diff --git a/coordination-layer/constraint.py b/coordination-layer/constraint.py
deleted file mode 100644
index 76c8066..0000000
--- a/coordination-layer/constraint.py
+++ /dev/null
@@ -1,8 +0,0 @@
-from dataclasses import dataclass
-
-
-@dataclass
-class Constraint:
-
-    def hash(self) -> bytes:
-        raise NotImplementedError()
diff --git a/coordination-layer/constraints/__init__.py b/coordination-layer/constraints/__init__.py
index e69de29..6397f98 100644
--- a/coordination-layer/constraints/__init__.py
+++ b/coordination-layer/constraints/__init__.py
@@ -0,0 +1,2 @@
+from .constraint import Constraint
+from .vacuous import Vacuous
diff --git a/coordination-layer/constraints/constraint.py b/coordination-layer/constraints/constraint.py
new file mode 100644
index 0000000..17eb8ac
--- /dev/null
+++ b/coordination-layer/constraints/constraint.py
@@ -0,0 +1,15 @@
+"""
+This module defines the Constraint interface.
+
+Constraints are the predicates that must be satisfied in order to destroy or create a note.
+
+The logic of a constraint is implemented in a ZK Circuit, and then wrapped in a python interface
+for interacting with the rest of the the system.
+"""
+
+from dataclasses import dataclass
+
+
+class Constraint:
+    def hash(self) -> bytes:
+        raise NotImplementedError()
diff --git a/coordination-layer/constraints/vacuous.py b/coordination-layer/constraints/vacuous.py
new file mode 100644
index 0000000..b41b471
--- /dev/null
+++ b/coordination-layer/constraints/vacuous.py
@@ -0,0 +1,15 @@
+from noir_constraint import NoirProof
+
+from constraints import Constraint
+
+
+class Vacuous(Constraint):
+    """
+    This is the empty constraint, it return true for any proof
+    """
+
+    def prove(self) -> NoirProof:
+        return NoirProof("vacuous")
+
+    def verify(self, _proof: NoirProof):
+        return True
diff --git a/coordination-layer/crypto.py b/coordination-layer/crypto.py
index 2ae1daa..9e545fa 100644
--- a/coordination-layer/crypto.py
+++ b/coordination-layer/crypto.py
@@ -1,4 +1,4 @@
-from keum import grumpkin
+from keum import grumpkin, PrimeFiniteField
 import poseidon
 
 
@@ -9,6 +9,10 @@ Point = grumpkin.AffineWeierstrass
 Field = grumpkin.Fq
 
 
+class Field(PrimeFiniteField):
+    ORDER = poseidon.prime_64
+
+
 def poseidon_grumpkin_field():
     # TODO: These parameters are made up.
     # return poseidon.Poseidon(
@@ -19,11 +23,23 @@ def poseidon_grumpkin_field():
     #     t=9,
     # )
     h, _ = poseidon.case_simple()
+    # h, _ = poseidon.case_neptune()
+    # h = poseidon.Poseidon(
+    #     p=Field.ORDER,
+    #     security_level=128,
+    #     alpha=5,
+    #     input_rate=3,
+    #     t=9,
+    # )
 
-    # TODO: this is a hack to make poseidon take in arbitrary input length.
+    # TODO: this is hacks on hacks to make poseidon take in arbitrary input length.
     # Fix is to implement a sponge as described in section 2.1 of
     # https://eprint.iacr.org/2019/458.pdf
     def inner(data):
+        assert all(
+            isinstance(d, Field) for d in data
+        ), f"{data}\n{[type(d) for d in data]}"
+        data = [d.v for d in data]
         digest = 0
         for i in range(0, len(data), h.input_rate - 1):
             digest = h.run_hash([digest, *data[i : i + h.input_rate - 1]])
@@ -36,7 +52,7 @@ POSEIDON = poseidon_grumpkin_field()
 
 
 def prf(domain, *elements):
-    return POSEIDON(str_to_vec(domain) + elements)
+    return POSEIDON([*_str_to_vec(domain), *elements])
 
 
 def comm(*elements):
@@ -48,6 +64,10 @@ def comm(*elements):
     raise NotImplementedError()
 
