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Nomadic Labs just recently released a blog post talking about the sapling integrations in a new future protocol proposal. It mentions using smart contracts that have a shielded pool of XTZ used for private transactions and good practices says that one should not move funds from shielded to unshielded as that reveals the transaction privacy.

So the question is how does this shielded pool participate in proof of stake(baking) and specifically how will roll calculations be done? Will the contract itself delegate all the funds in the shielded pool(publicly known total) to one specific baker?

Can someone shed some light in how this will work?

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I am a developer at Nomadic. Firstly let me precise that there is no shielded tez as such with the next plan upgrade. There are contracts managing shielded token. Theses contracts can hold the tokens counterpart in tez and delegate those as usual. The shielded tokens do not participate in the consensus as usual.

Secondly you do raise an interesting and non trivial question of counting shielded token. This could be done with an additional privacy protocol but in the case of a proof of stake protocol the rewards you receive create a side channel that would reveal how much you hold. Here is a further reading solving that issue https://eprint.iacr.org/2018/1105 Please note that this work is theoretical for now and we have no plan for integration in the near future.

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