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The first non-custodial and decentralized on and off-ramp
Overview
Zephyr is a protocol that enables users to securely exchange stablecoins for fiat currencies without having to trust counterparties or centralized escrow services. Zephyr uses Zero Knowledge proofs to verify fiat payment receipts, beginning with Venmo, with plans to support multiple platforms across different countries. At it's core Zephyr combines:
A smart contract order book that acts as a bulletin board for sell orders
An on-chain verifier of Zero-Knowledge proofs of payment
A decentralized and incentive-compatible prover network
How to On and Off-ramp with Zephyr
Off-ramping
Sellers begin by posting their order to the order book, which encodes the price at which they want to sell their stablecoins and the address of a sybil contract, which defines rules about who can fulfill parts of their order. They then post a commitment to the Verifier contract of information required to verify payment receipts for the order. The pre-image of this commitment, which includes information such as their Venmo identifier, is then stored by a decentralized keeper whose role is to relay this information to on-rampers.
On-ramping
Buyers begin by placing a claim which reserves a portion of the seller's funds for an hour. The buyer then receives the seller's payment information and completes a fiat transfer. Once they receive the email receipt, they forward it, along with the email signatures, to the decentralized prover. The prover posts the proof-of-payment on-chain where it gets verified and then used to unlock the seller's escrowed funds.
Proof of Payment
Our Zero Knowledge proof of payment verifies both the contents of the email, and it's origin, to ensure authenticity of Venmo transactions. DKIM is a universal email protocol that verifies the origin of emails. In order to authenticate an email, the sender will hash the body of the message and include this hash and email metadata in a header which then gets hashed and signed.
The email body of a Venmo receipt is mostly fixed HTML, with a few variable length components that encode information such as the value of the transaction and who it was sent to. Our proof takes the email body and header as a witness, and partitions the fixed HTML sections and the variable content in-between. It then uses regular expressions to verify that these sections are well-formed and contain all of the content of a Venmo receipt. These regular expressions also extract unique transaction data (sender, recipient, value), which get checked against data extracted from the header. The signature of the hash of the header is then verified, and a commitment to essential transaction data is posted on-chain, to be verified within a smart contract. By using commitments, this system keeps all data relating to the identity of the sender and recipient private from the smart contract.
What this Enables
Zephyr is the first decentralized exchange between stablecoins and fiat currencies. Our design ensures that the buyer and seller maintain custody of their funds throughout the entire process, whilst ensuring that both sides are protected from counterparty risk. By integrating additional payment methods in the upcoming year, we will use Zephyr to decentralize Ethereum's Achille's heel - its lack of interoperability with fiat.
Why we are more Decentralized
We do not hold a Venmo API Key and all proofs are verified through email receipts
Transactions are just regular Venmo transactions
We never take custody of your assets and funds can be transferred out without our approval
Eventually with multiple payment providers, each individual provider will be unable to censor transations on Zephyr
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