Blockchain technology is only pseudonymous, meaning that while your identity is hidden, your transactions are not. Since centralized exchanges and other crypto custodians require KYC, a simple database leak can help hackers or institutions connect your personal data with your past transactions.
Blackhole is a non-custodial privacy solution for the Zilliqa network. Inspired by Tornado Cash which operates on the Ethereum network. The protocol ensures that users can break a link in on-chain activity for the purpose of improving transaction privacy between the recipient and destination address.
Acting as a complex token mixer, Blackhole utilizes smart contracts that accept deposits made in ZIL or ZRC2 tokens that are then withdrawn to other addresses. Since the withdrawal is made from the Blackhole smart contract, there is no way of knowing who the original sender is.
Blackhole generates a secret hash (proof) each time a user deposits assets. The smart contract then accepts the deposit along with the hash, called a commitment. The commitment's purpose is to prove during the withdrawal process that the person withdrawing has the right to the deposited assets. By inputting the proof upon making the request, the user essentially confirms this right while remaining anonymous.