Phoenix is a customized transaction model for the DUSK network, designed specifically for privacy and based on Unspent Transaction Outputs (UTXOs). This model employs zero-knowledge proofs (ZKP) to achieve confidential financial activities, enabling the network to verify transactions without disclosing sensitive information (such as sender/receiver identities or transaction amounts) to external observers.
• Phoenix's Core Mechanisms:
✓ UTXO: In Phoenix, the outputs of unspent transactions are called "notes." The network tracks these notes by storing their hash values in the leaf nodes of a Merkel tree.
✓ Privacy Achieved through ZKP: A transaction contains a "transaction proof" that verifies whether a user has the right to spend a note and whether the total amount input equals the total amount output, all without revealing the note's actual value.
✓ Dual-Key System: Phoenix employs a unique dual-element key system (private and public keys), allowing users to delegate the task of finding new banknotes to third parties without granting them permission to spend these assets.
✓ Privacy Protection Through Zero-Knowledge Proofs (ZKP): Obfuscation: Ensures that external observers cannot associate "deprecated indices" (key indicators of banknote usage) with specific banknotes or identities, thus preventing traceability.
• Evolution of Phoenix 2.0:
As of 2026, Dusk has implemented Phoenix 2.0, which improves the model to meet enterprise and regulatory requirements:
✓ Controlled Privacy: While transaction details are hidden from the public, Phoenix 2.0 allows recipients to explicitly identify senders. This meets the requirements of regulations such as MiCA and AMLD5 by providing "source determinism."
✓ Completely Confidential Refunds: Allows recipients to return funds to the transaction initiator without revealing transaction secrets. This feature aims to eliminate money laundering risks for enterprises.
✓ Smart Contract Integration: Phoenix 2.0 simplifies the sending and receiving of DUSK tokens between smart contracts, improving the usability of the native token in complex, privacy-conscious applications.
• Its role in the Dusk Ecosystem:
✓ DuskVM: Phoenix is the core transaction model of DuskVM, a layer designed specifically for applications that prioritize privacy and do not compromise anonymity.
✓ Hybrid Model: Phoenix works in conjunction with the public transaction model Moonlight. This dual-model approach allows users to switch between private (protected) and transparent transactions as needed.
✓ Citadel Infrastructure: Phoenix provides the cryptographic infrastructure for Dusk's Sovereign Self-Identity (SSI) system, Citadel, which allows users to privately store and verify customer authentication/anti-money laundering (KYC/AML) credentials.
