Auditor EY has implemented privacy tools into its Nightfall network

What’s new? Big four audit firm EY (formerly Ernst & Young) has made changes to its enterprise-focused Layer 2 (L2) Nightfall network based on the Ethereum blockchain. Nightfall is now a rollup that utilizes zero-knowledge (ZK) proof technology. EY noted that companies have seen a return of interest in using privacy tools after the lifting of sanctions on crypto mixer Tornado Cash.

Cointelegraph’s material

ZK is a cryptographic technology that allows one party to a transaction to verify information from another party without revealing that information. It is gaining wider adoption amid growing demand for privacy and security in digital transactions and is already being actively used in lending and trading decentralized financial protocols (DeFi), as well as for personal identification without disclosing personal data.

Rollups are protocols that improve performance by aggregating transactions into groups.

What else is known? EY said in its April 2 announcement that the new “Nightfall_4” source code simplifies the network architecture and offers near-instant transaction execution on Ethereum, making the network more accessible to users compared to the previous optimistic rollup-based versions.

Now Nightfall users will not need to challenge potentially incorrect transactions in Ethereum. There is no such feature in ZK rollups, and the transaction is finalized as soon as it is added to the Nightfall blockchain, EY explained.

This is the fourth major update to Nightfall since EY launched the network in 2019.

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Nightfall allows the firm’s business partners to transfer tokens privately with the security of Ethereum but with cheaper transactions compared to the underlying blockchain. The network also uses technology to bind a verified identity to a public key via digital signatures to reduce counterparty risk.

EY noted that it has long taken steps to make Nightfall an unattractive network for attackers. In particular, it cannot be used anonymously. However, it is the lifting of sanctions against Tornado Cash that has really helped renew interest among clients, as the use of privacy technologies no longer carries serious regulatory risks.

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Although Nightfall’s code is publicly available on GitHub, it is a private closed network for EY’s client base. Similar projects include Hyperledger Fabric, R3 Corda, and Quorum.