🔒 Privacy Perps are now live on Mainnet

Effective today, all position and account data on Paradex is private to the account holder. Privacy on Paradex is end-to-end: orders, positions and trades are private at the Paradex Cloud, Paradex Chain (L2) and on Ethereum (L1) where state commitments are posted. This means the account state is no longer publicly visible and data is only readable by the account owner via authenticated access. L1 state diffs are encrypted and their correctness is enforced inside the ZK proof.

Prior to today’s upgrade (Paradex Chain v0.14.1), there were two broad ways to observe or reconstruct chain state:

1. querying off-chain services that index Paradex activity (running a full node, querying RPC providers, explorers, etc.)

2. reconstructing aggregated balances/positions from L1 data availability by reading the state diff published in each state update.

v0.14.1 closes both paths for unauthenticated observers while preserving an escape hatch on Ethereum.

Architecture

L2: Private reads via authenticated RPC

Privacy on the L2 is guaranteed through a custom RPC configuration. RPC nodes mask position and account fields by default, and only return private data to the owner after authenticating the request via a valid signature. This addresses (1) the historical “off-chain indexing” visibility path: starting in v0.14.1, unauthenticated access to chain-wide activity via RPC/off-chain services is blocked, while users can still retrieve their own transactions and activity through authenticated requests. Bridge partners are only granted selective access to the transaction data (account state remains private) required by their smart contracts to process deposits and withdrawals.

L1: Encrypted state diffs with ZK verification

When the sequencer posts updates to Ethereum, it will now encrypt the state diff and include it in the ZK proof posted to the L1. This specifically addresses (2) the historical “reconstruct state from L1 DA” path: in zkrollup architectures, the state update transaction contains an aggregated (“squashed”) state diff.

Starting in v0.14.1, the blob data that carries the serialized squashed state diff is encrypted before being posted to Ethereum, while the ZK proof still validates both the correctness of the state transition and the correctness of the encryption/commitment to the encrypted diff. This encryption path is unique to the Paradex Chain and is not available on public Starknet. Because encrypting an entire blob asymmetrically would be prohibitively expensive, Paradex uses hybrid encryption. Details are listed here. Decryption keys are held by the Paradex Privacy Council, and only council members can decrypt the L1 state.

Why a Privacy Council

Paradex continues to submit state to Ethereum to preserve the possibility of an escape hatch in the event Paradex becomes inoperable. The council model balances that escape hatch with privacy: under normal operation diffs remain encrypted on L1, and if an escape hatch is required, the council can decrypt and publish the necessary state to enable recovery. The current members of the Privacy Council are Paradex Foundation, Paradex, and Karnot. As Paradex scales, the committee will be expanded for even stronger decentralization.

Trust assumptions

At the RPC layer, trust assumptions do not change: Paradex remains the operator of Paradex Chain RPC nodes. At the Ethereum layer, trust shifts to the Privacy Committee for the ability to decrypt state diffs during an escape-hatch scenario.

TL;DR

Private by default on L2 + encrypted diffs on L1, with the possibility of an escape hatch preserved via council-controlled decryption. Only the account owner and operator can view their trading state, providing a CEX-equivalent privacy experience with self-custody.

Paradexio

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