 
+def pederson_commit(value: Field, blinding: Field, domain: Point) -> Point:
+    return value * Point.generator() + blinding * domain
+
+
 def merkle_root(data) -> Field:
     data = _pad_to_power_of_2(data)
     nodes = [CRH(d) for d in data]
@@ -64,8 +84,8 @@ def _pad_to_power_of_2(data):
     if 2**max_lower_bound == len(data):
         return data
     to_pad = 2 ** (max_lower_bound + 1) - len(data)
-    return data + [0] * to_pad
+    return data + [Field.zero()] * to_pad
 
 
 def _str_to_vec(s):
-    return list(map(ord, s))
+    return [Field(ord(c)) for c in s]
diff --git a/coordination-layer/note.py b/coordination-layer/note.py
index 9e43ed5..5214b34 100644
--- a/coordination-layer/note.py
+++ b/coordination-layer/note.py
@@ -1,11 +1,15 @@
 from dataclasses import dataclass
 
-from crypto import Field, Point
+from crypto import Field, Point, prf
+
+from constraints import Constraint
 
 
 @dataclass
-class Commitment:
-    cm: bytes
+class NoteCommitment:
+    cm: Field
+    blinding: Field
+    zero: Field
 
 
 @dataclass
@@ -13,47 +17,98 @@ class Nullifier:
     nf: bytes
 
 
-@dataclass
-class SecretNote:
-    note: InnerNote
-    nf_sk: Field
-
-    def to_public_note(self) -> PublicNote:
-        return PublicNote(
-            note=self.note,
-            nf_pk=Point.generator().mul(self.nf_sk),
-        )
+def nf_pk(nf_sk) -> Field:
+    return prf("CL_NOTE_NF", nf_sk)
 
 
-@dataclass
-class PublicNote:
-    note: InnerNote
-    nf_pk: Point
-
-    def commit(self) -> Commitment:
-        return crypto.COMM(
-            self.note.birth_constraint.hash(),
-            self.note.death_constraints_root(),
-            self.note.value,
-            self.note.unit,
-            self.note.state,
-            self.note.nonce,
-            self.nf_pk,
-        )
-
-
-@dataclass
+@dataclass(unsafe_hash=True)
 class InnerNote:
     value: Field
     unit: str
     birth_constraint: Constraint
-    death_constraints: set[Constraint]
+    death_constraints: list[Constraint]
     state: Field
     nonce: Field
-    rand: Field
+    rand: Field  # source of randomness for note commitment
+
+    def r(self, index: int):
+        prf("CL_NOTE_COMM_RAND", self.rand, index)
+
+    def verify_value(self) -> bool:
+        return 0 <= self.value and value <= 2**64
+
+    @property
+    def fungibility_domain(self) -> Field:
+        """The fungibility domain of this note"""
+        return crypto.prf(
+            "CL_NOTE_NULL", self.birth_constraint.hash(), *crypto.str_to_vec(unit)
+        )
 
