Institutional Compliance

The Dilemma

Privacy protocols often face a critical failure mode: they become safe havens for illicit actors. When a mixer is used by hackers or sanctioned entities, the entire liquidity pool becomes "tainted," making it unusable for legitimate users and institutions.

TSS solves this with Zero-Knowledge Compliance (ZK-C).

Our Solution: Proof of Innocence

We utilize a proprietary ZK-SNARK circuit to enforce a "Blacklist Check" without revealing the user's identity. This allows the protocol to remain permissionless for good actors while being impenetrable to bad actors.

The Mechanism

1. The Blacklist: The protocol maintains an on-chain Merkle Tree containing addresses linked to illicit activity (e.g., OFAC sanctions list, known exchange hacks).

2. Client-Side Proving: Before a deposit is accepted, the user's browser generates a Zero-Knowledge Proof locally.

3. The Assertion: This proof cryptographically asserts:

   "I certify that the source of these funds is NOT included in the current Blocklist Merkle Tree."

4. On-Chain Verification: The smart contract verifies this proof. It receives a simple True or False signal.

The Result

• For the User: You prove your funds are clean without ever revealing who you are.

• For the Protocol: The anonymity set remains "compliant," ensuring that withdrawing funds from TSS does not flag your wallet at exchanges or banks.

Dynamic Updates

The TSS Governance module allows $TSS token holders to vote on updates to the Blacklist Merkle Root, ensuring the protocol can adapt to new threats in real-time without centralized control.