Ethereum's pERC-20 Would Hide Your Bags From the Whole Block 🧅

A draft Ethereum token standard called pERC-20, formally tracked as ERC-7605, would replace public ERC-20 balances with encrypted cryptographic notes shielded by zero-knowledge proofs, hiding transfer amounts, counterparties, and holdings from on-chain observers. The proposal is a privacy-native replacement interface rather than a wrapper around existing tokens, and it draws on ZK-UTXO architecture pioneered by Zcash, specifically the Groth16 proof system and Orchard-style note commitments, adapted for EVM-native deployment. The authors describe pERC-20 as MetaMask-compatible and say it requires no new precompile.

Under the current ERC-20 standard, any address can be queried via the public balanceOf function to expose token holdings and transfer history. pERC-20 removes that interface entirely, dropping balanceOf, approve, allowance, and transferFrom in favor of a new IPERC20 interface built around mint, burn, and transfer operations, each requiring a valid zero-knowledge proof. Token balances are represented as discrete encrypted notes owned by a key pair and spendable exactly once, meaning encrypted balances never exist in public state at any point in a token's lifecycle.

The draft also includes a compliance blacklist mechanism, a deliberate architectural choice the authors frame as positioning pERC-20 as regulation-aware infrastructure rather than a privacy-maximalist tool, a relevant distinction given the regulatory climate that stalled Ethereum privacy work for the better part of three years. The standard borrows conceptually from Zcash's Orchard shielded pool, where note commitments and nullifiers prevent double-spends without revealing ownership, but ports the design into Solidity-level interfaces accessible to existing Ethereum tooling.

The proposal arrives against a sharp downturn for the underlying asset, with Ethereum (ETH) trading at $1,660.21, down 5.42% over the prior 24 hours. No deployment timeline, client implementation, or mainnet activation date was included in the draft.