Tornado Cash

Tornado Cash is a decentralized application (dApp) built on the Ethereum blockchain that provides privacy for its users by obscuring the history of the Ethereum transactions they make. This is achieved by creating a pool of ETH or ERC-20 tokens, from which users can withdraw their coins without revealing the original source of the transaction.

Here’s a simplified example of how it works:

1. User deposits ETH into the Tornado Cash pool.
2. User receives a “note” which is essentially a proof of deposit. This note is kept private and should not be shared.
3. Later, the user can use this note to withdraw the deposited ETH to any Ethereum address. This new address doesn’t have to be related to the user in any way.
4. The smart contract checks the note, and if it’s valid, it allows the withdrawal of the ETH from the pool to the new address.

The whole process makes use of zero-knowledge proofs (specifically zk-SNARKs) to ensure that no one can link the deposit to the withdrawal. This helps to ensure privacy and fungibility of the ETH or ERC-20 tokens.

Tornado Cash supports ETH and several ERC-20 tokens including DAI, USDT, USDC, and WBTC.

Please note that the use of such services may have legal implications depending on your jurisdiction, and you should always make sure to comply with the laws and regulations applicable to you. Also, while Tornado Cash increases transaction privacy, it doesn’t provide complete anonymity. Advanced blockchain analysis techniques may still be able to infer some information about transaction participants. It’s also important to note that if you lose your withdrawal “note”, you can’t recover your deposited funds.