From 9223ab61fb7e799a202cef9d1c6626943c2478bb Mon Sep 17 00:00:00 2001
From: Hitakshi Arora <hitakshiarora005@gmail.com>
Date: Sun, 12 Jul 2026 10:06:33 +0530
Subject: [PATCH] fix(wallet): decrypt the private balance with the SDK's own
 eERC key

The eERC SDK's register() ignores the decryptionKey passed to the EERC
constructor and derives its own from a deterministic wallet signature
(generateDecryptionKey), binding the on-chain public key and the
ElGamal-encrypted balance to THAT key. Our read path constructed a fresh
EERC with account.eercDecryptionKey and never called generateDecryptionKey,
so calculateTotalBalance decrypted with the wrong key, failed its eGCT
verify, and every shielded balance rendered $0.00 even though the deposit
was on-chain (activity showed it correctly).

Have createEerc install the SDK's own key up front. The signature is local
(self-custody key) and deterministic, so it is stable across sessions and
matches whatever key registration used. Verified end-to-end on Fuji: a
fresh wallet that deposited 0.04 USDC now decrypts to 40000 (was 0).
---
 apps/wallet/src/lib/eerc.shield.test.ts |  3 +++
 apps/wallet/src/lib/eerc.ts             | 13 ++++++++++++-
 2 files changed, 15 insertions(+), 1 deletion(-)

diff --git a/apps/wallet/src/lib/eerc.shield.test.ts b/apps/wallet/src/lib/eerc.shield.test.ts
index 34f7d7e..a4a6e89 100644
--- a/apps/wallet/src/lib/eerc.shield.test.ts
+++ b/apps/wallet/src/lib/eerc.shield.test.ts
@@ -19,6 +19,7 @@ const eercMocks = vi.hoisted(() => {
   const withdraw = vi.fn();
   const transfer = vi.fn();
   const calculateTotalBalance = vi.fn();
+  const generateDecryptionKey = vi.fn(async () => `0x${"a".repeat(64)}`);
 
   class MockEERC {
     client = publicClient;
@@ -29,6 +30,7 @@ const eercMocks = vi.hoisted(() => {
     withdraw = withdraw;
     transfer = transfer;
     calculateTotalBalance = calculateTotalBalance;
+    generateDecryptionKey = generateDecryptionKey;
   }
 
   return {
@@ -36,6 +38,7 @@ const eercMocks = vi.hoisted(() => {
     calculateTotalBalance,
     deposit,
     fetchPublicKey,
+    generateDecryptionKey,
     publicClient,
     register,
     transfer,
diff --git a/apps/wallet/src/lib/eerc.ts b/apps/wallet/src/lib/eerc.ts
index aaea8cc..feeacfa 100644
--- a/apps/wallet/src/lib/eerc.ts
+++ b/apps/wallet/src/lib/eerc.ts
@@ -123,7 +123,7 @@ export async function createEerc(account: BenzoAccount): Promise<EERC | null> {
   if (!ENCRYPTED_ERC_ADDRESS || !REGISTRAR_ADDRESS) return null;
   const EERCClass = await loadEERC();
   const { publicClient, walletClient } = createViemClients(account);
-  return new EERCClass(
+  const eerc = new EERCClass(
     publicClient,
     walletClient,
     ENCRYPTED_ERC_ADDRESS,
@@ -132,6 +132,17 @@ export async function createEerc(account: BenzoAccount): Promise<EERC | null> {
     EERC_CIRCUIT_URLS,
     account.eercDecryptionKey,
   );
+  // The eERC SDK does NOT use the `decryptionKey` we pass to the constructor for
+  // anything that touches chain state: register() derives its OWN key via
+  // generateDecryptionKey() (a deterministic wallet signature) and binds the
+  // on-chain public key + ElGamal-encrypted balance to THAT key. If we then
+  // decrypt with our own `account.eercDecryptionKey`, calculateTotalBalance()'s
+  // eGCT verify fails and every private balance reads $0. So let the SDK derive
+  // and install its own key (and matching publicKey) up front — the signature is
+  // local (self-custody key) and deterministic, so it's stable across sessions
+  // and matches whatever key registration used.
+  await eerc.generateDecryptionKey();
+  return eerc;
 }
 
 function eercPublicClient(eerc: EERC): PublicClient {