Private Token Swap

The Problem
Traditional decentralized exchanges (DEXs) are completely transparent - every trade, balance, and wallet activity is publicly visible on the blockchain. This creates several issues:

1. Front-running: Bots can see pending transactions and exploit them
2. Privacy concerns: All trading activity is public (amounts, prices, positions)
3. Competitive disadvantage: Large traders reveal their strategies
4. Regulatory challenges: No compliance layer for regulated assets

The Solution

This project demonstrates a privacy-preserving token swap system using Chainlink ACE (Automated Compliance Engine) that enables:

1. Private Trading
   • Shielded balances hide token amounts from public view

• Orders and swaps execute without revealing sensitive data
  • Only participants know trade details

2. Collateralized Real-World Assets
   • Tokens backed by precious metals (Gold/Silver)
   • 150% over-collateralization with USDT ensures stability
   • Prices reflect real market rates from metalpriceapi.com
3. Compliance-Ready Architecture
   • Policy Engine enforces rules (KYC, transfer limits, blacklists)
   • Regulatory compliance without sacrificing privacy
   • Auditable by authorized parties only
4. Automated Matching & Execution
   • Off-chain orderbook for efficient matching
   • Atomic on-chain settlement via Chainlink ACE Vault
   • No counterparty risk

Key Features

Privacy Layer

• Shielded addresses derived from secrets using Poseidon hash
• Private balances stored within ACE Vault (not visible on blockchain)
• Confidential swaps - amounts and participants hidden from public

Tech Stack

Smart Contracts:

• Solidity + Foundry
• OpenZeppelin libraries
• Chainlink ACE integration

Backend:

• Node.js + TypeScript
• Express.js (REST API)
• WebSocket (real-time updates)
• ethers.js (blockchain interaction)

Frontend:

• React 18 + TypeScript
• Vite (build tool)
• ethers.js (Web3 provider)

Blockchain:

• Ethereum Sepolia testnet
• Alchemy RPC provider