<p>The key words "MUST", "SHOULD", and "MAY" in this document are to be interpreted as described in BCP 14 <aid="footnote-reference-1"class="footnote_reference"href="#bcp14">1</a> when, and only when, they appear in all capitals.</p>
<p>The terms "Recipient", "Producer", "Consumer", "Sender", "Receiver", "Item", "Metadata Item", "Typecode", "Address", "Unified Address" (UA), "Unified Viewing Key" (UVK), "Unified Full Viewing Key" (UFVK), and "Unified Incoming Viewing Key" (UIVK) are to be interpreted as described in ZIP 316 <aid="footnote-reference-2"class="footnote_reference"href="#zip-0316-terminology">5</a>.</p>
<p>The terms "Testnet" and "Mainnet" are to be interpreted as described in section 3.12 of the Zcash Protocol Specification <aid="footnote-reference-3"class="footnote_reference"href="#protocol-networks">9</a>.</p>
<p>This ZIP defines a new encoding for transparent Zcash addresses. Wallets must ensure that no shielded notes are spent in transactions that send to a transparent address encoded in the specified fashion.</p>
<p>This ZIP is presently in Draft status, and defines two alternate encodings for consideration. Analysis of the benefits and drawbacks of each of the proposed alternatives is presented at the end of this document.</p>
<p>In November of 2023, the Zcash community received notice from the Binance cryptocurrency exchange that Zcash was at risk of being delisted from the exchange unless the community could provide a mechanism by which Binance could refuse deposits from shielded addresses and return them to the depositor. This issue was raised and discussed at length in the Zcash Community forum <aid="footnote-reference-4"class="footnote_reference"href="#binance-delisting">2</a>.</p>
<p>In the course of that discussion thread, wallet developer and community member @hanh <aid="footnote-reference-5"class="footnote_reference"href="#hanh-profile">3</a> suggested a wallet-oriented approach <aid="footnote-reference-6"class="footnote_reference"href="#hanh-suggestion">4</a> that involved defining a new encoding for Zcash transparent P2PKH addresses. A Consumer of such an address, whether it be a wallet or an exchange, could recognize this encoding as a directive that the wallet should only spend transparent funds when creating an output to that address.</p>
<p>The Binance cryptocurrency exchange requires that funds sent to their deposit addresses come from source addresses that are readily identifiable using on-chain information, such that if necessary funds may be rejected by sending them back to the source address(es). This ZIP is intended to standardize a transparent address encoding that is not yet understood by preexisting Consumers, in order to prevent inadvertent shielded spends when sending to such addresses. Then, Consumers that upgrade to support the new encoding will do so with the understanding that they must respect the restrictions on sources of funds described in this ZIP.</p>
<li>A Recipient wishing to receive funds from exclusively transparent sources must be able to generate a receiving address such that only transparent funds will be spent in transactions with an output to this address.</li>
<li>Wallets and other Consumers that have not been upgraded to recognize the new address format cannot mistake the address for another address type or inadvertently send shielded funds to the address.</li>
<li>No changes to Recipient infrastructure beyond changes to address encoding and decoding should be required as a consequence of this ZIP.</li>
<p>A TEX Address is a Bech32m <aid="footnote-reference-8"class="footnote_reference"href="#bip-0350">14</a> reencoding of a transparent Zcash P2PKH address <aid="footnote-reference-9"class="footnote_reference"href="#protocol-transparentaddrencoding">10</a>.</p>
<sectionid="motivations-for-alternative-1"><h3><spanclass="section-heading">Motivations for Alternative 1</span><spanclass="section-anchor"><arel="bookmark"href="#motivations-for-alternative-1"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h3>
<p>The TEX Address is the simplest possible approach to creating a new address type that indicates that only transparent sources of funds should be used.</p>
<li>Decode the address to a byte sequence using the Base58Check decoding algorithm <aid="footnote-reference-10"class="footnote_reference"href="#base58check">12</a>.</li>
, return an error. Otherwise, let the <strong>validating key hash</strong> be the remaining 20 bytes of the sequence after removing the two-byte address prefix.</li>
<li>Reencode the 20-byte <strong>validating key hash</strong> using the Bech32m encoding defined in <aid="footnote-reference-11"class="footnote_reference"href="#bip-0350">14</a> with the human-readable prefix (HRP) <code>"tex"</code>.</li>
<p>Wallets and other Senders sending to a TEX address (as any output) MUST ensure that only transparent UTXOs are spent in the creation of a transaction.</p>
