Update and rename 2026-08-FPI-TEE-covalidator.md to 2026-08-RFP-23-Fi… to 2026-08-RFP-23-Financial-Privacy-Inc-TEE-covalidator.md

CANTON DEVELOPMENT FUND · PROPOSAL

Field	Value
Author	Jonathan Rouach, Alexey Koren
Org	Financial Privacy Inc.
RFP	RFP-23
Champion	Shaul Kfir
Status	Approved
Created	2026-08-04
Approved	2026-11-12
PR	#642

Abstract

Canton already has an answer to single-node trust: host a party on several participant nodes and require a confirmation threshold. The network relies on this mechanism for its most critical party, and the Covalidation Service productizes it for wallets and applications. What multi-hosting leaves in place is trust in each operator. The operator of every hosting node can read that node's state, and a compromised or coerced operator can tamper with it. Adding a co-validator today also means giving one more organization full visibility into the party's transactions.

We propose an open-source (Apache-2.0) co-validator that closes both gaps: a Canton participant running inside a Trusted Execution Environment, with reproducible builds, published attestation measurements, and encrypted external state persistence. Its operator cannot read its state, cannot alter it, and cannot sign in its name. Any operator can deploy it, and any third party can verify exactly which code holds the data. Co-validation gains a node class that adds confirmations without adding readers. We will deliver reproducible images, deployment tooling, operator documentation, and a reference deployment, developed against DevNet and TestNet.

flowchart TD
    P["PARTY P<br/>hosted on {N1, N2, N3} · confirmation threshold: 2 of 3"]
    N1["N1 · participant<br/>operator A<br/>can read P's data"]
    N2["N2 · participant<br/>operator B<br/>can read P's data"]
    N3["N3 · TEE co-validator<br/>operator C<br/>sees ciphertext only"]
    M["mediator: ≥ 2 confirmations → commit<br/>any single compromised node can neither forge nor block a commit"]
    P --- N1
    P --- N2
    P --- N3
    N1 --> M
    N2 --> M
    N3 --> M
    classDef solid fill:#FCFDFC,stroke:#35566B,color:#1A1D1F
    classDef tee fill:#F8EDE5,stroke:#C24914,color:#1A1D1F
    class P,N1,N2,M solid
    class N3 tee

Figure 1 — A multi-hosted party with a TEE co-validator in its hosting set. N3 adds a confirmation without adding a reader. Diagram grammar, used throughout: solid border = inside the trust base, dashed = outside it, orange = cryptographic key material or the property it protects.

Specification

1. Objective

We will deliver a single, production-grade, open-source Canton co-validator: it runs a participant inside a TEE, participates as a Confirmation-level host for multi-hosted parties, and persists its state as encrypted artifacts outside the enclave.

Out of scope: compliance and disclosure logic, analytics integrations, and key-custody services. These are downstream consumers of the open interfaces defined here, not part of this proposal.

2. Implementation Mechanics

Packaging. We run a Splice participant and its PostgreSQL store as a single multi-process image inside a TEE Enclave. While PostgreSQL is running inside the enclave - database page files are stored outside of it in encrypted form. This ensures that nobody can see transaction details while solving the problem of database size that can grow significantly and not fit in the enclave. It is wrapped by a harness running inside an enclave, developed by FPI. It manages enclave access and acts as a proxy for certain operations. The deliverable is that image, host-side setup scripts (docker-compose and Terraform), and documentation; standard host components such as the vsock proxy are documented rather than shipped. A working prototype exists: the enclave-packaged node has run against a simulated Canton network, and we separately operate standard, non-enclave validator and TestNet participant nodes. That operating experience feeds directly into the tooling and runbooks this proposal delivers. Milestone 1 merges the two tracks: the enclave-packaged node synchronizing DevNet.

Attestation. We build reproducibly, publish PCR0/1/2 per release, and provide a verification guide so any third party can rebuild the image from source and check the measurements against a running enclave’s attestation document. Trust in the node reduces to trust in published, reviewable code. We use Splice binaries signed by Digital Asset as a core building block for reproducible builds.

Keys. Three keys, with three distinct jobs:

• Canton identity key. The co-validator's signing key, the identity whose confirmations the network counts. It is provisioned into the enclave and never leaves it. This is what makes the co-validation itself trustworthy: if this key were available outside the TEE, its holder could sign confirmations from anywhere.

