This paper describes Darlin, a recursive zk-SNARK that Horizen created to handle the computation of block and epoch proofs in a Latus sidechain. Latus is a sidechain construction within Zendoo, which uses recursive proof composition for the generation of a succinct proof of the correctness of the interoperable blockchain’s current state. In this process, the proofs provided for each transaction that happened in the interoperable blockchain are computed recursively by a group of provers. The transactions are then merged to end up with one unique proof for the epoch.

This paper details the incentive scheme of the latus-enabled sidechain first introduced in the Zendoo white paper. This reward scheme is an essential element for a fully decentralized system and allows the creation of a balanced mechanism of reward distribution. The scheme also promotes stable system operation and honest participation. The ideas described in the paper can also be adopted by other SNARK-based blockchains to incentivize proof creation.

Sidechains are an appealing innovation for enhancing existing blockchain systems. It enables blockchain scalability and extensibility. The value of sidechains is underestimated, and we seek to develop this area. This paper introduces Zendoo, a universal construction for Bitcoin-like blockchain systems. The paper also provides a specific sidechain construction, Latus, that leverages zk-SNARK techniques to establish decentralized and verifiable cross-chain transfers. Both constructions enable the creation and communication with different sidechains without knowing their internal structure.

Horizen is a distributed blockchain platform enabling truly decentralized applications. The system is composed of the main Horizen blockchain and its well established tradable ZEN token, a core protocol that behaves as a simple ”truth engine”, and decoupled sidechains that are fully generalizable in consensus and any other design characteristics.

The longest chain rule, or Nakamoto Consensus, worked well in the relatively decentralized environment in which it was introduced in 2009. Mining technology has evolved over the years, thus making it financially feasible to launch 51% attacks on operational public blockchains networks. Horizen proposes a solution to modify the longest chain rule to make it financially infeasible to conduct such attacks while also allowing the network to dynamically adjust parameters.

We propose a novel sidechain construction tailored to be compatible with the Horizen blockchain and designed for conducting secure and decentralized cross-chain transfers without requiring the mainchain nodes to track sidechains to verify them. The proposed scheme can also be adopted for other similar blockchain systems. We show that our cross-ledger transfer mechanism is secure under certain plausible assumptions.