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Technical overview
Tessera’s pool smart contract acts as a privacy layer on public blockchains. Users can deposit into and withdraw from the Tessera pool. Once a user is inside the Tessera pool, they can make private transfers to any other user, whether inside or outside the pool. A user can also receive transfers within the pool from an account on a public blockchain. In addition, users can access public DeFi and interact with other public smart contracts while the public only learns that a user in Tessera performed the action.
We refer to Tessera’s smart contract as the Tessera pool because each individual remains private within the broader pool of Tessera users. One of Tessera’s core objectives is to provide privacy at scale on public blockchains, while supporting compliance. To achieve this, the Tessera pool is subdivided into multiple subpools governed by regulated entities, while all subpools benefit from the combined privacy of the overall Tessera pool.
The subpool owner is responsible for the compliance of its subpool. Any user can become part of a Tessera subpool and, by doing so, keep their activities private from the public, provided they are admitted to a subpool. The subpool owner determines the KYC policy, the granularity of information it can access regarding activities within the subpool, interoperability with other subpools, and other configuration variables. Tessera, as a protocol, guarantees that all activities within a subpool follow the rules configured by the subpool owner.
Tessera is designed to maintain strong data silos both between subpools and between each subpool and the protocol itself. No information within a subpool crosses the boundary defined by the subpool owner. The various operating entities defined in the protocol do not, at any time, receive information about any subpool or its users. For this reason, we refer to Tessera as providing banking-grade privacy on public chains.
Tessera is non-custodial. Its users do not place any trust in Tessera beyond the trust assumptions already inherent in the public blockchain. Tessera introduces no additional settlement risk beyond the intrinsic settlement risk of the underlying public blockchain.
It is worth noting that a regulated entity may choose to deploy its own individual Tessera pool, meaning a pool with only a single subpool. In that case, however, the entity’s users benefit only from anonymity among that entity’s own users.
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