• Sealed persistence key. Enclaves have no persistent storage, so state lives outside as encrypted snapshots. This key encrypts them, and it is released only to an enclave whose measurements match the published build. A new enclave instance restores from the latest snapshot instead of starting from zero, and no human ever holds the key.

• Audit key (optional). The enclave can additionally encrypt state exports to a configured public key. Local key generation ships in the repository, and self-custody is the default; an HSM or an external custodian is a configuration choice.

flowchart LR
    subgraph EC2["EC2 PARENT INSTANCE"]
        subgraph ENC["NITRO ENCLAVE"]
            direction TB
            NOTE["no disk · no NIC · vsock only · RAM-resident"]
            SP["Splice participant<br/>validates · confirms"]
            PG["PostgreSQL<br/>in RAM"]
            IK["CANTON IDENTITY KEY<br/>signs confirmations · never leaves the enclave"]
            PK["SEALED PERSISTENCE KEY<br/>released only to a build with matching PCRs"]
            AK["AUDIT KEY (OPTIONAL)<br/>operator-configured public key"]
            NOTE ~~~ SP
            SP ~~~ IK
            PG ~~~ PK
        end
    end
    NET["CANTON NETWORK<br/>counts the confirmations"]
    ST["EXTERNAL STORAGE<br/>ciphertext only<br/>snapshots · exports"]
    AH["SK_audit HOLDER<br/>self-custody (default) · HSM · service provider"]
    IK -- confirmations --> NET
    PK -- snapshots --> ST
    ST -. restore on restart .-> PG
    AK -- exports --> ST
    ST -- decrypt --> AH
    classDef solid fill:#FCFDFC,stroke:#35566B,color:#1A1D1F
    classDef key fill:#F8EDE5,stroke:#C24914,color:#1A1D1F
    classDef outer fill:none,stroke:#9AA4AB,stroke-dasharray:6 4,color:#5D666E
    classDef encl fill:#FCFDFC,stroke:#35566B,color:#1A1D1F
    classDef note fill:none,stroke:none,color:#5D666E,font-style:italic
    class NOTE note
    class SP,PG,NET,ST solid
    class IK,PK,AK,AH key
    class EC2 outer
    class ENC encl

Figure 2 — Three keys, three jobs. The identity key never leaves the enclave; the persistence key returns only to a build with matching measurements; the audit key is an optional, operator-configured interface whose private half sits wherever the operator chooses. The operator of the EC2 parent instance sees ciphertext and vsock traffic only.

Provisioning. The party that benefits from the co-validation, typically the asset issuer, provisions the keys. A fresh enclave generates a keypair and produces an attestation binding its public key to the measurements of the running build. The issuer verifies the attestation against the published values and injects the identity and persistence keys, encrypted to the attested public key. An independent infrastructure operator can therefore run the co-validator without ever being able to read its state or sign on its behalf. The same procedure applies to enclaves the issuer runs itself.

flowchart LR
    subgraph OP["INFRASTRUCTURE OPERATOR"]
        direction TB
        SPC["hosts · relays · reads nothing"]
        FE["FRESH ENCLAVE<br/>1 · boots the published image<br/>2 · generates keypair (pk, sk)<br/>sk never leaves the enclave<br/>5 · receives keys, decrypts inside, begins co-validating"]
        SPC ~~~ FE
    end
    IS["ISSUER — key provisioner<br/>4 · verifies the attestation against the published PCRs,<br/>then injects the identity and persistence keys · Enc(pk)"]
    PB["PUBLISHED BUILD<br/>source + PCR values"]
    FE -- "3 · attestation { PCRs, pk }" --> IS
    IS -. compare .- PB
    IS == "keys · Enc(pk)" ==> FE
    classDef solid fill:#FCFDFC,stroke:#35566B,color:#1A1D1F
    classDef outer fill:none,stroke:#9AA4AB,stroke-dasharray:6 4,color:#5D666E
    classDef ghost fill:none,stroke:none,color:#5D666E,font-style:italic
    class PB,FE,IS solid
    class OP outer
    class SPC ghost

The operator relays every byte of this exchange — and can read none of it, and can sign nothing.

