How does the Ethereum AI privacy system work?
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Ethereum co-founder Vitalik Buterin and AI lead Davide Crapis propose a way for users to interact with large language models (LLMs) privately while ensuring providers are paid and protected from spam. Users deposit funds into a smart contract, then make API calls anonymously. Using zero-knowledge proofs and rate-limit nullifiers, requests remain unlinked to the user or each other, while the provider receives guaranteed payment for every valid query.
This approach avoids the pitfalls of identity-based access (which exposes personal data) and per-request on-chain payments (which are slow, costly, and traceable).
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