Paper 2026/917

Obscura: Privacy-Preserving Protocol for the Algorand Blockchain Using LSAG Ring Signatures

Abstract

While public blockchains provide transparent and auditable transaction histories, they inherently compromise user privacy. Existing privacy-enhancing protocols, such as those deployed on Ethereum, typically rely on succinct zero-knowledge proofs (zk-SNARKs) to obscure the transaction graph. However, implementing comparable cryptographic guarantees on high-throughput blockchains like Algorand is challenging due to strict per-call execution budgets and the state contention introduced by global Merkle accumulators. This paper presents Obscura, a decentralized, non-custodial privacy protocol tailored for constrained smart contract environments. Obscura achieves transaction anonymity using Linkable Spontaneous Anonymous Group (LSAG) signatures over the BN254 elliptic curve, verified entirely on-chain. To overcome limitations of the Algorand Virtual Machine (AVM), we introduce a novel state model that leverages Algorand's Box Storage for $O(1)$ commitment membership checks, eliminating the need for global Merkle accumulators, and a dynamic opcode-budget expansion mechanism via pooled inner application calls. Our implementation demonstrates that signer-ambiguous privacy is practical and efficient on Algorand without relying on trusted setups or succinct proofs. Obscura provides a robust privacy layer for transparent ledgers, bridging the gap between high-throughput blockchain architectures and the dual requirements of cryptographic privacy and selective auditability.