<p>A Traceable Unified Address is a reencoding of a transparent Zcash P2PKH address into a Unified Address <aid="footnote-reference-12"class="footnote_reference"href="#zip-0316-unified-addresses">6</a>.</p>
<sectionid="motivations-for-alternative-2"><h3><spanclass="section-heading">Motivations for Alternative 2</span><spanclass="section-anchor"><arel="bookmark"href="#motivations-for-alternative-2"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h3>
<p>Traceable Unified Addresses fit into the existing Zcash Unified Address ecosystem. Existing Consumers that support Unified Addresses will automatically be able to recognize a Traceable Unified Address as a valid Zcash address, but will not be able to send to that address unless they update their code to understand the new Receiver Typecode defined in this ZIP. Even in the case that Traceable P2PKH Receivers are not understood by the sending wallet, a Unified Address-supporting wallet will be able to automatically provide good error messages for their users to indicate that the wallet needs to be updated to understand and send to these addresses.</p>
<p>In addition, by integrating with the Unified Address framework, it becomes possible for the addresses being generated to include extra metadata; in particular, metadata items such as an Address Expiry Height or Address Expiry Date <aid="footnote-reference-13"class="footnote_reference"href="#zip-0316-address-expiry">8</a> may be included. For exchange use cases such as Binance's, it is useful to ensure that an address provided to a user has a limited utility life, such that after expiration the user must obtain a new address in order to be able to continue to send funds <aid="footnote-reference-14"class="footnote_reference"href="#binance-address-expiry">11</a>.</p>
<p>Upon activation of this ZIP, the section <cite>Encoding of Unified Addresses</cite> of ZIP 316 <aid="footnote-reference-15"class="footnote_reference"href="#zip-0316-unified-addresses">6</a> will be modified to define a new Traceable P2PKH Receiver Type having Typecode
, the value of which MUST be the 20-byte <strong>validating key hash</strong> of a Zcash P2PKH Address as defined in <aid="footnote-reference-16"class="footnote_reference"href="#protocol-transparentaddrencoding">10</a>.</p>
<p>The "Requirements for both Unified Addresses and Unified Viewing Keys" section of ZIP 316 <aid="footnote-reference-17"class="footnote_reference"href="#zip-0316-unified-requirements">7</a> will be modified as follows — the text:</p>
<li>Decode the address to a byte sequence using the Base58Check decoding algorithm <aid="footnote-reference-18"class="footnote_reference"href="#base58check">12</a>.</li>
, return an error. Otherwise, let the <strong>validating key hash</strong> be the remaining 20 bytes of the array after removing the two-byte address prefix.</li>
with the 20-byte <strong>validating key hash</strong> as its value. In addition, metadata items such as an Address Expiry Height or Address Expiry Date <aid="footnote-reference-19"class="footnote_reference"href="#zip-0316-address-expiry">8</a> MAY be included.</li>
<p>The HRP of the resulting Unified Address is the same as for any other Unified Address on the relevant network as specified in <aid="footnote-reference-20"class="footnote_reference"href="#zip-0316-unified-addresses">6</a>, i.e. <code>"u"</code> for Mainnet and <code>"utest"</code> for Testnet.</p>
<p>Wallets and other Senders sending to a Traceable P2PKH Receiver MUST ensure that only transparent UTXOs are spent in the creation of a transaction.</p>
<sectionid="analysis-of-alternative-1"><h2><spanclass="section-heading">Analysis of Alternative 1</span><spanclass="section-anchor"><arel="bookmark"href="#analysis-of-alternative-1"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h2>
<sectionid="pros-to-alternative-1"><h3><spanclass="section-heading">Pros to Alternative 1</span><spanclass="section-anchor"><arel="bookmark"href="#pros-to-alternative-1"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h3>
<ul>
<li>The reencoding from Zcash P2PKH addresses is extremely straightforward and relies only upon widely available encoding libraries.</li>
</ul>
</section>
<sectionid="cons-to-alternative-1"><h3><spanclass="section-heading">Cons to Alternative 1</span><spanclass="section-anchor"><arel="bookmark"href="#cons-to-alternative-1"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h3>
<li>Existing wallets and other Consumers will regard the new address type as entirely invalid, and will not automatically prompt their users that they need to upgrade in order to send to this type of address.</li>
<li>Creation of a new fully distinct address type further fragments the Zcash address ecosystem. Avoiding such fragmentation and providing smooth upgrade paths and good error messages to users is exactly the problem that Unified Addresses <aid="footnote-reference-22"class="footnote_reference"href="#zip-0316-unified-addresses">6</a> were intended to avoid.</li>
