A new protocol, Sigma, is expected to replace Zerocoin in ZCoin. The team made the announcement on Medium, explaining what Sigma is and why it will be replacing Zerocoin. Testnet on Sigma is expected to begin before the end of Q1 2019.

In order to understand what Sigma is, it is expedient to briefly explain what Zerocoin is and how the trusted setup is implemented in ZCoin.

Zerocoin is a privacy protocol which allows transaction anonymity. With zero-knowledge setups, anonymity sets can exceed thousands of anonymity schemes. However, despite these benefits zero-knowledge coins required a ‘trusted setup.’ What this means is that certain parameters need to be generated and thereafter destroyed during a transaction.

One of the downsides of a trusted setup is at a malicious actor can generate infinite amount of coins out of thin air if these initial parameters are leaked.

Additionally, Zcoin’s Zerocoin protocol uses RSA accumulators which function by generating two large prime numbers.

The Sigma protocol will be solving the problems of having a trusted setup, introduce elliptic curve groups in place of RSA accumulators and reduce the proof size of Zerocoin from 25 kb to 1.5 kb. Sigma will also lead to improved security.