Private, Auditable, and Distributed Ledger for Financial Institutes
Shaltiel Eloul, Yash Satsangi, Yeoh Wei Zhu, Omar Amer, Georgios Papadopoulos, Marco Pistoia
TL;DR
The paper addresses the need for private, auditable ledgers in finance that support multiple assets and cross-party interactions. It introduces PADL, a table-based, append-only ledger that combines Pedersen commitments with zero-knowledge proofs to enable private transactions and privacy-preserving audit capabilities without a trusted setup, framed by the PACT scheme for multi-asset transactions. Key contributions include the PADL ledger design, a formal transaction scheme, privacy-preserving auditing primitives (Basic Asset Balance, Asset Liquidity, Inter-transactions Rate), and a comprehensive security and performance analysis with real-use-case demonstrations (exchange, settlement bank, bond market). The work demonstrates practical scalability and privacy guarantees against strong threat models, positioning PADL as a viable enterprise solution for confidential, compliant financial markets with adaptable auditing capabilities.
Abstract
Distributed ledger technology offers several advantages for banking and finance industry, including efficient transaction processing and cross-party transaction reconciliation. The key challenges for adoption of this technology in financial institutes are (a) the building of a privacy-preserving ledger, (b) supporting auditing and regulatory requirements, and (c) flexibility to adapt to complex use-cases with multiple digital assets and actors. This paper proposes a framework for a private, audit-able, and distributed ledger (PADL) that adapts easily to fundamental use-cases within financial institutes. PADL employs widely-used cryptography schemes combined with zero-knowledge proofs to propose a transaction scheme for a `table' like ledger. It enables fast confidential peer-to-peer multi-asset transactions, and transaction graph anonymity, in a no-trust setup, but with customized privacy. We prove that integrity and anonymity of PADL is secured against a strong threat model. Furthermore, we showcase three fundamental real-life use-cases, namely, an assets exchange ledger, a settlement ledger, and a bond market ledger. Based on these use-cases we show that PADL supports smooth-lined inter-assets auditing while preserving privacy of the participants. For example, we show how a bank can be audited for its liquidity or credit risk without violation of privacy of itself or any other party, or how can PADL ensures honest coupon rate payment in bond market without sharing investors values. Finally, our evaluation shows PADL's advantage in performance against previous relevant schemes.