Ethereum developers propose cryptographic system to anonymize LLM API use while enforcing payments and preventing abuse

Two Ethereum contributors have outlined a technical design intended to reconcile two competing demands: strong user privacy when calling hosted language models, and reliable anti-spam/payment guarantees for service operators. They observe that current approaches either force users to reveal identifying payment credentials or require per-call on-chain settlements that are too slow and transparent for many use cases. Their architecture centralizes prepaid balances in a smart contract and issues cryptographic tickets that prove valid paid usage without linking individual calls to the depositor. Rate-limit nullifiers and a running ticket index are used to let servers verify that cumulative spending remains within allowed bounds while preserving unlinkability between requests. To discourage double-spends, jailbreaking, and policy violations, the proposal layers a dual-stake deterrent: misbehavior can result in funds being claimed or burned, and those slashing events and associated evidence are recorded on chain for public inspection. The authors illustrate the model with an example where a user deposits a fixed token amount (example: 100 USDC) and consumes hundreds of queries (example: 500 calls) without exposing which caller generated which prompt. Operationally, the scheme shifts enforcement work onto cryptographic verification and community-aware slashing rather than identity-based moderation. That reduces direct privacy exposure of usage logs while still creating an auditable trail when rules are broken. Practical obstacles remain: integrating such flows into existing LLM hosting stacks, managing gas and latency for on-chain actions, and defining robust evidence standards so slashes are fair and not weaponized. Regulators and platform operators will need to assess whether anonymous-but-accountable payment channels comply with AML, content law, and contractual obligations. If implemented carefully, the proposal could let enterprise and privacy-sensitive users interact with hosted models without surrendering linkable logs, while giving providers economic protection against abuse. Adoption will depend on clear developer tooling, interoperable standards, and incentives for hosts to accept ticket-based requests rather than conventional API billing.