Shielded Transaction

A shielded transaction uses zero-knowledge proofs (see Kaavon's "Zero-Knowledge Proof" glossary definition) to hide sensitive details — typically the sender, recipient, and transferred amount — while still providing the network with cryptographic proof that the transaction is valid, follows all protocol rules, and doesn't create or destroy funds improperly. This is a stronger privacy guarantee than a confidential transaction (see Kaavon's "Confidential Transaction" glossary definition), which commonly hides only the amount while still revealing sender and recipient addresses.

Shielded transactions rely on a nullifier (see Kaavon's "Nullifier" glossary definition) mechanism to prevent the same hidden funds from being spent twice, since the network can't directly see which specific funds a shielded transaction consumes the way it can with a fully transparent transaction. Privacy-focused blockchains that support shielded transactions commonly let users choose between shielded and fully transparent transaction types, since shielded transactions typically require more computation to generate and verify than a standard transparent one.