Asset IDs and Value Commitments

Penumbra’s shielded pool can record arbitrary assets. These assets either originate on Penumbra itself, or, more commonly, originate on other IBC-connected chains. To record arbitrary assets and enforce value balance between them, we draw on ideas originally proposed for Zcash and adapt them to the Cosmos context.

Asset types and asset IDs

To be precise, we define:

• an amount to be an untyped u64 quantity of some asset;
• an asset ID to be an ${\mathbb{F}}_q$ element;
• a value to be a typed quantity, i.e., an amount and an asset ID.

Some asset IDs correspond to a denomination, an ADR001-style denomination trace uniquely identifying a cross-chain asset and its provenance, such as:

• denom (native chain A asset)
• transfer/channelToA/denom (chain B representation of chain A asset)
• transfer/channelToB/transfer/channelToA/denom (chain C representation of chain B representation of chain A asset)

However, Penumbra deviates slightly from ADR001 in the definition of the asset ID. While ADR001 defines the IBC asset ID as the SHA-256 hash of the denomination trace, Penumbra hashes to a field element, so that asset IDs can be more easily used inside of a zk-SNARK circuit. Specifically, define from_le_bytes(bytes) as the function that interprets its input bytes as an integer in little-endian order, and hash(label, input) as BLAKE2b-512 with personalization label on input input. Then asset IDs are computed as

asset_id = from_le_bytes(hash(b"Penumbra_AssetID", asset_type)) mod q

Other asset IDs do not correspond to denominations, but are computed as hashes of other state data. By making the asset ID itself be a hash of extended state data, a note recording value of that type also binds to that extended data, even though it has the same size as any other note. For instance:

• The ZSwap mechanism has the Swap action form a Swap NFT, whose asset ID is a Poseidon hash of the user’s secret input values address, so that when the SwapClaim action spends the NFT, it can (zk)prove consistency of the newly minted swap outputs with the user’s inputs and the chain’s clearing prices, and that the newly minted outputs are sent to the user’s own address.
• The LPNFT mechanism creates asset IDs that bind both a liquidity position ID and the position state, so that the value balance mechanism described below can track state changes to concentrated liquidity positions.

Value Generators

Each asset ID $\mathsf{a}$ has an associated value generator $V_{\mathsf{a}}\in \mathbb{G}$. The value generator is computed as $V_{\mathsf{a}}=H_{\mathbb{G}}^{\mathsf{v}}(\mathsf{a})$, where $H_{\mathbb{G}}^{\mathsf{v}}:{\mathbb{F}}_q\to \mathbb{G}$ is a hash-to-group function constructed by first applying rate-1 Poseidon hashing with domain separator from_le_bytes(b"penumbra.value.generator") and then the decaf377 CDH map-to-group method.

Homomorphic Commitments

We use the value generator associated to an asset ID to construct homomorphic commitments to (typed) value. To do this, we first define the blinding generator $\tilde{V}$ as

V_tilde = decaf377_encode_to_curve(from_le_bytes(blake2b(b"decaf377-rdsa-binding")))

The commitment to value $(v,\mathsf{a})$, i.e., amount $v$ of asset $\mathsf{a}$, with blinding factor $\tilde{v}$, is the Pedersen commitment $${\mathrm{Commit}}_{\mathsf{a}}(v,\tilde{v})=[v]V_{\mathsf{a}}+[\tilde{v}]\tilde{V}.$$

These commitments are homomorphic, even for different asset types, say values $(x,\mathsf{a})$ and $(y,\mathsf{b})$: $$([x]V_{\mathsf{a}}+[\tilde{x}]\tilde{V})+([y]V_{\mathsf{b}}+[\tilde{y}]\tilde{V})=[x]V_{\mathsf{a}}+[y]V_{\mathsf{b}}+[\tilde{x}+\tilde{y}]\tilde{V}.$$ Alternatively, this can be thought of as a commitment to a (sparse) vector recording the amount of every possible asset type, almost all of whose coefficients are zero.

Binding Signatures

Finally, we’d like to be able to prove that a certain value commitment $C$ is a commitment to $0$. One way to do this would be to prove knowledge of an opening to the commitment, i.e., producing $\tilde{v}$ such that $$C=[\tilde{v}]\tilde{V}=\mathrm{Commit}(0,\tilde{v}).$$ But this is exactly what it means to create a Schnorr signature for the verification key $C$, because a Schnorr signature is a proof of knowledge of the signing key in the context of the message.

Therefore, we can prove that a value commitment is a commitment to $0$ by treating it as a decaf377-rdsa verification key and using the corresponding signing key (the blinding factor) to sign a message. This also gives a way to bind value commitments to a particular context (e.g., a transaction), by using the context as the message to be signed, in order to, e.g., ensure that value commitments cannot be replayed across transactions.