eERC Contracts Flow

The eERC (Encrypted ERC) standard on Avalanche provides privacy-preserving tokens while remaining EVM-compatible.
This section walks through the full lifecycle of an eERC, from deployment to interaction, including key considerations for developers.

1. Creating Your eERC

Step 1: Select Deployment Mode

• Standalone Mode: Fully private token from creation, optional hidden total supply.
• Converter Mode: Wrap an existing ERC-20 into an encrypted format using a TokenTracker.

Step 2: Deploy the Core Contracts

• encryptedERC: Stores encrypted balances.
• Registrar Contract: Manages auditor keys and permissions.
• Proof Verifier: Validates zk-SNARK proofs for transfers.

Step 3: Configure Auditor Access (Optional)

• Register auditors in the Registrar Contract.
• Provide them with decryption permissions for compliance scenarios.

2. About the zk-Proof Type

In the current EncryptedERC implementation, the proving system is not chosen by the end-user.
By default, the official Avalanche eERC contracts use Groth16 for proof generation and verification.

If a developer wants to change the proving system (e.g., to PLONK or Halo2), they must:

1. Modify the Circom circuits.
2. Regenerate the zk verifiers.
3. Deploy new contract versions using those verifiers.

Avalanche Tip: Groth16 is optimal for most L1 and C-Chain deployments due to its low gas cost and existing integration in the eERC stack.

3. Encryption & Hashing Details

• Curve: BabyJubJub for zk-friendliness.
• ElGamal: ElGamal for balance and transfer amounts.
• Poseidon: Poseidon Cipher Text for proof inputs and Merkle trees.

4. Backend Deployment Flow

Step 1: Set Up Environment

git clone https://github.com/alejandro99so/eerc-backend-converter.git
cd eerc-backend-converter

Step 2: Configure .env variables in Hardhat

• This step is VERY important because you need those private keys to run zkit files.

• Create .env file:

• Add to .env file: RPC_URL = YOUR_RPC_URL // If you are using Fuji C-Chain (https://api.avax-test.network/ext/bc/C/rpc)

• Add to .env file: PRIVATE_KEY = PRIVATE_KEY_1

• Add to .env file: PRIVATE_KEY_2 = PRIVATE_KEY_2

Step 3: Install dependencies and create zkit files

npm install

Step 4: Choose your way (Converter way) and deploy main contracts

npm run converter:init
npm run converter:core

Step 5: Register Users

npm run converter:register

• Change WALLET_NUMBER = 1; to WALLET_NUMBER = 2; to register PRIVATE_KEY_2 in the scripts/converter/03_register-user.ts file

npm run converter:register

Step 6: Set auditor

npm run converter:auditor

Step 7: Get faucet tokens for PRIVATE_KEY_2

• Let's check our first balance (PRIVATE_KEY_2)

npm run converter:balance

• Let's get faucet tokens for PRIVATE_KEY_2

npm run converter:faucet

Step 8: Deposit tokens

To PRIVATE_KEY_1

• Change WALLET_NUMBER = 2; to WALLET_NUMBER = 1; to get token balance from PRIVATE_KEY_1 in scripts/converter/08_check_balance.ts file
• Let's check our first balance

npm run converter:balance

• Let's deposit some ERC20 tokens to get eERC20 tokens

npm run converter:deposit

• Let's check our new balance

npm run converter:balance

To PRIVATE_KEY_2

• Change WALLET_NUMBER = 1; to WALLET_NUMBER = 2; to get token balance from PRIVATE_KEY_2 in scripts/converter/08_check_balance.ts file
• Let's check our first balance

npm run converter:balance

• Change WALLET_NUMBER = 1; to WALLET_NUMBER = 2; to deposit tokens from PRIVATE_KEY_2 in the scripts/converter/06_deposittx.ts file
• Let's deposit some ERC20 tokens to get eERC20 tokens

npm run converter:deposit

• Let's check our new balance

npm run converter:balance

Step 9: Transfer tokens

• Let's transfer encrypted tokens from PRIVATE_KEY_1 to PRIVATE_KEY_2

npm run converter:transfer

Step 10: Withdraw tokens from PRIVATE_KEY_2

To PRIVATE_KEY_1

• Let's transfer encrypted tokens from PRIVATE_KEY_1 to PRIVATE_KEY_2

npm run converter:transfer

• Change WALLET_NUMBER = 2; to WALLET_NUMBER = 1; to get token balance from PRIVATE_KEY_1 in scripts/converter/08_check_balance.ts file
• Let's check our new balance after transferring tokens

npm run converter:balance

To PRIVATE_KEY_2

• Let's withdraw encrypted tokens (eERC20) from PRIVATE_KEY_2 to get tokens (ERC20)

npm run converter:withdraw

• Change WALLET_NUMBER = 1; to WALLET_NUMBER = 2; to get token balance from PRIVATE_KEY_2 in scripts/converter/08_check_balance.ts file
• Let's check our new balance for PRIVATE_KEY_2 after transferring tokens

npm run converter:balance

Step 11: Choose your way (Standalone way)

• Follow the flow by yourself and reach out to us at https://t.me/avalancheacademy

6. Considerations for Production

• Gas Costs: Proof verification adds overhead; optimize circuits.
• Auditor Key Rotation: Plan for secure revocation and re-assignment.
• Compliance: Align privacy settings with jurisdictional requirements.