Figure 3 — Attestation-verified key injection. Keys reach only an enclave that proves it is running the published build; the operator's role ends at hosting.

Co-validation. The node registers as a Confirmation-permission host for a multi-hosted party; its confirmations count toward the party’s k-of-n threshold, the same mechanism the network’s DSO party uses across Super Validators.

Tracked design decision. Whether audit-key exports use the raw participant store or a PQS-shaped projection that standard query tooling can read once decrypted. Snapshots for restore stay raw either way. We will document the choice and its rationale in the repository.

3. Architectural Alignment

Functionally, a TEE co-validator behaves exactly like any confirming participant in the existing co-validation model. It hosts parties, validates its view, and counts toward confirmation thresholds. Protocol, standards, and topologies are unchanged. The difference is the trust boundary: the node's operator sits outside it, so co-validation no longer requires showing another organization the party's transactions. Canton gains cooperative validation that preserves financial privacy.

RFP alignment. This proposal responds to RFP 23, Validator and Shared Infrastructure Security and Resilience, in the 2026–2028 Strategic Roadmap, which seeks "reusable tools, controls, and standards that improve the security, reliability, availability, and recoverability of Validator infrastructure," including "hardened configurations, … backup and recovery, … supply-chain security, or security controls for hosted Validator services." Against each of the RFP's terms:

• Hardened configuration and security controls for hosted Validators. The participant runs inside a TEE; the hosting operator cannot read its state, alter it, or sign in its name, and has neither direct full access to the Ledger API nor unrestricted access to debug logs (§6).

• Backup and recovery. State persists outside the enclave as encrypted snapshots under a sealed persistence key that only an attested build can unseal; a replacement enclave restores from the latest snapshot with no data loss (M2).

• Supply-chain security. Reproducible builds from Digital Asset–signed Splice binaries, published PCR values per release, and a guide so any third party can rebuild and verify what is running (M1).

• Broadly applicable across operators, self-operated and hosted. One image serves both cases: the same attestation-verified provisioning flow works whether the issuer runs the enclave itself or hands it to an independent infrastructure operator. M5 requires three independent organizations operating it.

• Complements rather than duplicates existing resilience work. We add a node class to Canton's existing multi-hosting and co-validation mechanism, with no protocol change, and build to run alongside the Covalidation Service.

The three-key model also contributes to RFP 26, Key Management and Signing Controls: it is a reference architecture for key custody in hosted and self-operated environments, with the identity key confined to the enclave, the persistence key released only to an attested build, and the audit key held in self-custody, an HSM, or with an external custodian at the operator's choice.

The work operates within CIP-0100 governance.

4. Backward Compatibility

Purely additive. A TEE co-validator joins a party's hosting set like any participant. No protocol changes; no changes required from other nodes; removal is an ordinary topology change. A natural follow-on, outside this proposal's scope, is protocol-level recognition of TEE attestations, so that the network itself, rather than the key provisioner, blesses valid enclave builds. We would be glad to draft that as a separate proposal once this model has proven itself.

5. Software upgrades

Operators are able to upgrade Splice to newest versions without a complicated process involving direct involvement of a Party. We assume trust to Splice binaries signed by Digital Asset. Based on this assumption, the harness inside an enclave will accept an upgrade command from an Operator and switch running Splice binaries internally. This is done without a Party directly authorising an update.

6. Limited access to the Canton node

Operators don’t have direct full access to Ledger API to protect Party’s privacy. Access to debug logs is also limited. For cases when selective access is required, e.g. for mapping a Party to a participant - there is a command in harness that will deliver required call data and signatures to the node. This may include, for example, enabling temporary access to debug logging for operators.

Milestones

#	MILESTONE	EST. DELIVERY	FOCUS AND DELIVERABLES
M1	Attestable node on DevNet	Week 3	Enclave-packaged Splice participant synchronizing DevNet; reproducible build pipeline; published PCR values and third-party verification guide
M2	Encrypted persistence and provisioning	Week 6	Snapshot/restore via the sealed persistence key; attestation-verified key injection; audit-key export path with local keygen; restart without data loss
M3	Confirming co-validator	Week 9	Confirmation-level hosting of a multi-hosted party on TestNet, with the enclave node's confirmations counted toward the threshold
M4	Hardening and independent review	Week 12	Threat model; independent security review of the enclave image, key handling, and provisioning flow, with remediations; Splice upgrade runbook demonstrated
M5	Adoption	Week 16	Reference deployment, operator documentation, onboarding support; at least three independent organizations operating co-validators. This milestone also carries the twelve-month post-release maintenance and support commitment for all delivered artifacts

Committed delivery is three months after the estimated delivery for M1–M4, and twenty-four months after for M5.

