Security Model

Core Principles

On-chain Privacy

• Balances are encrypted using FHE
• Transfer amounts are never visible on-chain
• Only encrypted handles are stored publicly

Trustless Verification

• Server cannot fabricate payments
• Amount handles extracted directly from blockchain
• Client cannot lie about payment amounts

Minimal Authorization

• Decryption signatures scoped to specific contracts
• Time-limited authorization (default 365 days)
• Ephemeral keys for decryption operations

Security Flow

Handle Extraction

Transaction Receipt
        |
        v
Extract ConfidentialTransfer Event
        |
        v
Get Encrypted Handle (from chain, not client)
        |
        v
Verify Recipient Address

The facilitator extracts the encrypted handle directly from the blockchain, preventing clients from providing fake handles.

Decryption Authorization

The decryption signature contains:

Field	Purpose
signature	User's wallet signature
publicKey	Ephemeral public key
privateKey	Ephemeral private key
contractAddresses	Authorized contracts
startTimestamp	Authorization start
durationDays	Validity period

The privateKey is an ephemeral key, not the user's wallet key.

Verification Checks

The facilitator performs these security checks:

1. Schema Validation: Request structure matches expected format
2. Network Match: Payload network matches requirements
3. Transaction Exists: Receipt found on blockchain
4. Event Found: ConfidentialTransfer event in logs
5. Recipient Match: Transfer sent to correct payTo
6. Sender Match: Transfer from authorized user
7. Contract Authorization: Token in user's authorized list
8. Amount Sufficient: Decrypted amount >= required

Threat Mitigation

Client Manipulation

Threat	Mitigation
Fake transaction	Handle extracted from chain
Wrong amount	Server decrypts and verifies
Replay attack	Transaction hash uniqueness

Server Attacks

Threat	Mitigation
Fabricate payment	Cannot decrypt without signature
Scope creep	Contract addresses limited
Long-term access	Time-limited authorization

Best Practices

For Merchants

• Verify facilitator responses server-side
• Store verification results for auditing
• Use HTTPS for all endpoints

For Users

• Review authorized contracts before signing
• Use short authorization periods for testing
• Revoke old signatures when changing wallets