Charles Hoskinson Tests ZK Recovery Smart Contract for Cardano Wallet Security

Charles Hoskinson, the founder of Cardano, said on June 26 that he has started experimenting with a recovery smart contract for Cardano wallets. The model would use a zero-knowledge proof to confirm that a user possesses the 24 keywords that generate a wallet, allowing a contract to distribute Ada and Cardano native tokens from a shared pool. Hoskinson said he plans to sync with Pi Lanningham, Sebastien Guillemot and the Midnight team on what is discovered.

Hoskinson Describes an Early ZK Recovery Experiment

Hoskinson’s post described an early technical experiment, not a finished product, official wallet feature or deployed protocol. The proposed recovery smart contract would “vend out” funds from a pool after verifying a zero-knowledge proof tied to the possession of the 24 wallet keywords.

In that model, a user would not need to publish a seed phrase or hand recovery words to a third party. Instead, the user would generate a cryptographic proof that confirms knowledge of the required secret. The smart contract would verify the proof and, if valid under the contract’s rules, perform the recovery-related action.

Hoskinson added two short replies that gave more context to the idea. In one response, he said the approach “solves the white hat issue.” In another, he wrote that “the blockchain becomes the custodian.” Those comments point to a recovery model where part of the process moves from manual coordination and trusted intermediaries toward on-chain verification.

The technical design has not been published. There are no public details yet on which zero-knowledge system would be used, how the pool would be funded, who would define distribution rules, how abuse would be prevented or whether the approach would be compatible with existing wallet implementations.

SecondFi Incident Puts Wallet Recovery Back in Focus

The experiment appeared days after the security incident involving SecondFi, the Cardano wallet formerly known as Yoroi. SecondFi allows users to manage funds, send and receive tokens and interact with the Cardano ecosystem. The incident has renewed attention on how self-custody systems handle recovery when the problem is connected to wallet infrastructure rather than the Cardano protocol itself.

SecondFi confirmed that three external attacks drained roughly 16 million ADA from 374 wallets. The root cause was described as a flaw in its proprietary wallet generation software. A further 129 million ADA was routed to a third-party custodian before attackers could reach it. Some security and on-chain sources have discussed broader estimates of potentially affected funds, but those figures should be separated from the officially confirmed drained amount.

Hoskinson did not directly state that his ZK recovery experiment was a response to the SecondFi incident. The connection is contextual, based on timing and subject matter. Both developments relate to the same broader issue, safer wallet recovery and emergency handling in a self-custody environment.

For Cardano users, recovery remains one of the hardest parts of wallet security. A lost seed phrase, compromised wallet generation process or unsafe emergency recovery flow can undermine the benefits of direct asset control. A zero-knowledge recovery model would aim to preserve privacy while allowing a contract to verify that a user has the required recovery secret.

Pi Lanningham, Guillemot and Midnight Add the Technical Context

Hoskinson said he would sync with Pi Lanningham, Sebastien Guillemot and the Midnight team on the findings. Lanningham, known on X as @Quantumplation, is CTO of Sundae Labs and operator of the Cardano stake pool 314pool. His work in Cardano DeFi and technical education provides relevant context for a discussion about smart contract recovery design.

Guillemot is a long-time Cardano developer associated with Paima Studios and dcSpark. Midnight has also featured him in its developer ecosystem content, where his work was discussed in connection with blockchain gaming and zero-knowledge technology. His inclusion connects the recovery topic to wallet infrastructure, developer tooling and application-level design.

Midnight is a privacy-focused network connected to the Cardano ecosystem. Its public materials describe work around zero-knowledge applications, programmable data protection and developer tooling for data-protecting decentralized applications. That makes Midnight relevant to a recovery concept where sensitive information must be proven without being revealed.

The role of Midnight in this specific experiment has not been technically defined. Hoskinson has confirmed consultation with the Midnight team, but not the use of a specific Midnight tool, runtime or production architecture.

The current experiment is therefore best understood as an early Cardano wallet recovery initiative. Further development would require technical definition around how the proof is generated, how the pool is governed, how claims are validated and how the model avoids turning recovery into a new custody risk.