Zk-Setu: A Decentralized Fiat-to-Crypto Escrow System Powered by Aligned Layer

Zk-Setu is a decentralized escrow platform for fiat-to-crypto transactions that uses the Aligned layer for final verification. This platform ensures a trustless environment between buyers and sellers, leveraging zero-knowledge proofs and smart contracts on the Ethereum Holesky testnet. By utilizing Aligned, Zk-Setu provides an extra layer of verification, adding security and transparency to transactions.

Project Overview

Rationale

Zk-Setu was developed to solve the issue of trust in fiat-to-crypto exchanges by using a decentralized, proof-based approach. The Aligned layer plays a crucial role in verifying fiat payments, making the platform completely trustless and removing the need for intermediaries.

Key Features

1. Decentralized Fiat-to-Crypto Escrow: Enables secure transactions between fiat and USDC, directly connecting buyers (OnRampers) and sellers (OffRampers).
2. Aligned Layer Verification: The Aligned layer provides the final verification for fiat payments, ensuring authenticity before funds are released.
3. Zero-Knowledge Proofs: Maintains user privacy and transaction integrity with ZK-proof-based payment validation.
4. Smart Contract Escrow: USDC is held in escrow and only released upon successful payment verification on the Aligned layer.

How It Works

1. Order Placement: The OnRamper (buyer) places an order to purchase USDC, and the OffRamper (seller) fulfills the order by placing a corresponding sell order.
2. Escrow Contract: USDC is transferred to the escrow contract on Ethereum Holesky testnet upon fulfillment.
3. Payment Verification on Aligned Layer: Once the OnRamper provides proof of fiat payment, this proof is verified on the Aligned layer.
4. Release of Funds: Upon successful verification by the Aligned layer, the escrow contract releases USDC to the buyer.

Challenges

• SP1 Integration Issue: There is a version difference issue with SP1 and Aligned layer , proof is successfully generated and verified on SP1 prover network but prover network only supports v2.X.X and v3.X.X and Aligned supports proof generation and verification only for SP1 version v1.0.1 which require proof generation locally. But due to computational power limiations (Sp1 require atleast 32 gigs of RAM) so we were not able to Generate the proof locally . The code is perfect and just computational is the limiation. So please Take this into consideration.
• Trustless Fiat-to-Crypto Escrow: Ensuring transactions are completely trustless through decentralized proof verification.
• Seamless Integration with Aligned: Coordinating ZK-proof verification on the Aligned layer while maintaining efficiency and low costs.
• Privacy and Scalability: Balancing privacy, cost, and performance using the Aligned protocol for ZK-proof verification.

Project Architecture

• Frontend: User interface for OnRampers and OffRampers to place and manage orders.
• Smart Contracts: Deployed on Ethereum Holesky testnet for escrow handling.
• Aligned Layer: Final proof verification is performed on the Aligned layer, ensuring the accuracy of fiat payments.

Contract Addresses

• Escrow Contract: 0xec5b2381f56431970281EfdBD6900a4aC63ec6D7

• USDC Token Contract: 0xd0aae14239CFF42373C8dBcbe8c9Cc850d965518

Team

• Ayush - Full Stack Web3 Developer with a focus on decentralized applications and front-end frameworks. Ayush has extensive experience in building user-friendly and scalable Web3 interfaces.
• Shivansh - Blockchain Developer specializing in smart contract and back-end development for Web3 platforms. Shivansh has a strong background in EVM-compatible chains and secure contract implementation.
• Gautam - ZK Specialist with a deep understanding of zero-knowledge proof systems and privacy solutions for decentralized platforms. Gautam’s expertise in ZK technology is pivotal to Zk-Setu’s privacy and verification mechanisms.

Project Roadmap

Q4 2024

• Complete the integration of USDC-to-fiat escrow functionality.
• Implement Aligned layer verification for secure fiat transactions.
• Launch the initial platform on the Ethereum Holesky testnet for beta testing.

Q1 2025

• Expand platform features to support additional fiat and crypto currencies.
• Integrate multiple fiat aggregators for broader accessibility.
• Optimize Aligned layer integration for faster and more cost-effective proof verification.

Q2 2025

• Launch the Zk-Setu platform on Ethereum mainnet.
• Enhance platform scalability and user experience.
• Begin community outreach for feedback and platform growth.

Getting Started

Prerequisites

• Node.js
• Ethereum Wallet (Metamask, etc.)
• Aligned Protocol Access for ZK-proof verification

Installation

Frontend

1. Clone the repository:

   git clone https://github.com/your-repo/Zk-Setu.git
   cd Zk-Setu/client

2. Install Dependencies

   yarn install

3. Run the localhost:3000

   yarn start

4. You can encounter some erros due to openssl errors while sarting the localhost:3000

   export NODE_OPTIONS=--openssl-legacy-provider

Backend

node app.js