Ethereum has expanded its technical stack on two fronts: the launch of zkAPI on mainnet and the rollout of the Cobalt upgrade for the Base layer-2 network. The Ethereum Foundation and the Open Anonymity Project introduced zkAPI on October 1, 2026, enabling users to pay for metered APIs without revealing their identity. Users deposit ETH or USDC into a vault contract in a single transaction, after which the balance exists as a private note. Software on the user's machine produces a zero-knowledge proof that a funded note covers the spend and has not been spent before, and every spend publishes a nullifier that exposes double-spending attempts without linking the payment to a specific note.
The first target use case is AI inference, where prompts are sensitive and billing trails currently tie requests to identities. zkAPI ships a local client exposing standard OpenAI and Ollama APIs, so existing apps can work by pointing at localhost. A payment server verifies a proof, mints a short-lived API key held only in memory, and charges the private balance when the key expires. The Ethereum Foundation describes a split where the payment server sees that a valid payment exists but not who made it, while the AI provider sees prompts but not the payer. The design was published on Ethereum Research by Davide Crapis and Vitalik Buterin, using Groth16 proofs on the BN254 curve, Poseidon hashes for commitments and nullifiers, and a 32-level Merkle tree for notes. The live vault contract on mainnet currently holds USDC credits, and withdrawals remain available onchain even if the zkAPI server disappears.
Alongside zkAPI, the Cobalt upgrade for Base is aimed at improving transaction throughput and network stability. Developers and market participants see these moves as potential catalysts for increased developer engagement and decentralized application deployment on Ethereum. The foundation also noted limits: zkAPI does not provide network anonymity, meaning users seeking stronger privacy should route through Tor, and shared prompt contents can still act as fingerprints. Confidential GPU computing for content privacy is still emerging.
Broader market context was mixed. USDT is reportedly returning to Bitcoin via Utexo, signaling shifts in stablecoin dynamics, while Balancer and Blast are set to shut down operations, reflecting ongoing competitive pressure. Visa is connecting stablecoin settlement infrastructure, another sign of traditional finance integration. Ethereum's new privacy and scaling features could position it to capture more user interest and developer activity as competition among smart contract platforms intensifies.
