Zcash’s disclosure of a long-running Orchard pool vulnerability sent ZEC down 46% in a single day, and the selloff quickly pushed a new XRPL privacy proposal into focus. Vet, community lead at the XRPL Foundation, highlighted amendment XLS-0096, which would introduce confidential transfers for multi-purpose tokens on the XRP Ledger. The idea is not full anonymity. It is to shield transaction data while keeping token issuance and total supply verifiable.
Confidential transfers with supply checks built in
Based on details shared by Vet, the proposal relies on EC-ElGamal homomorphic encryption and zero-knowledge proofs to hide balances and transaction amounts from public view. At the same time, validators would still be able to monitor the aggregate amount of tokens circulating on the network. That distinction matters. Participants could confirm that outstanding supply never exceeds authorized issuance limits, a direct answer to concerns about undetected token creation.
Those concerns intensified after Zcash’s recent security issue. Reports said the flaw in the Orchard pool had existed since May 2022 without being detected, raising questions about possible hidden inflation risk across the network. Confidence weakened quickly, and several major holders, including Arthur Hayes, exited their positions.
Wallet design and proof systems are part of the proposal
XLS-0096 also includes compact sigma protocols and range proofs to validate transactions more efficiently while improving resistance to increasingly advanced analysis techniques. Vet pointed to another design element as well: a split-balance wallet structure. Under that model, a wallet contains a spending balance and a separate Inbox for incoming transfers. The goal is practical. Users could avoid failed transactions caused by outdated zero-knowledge proofs.
This makes the amendment more than a generic privacy upgrade. It addresses transaction usability inside the same framework, while keeping the core premise intact: confidentiality without losing control over supply visibility.
Selective disclosure targets regulated institutions
According to Vet, the proposal includes selective disclosure features and view keys that can support regulatory reporting. Institutions would be able to share transaction information with regulators while keeping commercially sensitive data shielded from the public. That places the amendment in a different category from systems built around complete opacity.
For businesses, the appeal is straightforward. Privacy protections could exist alongside auditability, with public verification of token supply preserved and transaction data revealed only where permissions require it.
Initial scope covers multi-purpose tokens on XRPL
At launch, XLS-0096 is intended for multi-purpose tokens on XRPL, including stablecoins and tokenized assets. The authors of the proposal say implementing confidentiality at the ledger level would create the technical base needed for broader privacy functions later on. In other words, the first use case is limited, but the architecture is meant to support wider expansion across the ecosystem.
While Zcash developers work to address the Orchard vulnerability and rebuild confidence, XRPL contributors are advancing a different privacy model centered on verifiable confidentiality. Based on the proposal as described by Vet, the amendment aims to improve privacy on XRP Ledger without giving up transparency over issuance and supply.