What “Private” Means in Veil

Privacy features fail when users assume they hide more than they actually do.

Veil uses Stellar Private Payments (SPP) — built with Nethermind and the Stellar Development Foundation (SDF) — to offer shielded payments. This guide explains in plain language exactly what is private, what remains public, and how the rules work, so you can use these tools safely and confidently.

The Core Rule: Inside the Pool vs. Outside the Pool

Think of a privacy pool like a shared, secure vault:

1. Entering the vault (Shield / Deposit) is public.
2. Exchanging items inside the vault (Private Send) is private.
3. Leaving the vault (Unshield / Withdraw) is public.

[ Your Public Account ] ──( Public Deposit )──> [ Shielded Pool ]
                                                        │
                                          [ Private Transfer ] (Hidden)
                                                        │
[ Destination Account ] <──( Public Withdraw )── [ Shielded Pool ]

At a Glance: What is Hidden vs. What is Public

1. What Happens Inside the Pool (Private Transfers)

When you make a Private Send to another Veil user:

• No addresses appear on the ledger: The network does not record who sent the funds or who received them.
• No amounts appear on the ledger: Observers cannot see whether you transferred 1 XLM or 1,000 XLM.
• Zero-Knowledge Proofs: Instead of publishing your transaction details, your device generates a mathematical proof (Groth16 over BN254) showing that you owned valid funds and transferred them according to the rules, without revealing the underlying numbers or keys.

2. Why Shielding (Deposit) and Unshielding (Withdrawal) are Public

To use the privacy pool, funds must move between Stellar’s transparent public ledger and the shielded pool contract.

Shielding (Depositing)

When you shield tokens:

1. Your public Stellar account submits a transaction to deposit funds into the pool contract.
2. Anyone looking at a block explorer (such as stellar.expert) can see: “Account A deposited 50 XLM into the privacy pool.”
3. Once the funds enter the pool, they become an encrypted private note owned by your device.

Unshielding (Withdrawing)

When you unshield tokens:

1. Your device proves with zero knowledge that you own an unspent private note in the pool.
2. The pool contract releases public tokens to the destination address you specified.
3. Anyone looking at a block explorer can see: “The privacy pool sent 50 XLM to Account B.”

Why this is still private

Even though deposit and withdrawal transactions are individually visible on-chain, observers cannot link which deposit corresponds to which withdrawal, as long as other users are transacting in the shared pool.

3. Selective Disclosure (“Prove this Payment”) — planned, not yet available

Privacy should never prevent you from proving legitimate transactions when you need to.

When this ships, a landlord, tax authority, merchant, or auditor asking for proof of payment will be answerable with a Selective Disclosure Proof:

• Note-Scoped: the disclosure will reveal only that single payment (amount, date, and recipient).
• Zero Leakage: it will reveal nothing about your total wallet balance, your other transactions, or your remaining private notes.
• Cryptographically Bound: the proof will be tied to the requesting party, so it cannot be altered or re-used elsewhere.

[ Private Payment ] ──> Generate Selective Proof ──> [ Auditor / Landlord / Tax Office ]
                                                     (Verifies single payment only)

4. Compliance Controls & Pool Operator Rules

Veil uses canonical shared pools operated according to the Stellar Private Payments specification. The pools are not unregulated mixers; they implement built-in compliance controls:

Association Set Providers (ASPs)

Each pool enforces membership policies:

• Block-Lists: Sanctioned, stolen, or malicious addresses (such as OFAC-listed accounts) are blocked from entering or transacting in the pool.
• Allow-Lists: The specification also permits allow-list pools, which require verified enrollment before you may deposit. No allow-list pool exists today — both pools in SPP’s testnet deployment hold native XLM and run the block-list policy.

Operator Key Freezing

• The pool operator has the administrative ability to freeze listed keys or notes that violate compliance rules or sanctions.
• If a key or note is frozen by the pool operator, it cannot be transferred or withdrawn from the pool.

We state this plainly so you understand the trust model: Veil does not operate private islands outside the law.

5. Security & Key Custody

• Keys never leave your device: Your note encryption keys and spending keys are derived deterministically from your passkey hardware authenticator.
• No server custody: No Veil server, bootnode, or relayer ever sees your private keys, your note secrets, or your transaction graphs.
• Deterministic recovery: When you recover your wallet with your passkey on a supported device (with WebAuthn PRF extension support), your private balance keys are recovered with it.

Summary Checklist

• Private sends hide amounts and counterparties inside the pool.
• Deposits (shield) and withdrawals (unshield) are visible on the public Stellar ledger.
• Selective disclosure — proving a specific transaction without exposing your whole wallet. Planned; not yet available.
• Pool operators can enforce compliance block-lists and freeze listed keys.
• Testnet only today: Never attempt to use private features on Mainnet until fully audited.

For technical details on cryptographic primitives and circuits, see the Threat Model and Architecture.