Acceptance Criteria

Each criterion is verifiable by parties other than us.

• M1. A reviewer outside our team reproduces the build from source and confirms the resulting PCR values match both the published values and a live enclave's attestation document.

• M2. A co-validator runs at least 24 hours of continuous sync, including at least one full restart from an encrypted snapshot with no state loss. An operator demonstrates export decryption with a self-generated audit key. The parent instance and its operator see only ciphertext.

• M3. On TestNet, a party multi-hosted across two or more participants, one of them the enclave node, commits transactions with the enclave node's confirmations counted toward its threshold.

• M4. The security review report is published together with remediations; an upgrade across two Splice versions is executed per the runbook.

• M5. At least three organizations, independent of one another and of Financial Privacy Inc., each use the TEE co-validator on MainNet for at least 30 days.

Funding

Total: 4,590,000 CC (reference ≈ USD 450,000 at $0.098 on 2026-10-27; we will re-strike CC amounts at the prevailing price on submission).

• Milestone 1: 430,000 CC upon committee acceptance

• Milestone 2: 575,000 CC upon committee acceptance

• Milestone 3: 715,000 CC upon committee acceptance

• Milestone 4: 575,000 CC upon committee acceptance

• Milestone 5 (adoption): 2,295,000 CC upon committee acceptance

Funding covers engineering, infrastructure (enclave-capable instances, multi-environment nodes, storage), an independent third-party security review, documentation, and a twelve-month post-M5 maintenance and support commitment for the released artifacts. Project duration is approximately four months, so milestone amounts are fixed in CC under the fund's terms for projects of six months or less.

Adoption. Milestones 1–4 are priced on engineering effort. Milestone 5 is priced on outcome, not on the four weeks between M4 and M5: it pays only once independent organizations are running the co-validator. Half of the request is therefore contingent on adoption by others.

Maintenance and support. The Milestone 5 payment also covers the reference deployment, operator onboarding, and twelve months of maintenance and support for the released artifacts after M5.

Co-Marketing

We will coordinate announcements with the Foundation at M1 and M5, publish a technical series suitable for Foundation channels — the architecture, a walkthrough of independently verifying the attestation, and the operations runbook — run a hands-on workshop for prospective operators during M5, and submit conference talks on TEE-hosted co-validation.

Motivation

Institutional participants face a recurring question: why should a counterparty trust a ledger view maintained by nodes you operate? Multi-hosting answers it, and every current form of it, running more nodes yourself, adding a partner, or engaging a managed service, extends the circle of organizations that can read the party's data and must be vetted. A TEE co-validator adds a confirmation without extending that circle. Beneficiaries: wallets, applications, issuers, and institutions hosting parties on Canton; infrastructure operators who want to offer co-validation without asking customers for trust or visibility; and the network itself, whose trust story strengthens without any protocol change.

Rationale

Co-validation through multi-hosted parties and thresholds is already the network's mechanism, and the Covalidation Service already offers it as a managed product. We extend that model with a new node class rather than building a parallel trust system, and we build the artifact to work alongside existing managed offerings, applications, and asset standards.

Alternatives we considered: proving node execution with zero-knowledge proofs is not practical for a full participant today, and multi-party computation across operators redistributes operator trust rather than removing it. A TEE with reproducible builds and remote attestation is deployable now on commodity cloud infrastructure.

Disclosure. We operate a commercial key-custody and selective-disclosure business at Financial Privacy Inc. and expect to offer it as one optional consumer of the audit-key interface specified here. The interface is open, local self-custody ships as part of this project, and nothing in the funded work depends on our services.

Financial Privacy Inc. · prepared 2026-08-04

Proposal text CC0-1.0 per canton-dev-fund repository policy · software artifacts Apache-2.0