<li>The TEX address type does not provide any mechanism for address expiration. One of the questions Binance has asked has been what to do about users who have stored their existing transparent deposit address in their wallets, or use them as a withdrawal address for other exchanges or services. This is a challenging problem to mitigate now because address expiration was not previously implemented. We should not further compound this problem by defining a new distinct address type that does not provide a mechanism for address expiry.</li>
<sectionid="analysis-of-alternative-2"><h2><spanclass="section-heading">Analysis of Alternative 2</span><spanclass="section-anchor"><arel="bookmark"href="#analysis-of-alternative-2"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h2>
<sectionid="pros-to-alternative-2"><h3><spanclass="section-heading">Pros To Alternative 2</span><spanclass="section-anchor"><arel="bookmark"href="#pros-to-alternative-2"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h3>
<li>By integrating with the Unified Address framework, Consumers of Traceable Unified Addresses that have not yet been upgraded to recognize these addresses can automatically be prompted to upgrade their wallets or services to understand the unrecognized Receiver Typecode.</li>
<li>It is possible to include address expiration metadata in a Traceable Unified Address, which can help to mitigate problems related to stored addresses in the future.</li>
<li>Traceable Unified Addresses benefit from the robustness to errors and protection against malleation of Unified Addresses <aid="footnote-reference-23"class="footnote_reference"href="#f4jumble">13</a>.</li>
<li>Regardless of which proposal is adopted, the Zcash Community will need to work with exchanges other than Binance to update their address parsing logic to understand the new address format. By encouraging Consumers such as exchanges to adopt parsing for Unified Addresses, this proposal furthers the original goal of Unified Addresses to reduce fragmentation in the address ecosystem.
<p>Whenever any new feature is added, wallets have a choice whether or not to support that new feature. The point of Unified Address parsing is that wallets don’t have to upgrade to recognize a different address format as a valid Zcash address. Instead of returning a “Not a valid Zcash address” error, which could be confusing for users, they can return an error more like “This is a valid Zcash address, but this wallet does not support sending to it.” This can be used as a prompt to upgrade the wallet to a version (or alternative) that does support that feature.</p>
<p>For example: numerous wallets have already upgraded to being able to parse Unified Addresses. Those wallets, on seeing a Traceable Unified Address from Binance, will report to their users that the address is a valid Zcash address, but not yet supported by the wallet. Instead of a user thinking that Binance has made some error, they can contact the wallet’s developer and ask that the wallet be updated.</p>
<sectionid="cons-to-alternative-2"><h3><spanclass="section-heading">Cons to Alternative 2</span><spanclass="section-anchor"><arel="bookmark"href="#cons-to-alternative-2"><imgwidth="24"height="24"class="section-anchor"src="assets/images/section-anchor.png"alt=""></a></span></h3>
<li>Unified Address encoding is slightly more complex than the proposed TEX address encoding, and requires use of the F4Jumble encoding algorithm <aid="footnote-reference-24"class="footnote_reference"href="#f4jumble">13</a>. However, this can be readily mitigated by providing a purpose-built library for Traceable Unified Address encoding to Producers.</li>
<li>A Traceable Unified Address is somewhat longer than a TEX address, although not excessively so.</li>
<td><ahref="https://www.rfc-editor.org/info/bcp14">Information on BCP 14 — "RFC 2119: Key words for use in RFCs to Indicate Requirement Levels" and "RFC 8174: Ambiguity of Uppercase vs Lowercase in RFC 2119 Key Words"</a></td>
<td><ahref="https://forum.zcashcommunity.com/t/important-potential-binance-delisting/45954">Zcash Community Forum thread "Important: Potential Binance Delisting"</a></td>
</tr>
</tbody>
</table>
<tableid="hanh-profile"class="footnote">
<tbody>
<tr>
<th>3</th>
<td>'Zcash Community Forum user @hanh <<ahref="https://forum.zcashcommunity.com/u/hanh/summary">https://forum.zcashcommunity.com/u/hanh/summary</a>>'_</td>
<td><ahref="zip-0316#requirements-for-both-unified-addresses-and-unified-viewing-keys">ZIP 316: Unified Addresses and Unified Viewing Keys — Requirements for both Unified Addresses and Unified Viewing Keys</a></td>
<td><ahref="https://forum.zcashcommunity.com/t/unified-address-expiration/46564/6">Zcash Community Forum post describing motivations for address expiry</a></td>