     def death_constraints_root(self) -> Field:
         """
         Returns the merkle root over the set of death constraints
         """
         return crypto.merkle_root(self.death_constraints)
+
+
+@dataclass(unsafe_hash=True)
+class PublicNote:
+    note: InnerNote
+    nf_pk: Field
+
+    def blinding(self, rand: Field) -> Field:
+        """Blinding factor used in balance commitments"""
+        return prf("CL_NOTE_BAL_BLIND", rand, self.nonce, self.nf_pk)
+
+    def commit(self) -> Field:
+        # blinding factors between data elems ensure no information is leaked in merkle paths
+        return crypto.merkle_root(
+            self.note.r(0),
+            self.note.birth_constraint.hash(),
+            self.note.r(1),
+            self.note.death_constraints_root(),
+            self.note.r(2),
+            self.note.value,
+            self.note.r(3),
+            self.note.unit,
+            self.note.r(4),
+            self.note.state,
+            self.note.r(5),
+            self.note.nonce,
+            self.note.r(6),
+            self.nf_pk,
+        )
+
+
+@dataclass(unsafe_hash=True)
+class SecretNote:
+    note: InnerNote
+    nf_sk: Field
+
+    def to_public_note(self) -> PublicNote:
+        return PublicNote(note=self.note, nf_pk=nf_pk(self.nf_sk))
+
+    def nullifier(self):
+        """
+        The nullifier that must be provided when spending this note along
+        with a proof that the nf_sk used to compute the nullifier corresponds
+        to the nf_pk in the public note commitment.
+        """
+        return prf("NULLIFIER", self.nonce, self.nf_sk)
+
+    def balance(self, rand):
+        """
+        Returns the pederson commitment to the notes value.
+        """
+        return crypto.pederson_commit(
+            self.note.value, self.blinding(rand), self.note.fungibility_domain
+        )
+
+    def zero(self, rand):
+        """
+        Returns the pederson commitment to zero using the same blinding as the balance
+        commitment.
+        """
+        return crypto.pederson_commit(
+            0, self.blinding(rand), self.note.fungibility_domain
+        )
diff --git a/coordination-layer/notes.org b/coordination-layer/notes.org
new file mode 100644
index 0000000..1dcf09c
--- /dev/null
+++ b/coordination-layer/notes.org
@@ -0,0 +1,73 @@
+* Open Issues
+
+** Why does PartialTransaction have a "blinding"?
+
+I believe it should only have a derived balance field.
+
+** Poseidon Constants for Grumpkin Field
+
+Generating the poseidon constants for the Grumpkin curve is very slow, like takes 1 minute.
+
+I need to pre-generate these to make the curve work.
+
+
+** Solvers need the value of a note in order to solve it
+
+- do users provide a merkle proof showing the value is legit?
+
+- merkle proofs also reveal positional information.
+- if we are to reveal partial information to solvers
+  we will need to blind the other leaf nodes of the tree:
+
+  Note = VALUE || UNIT || ....
+
+  com =      ..root..
+          /          \
+   h(h(V), h(U))     ...
+     /     \
+ h(VALUE) h(UNIT)
+    |       |
+  VALUE    UNIT
+
+  Revealing the value's merkle path would reveal h(UNIT) and since UNIT is well known, h(UNIT) is also easily computable.
+
+  Thus each component of the Note should have a blinding factor
+  Note = (r1, VALUE) || (r1, UNIT) || ....
+
+** Transferring requires recipients sk
+
+We need to be able to create a partial transaction where we don't know the output note's nullifier.
+
+What we need: A public note + balance commitment
+
+balance commitment is computed as
+
+```
+value <- known by transaction builder
+unit <- known by transaction builder
+blinding <- PRF_r(nullifier) !!!! <-- this is where the issue is
+funge <- hash_to_curve(Unit)
+balance_commit <- pedersen_commit(value, blinding, funge)
+```
+
+Why is the blinding a PRF of the nullifier? Can't we simply use the randomness of the transaction to derive a blinding factor?
+
+*** How does zcash solve this?
+
+They provide specific randomness for this when building the transaction.
+
+
+** Note Unit should be a string hashed to curve point when needed.
+We want human readable units (i.e. "ETH" "NMO")
+
+I've gone and denoted it as bytes.
+
+
+* Solved
+** Do we need note.randomness?
+
+It's currently used in the note commitment. But perhaps it's not really necessary?
+
+- it allows you to get away form content based addressing, this may be necessary for total privacy.
+
+Yes, we need this
diff --git a/coordination-layer/partial_transaction.py b/coordination-layer/partial_transaction.py
new file mode 100644
index 0000000..84fb46e
--- /dev/null
+++ b/coordination-layer/partial_transaction.py
@@ -0,0 +1,31 @@
+from dataclasses import dataclass
+
+from note import PublicNote, SecretNote
+from crypto import Field, Point
+
+
+@dataclass
+class Output:
+    note: PublicNote
+
+    # pre-computed balance and zero commitment "SecretNote" here.
+    balance: Field
+    zero: Field
+
+
+@dataclass(unsafe_hash=True)
+class PartialTransaction:
+    inputs: list[SecretNote]
+    outputs: list[Output]
+    rand: Field
+
+    def balance(self) -> Point:
+        output_balance = sum(n.balance for n in self.outputs)
+        input_balance = sum(n.note.balance() for n in self.inputs)
+        return output_balance - input_balance
+
+    def blinding(self) -> Field:
+        return sum(outputs.blinding(self.rand)) - sum(outputs.blinding(self.rand))
+
+    def zero(self) -> Field:
+        return sum(outputs.note.zero(self.rand)) - sum(inputs.zero(self.rand))
diff --git a/coordination-layer/test_transfer.py b/coordination-layer/test_transfer.py
new file mode 100644
index 0000000..c92d930
--- /dev/null
+++ b/coordination-layer/test_transfer.py
@@ -0,0 +1,61 @@
+from unittest import TestCase
+from dataclasses import dataclass
+
+from crypto import Field, prf
+from note import InnerNote, PublicNote, SecretNote, nf_pk
+from partial_transaction import PartialTransaction
+from transaction_bundle import TransactionBundle
+
+import constraints
+
+
+class TestTransfer(TestCase):
+    def test_1_to_1_transfer(self):
+        # Alice wants to transfer ownership of a note to Bob.
+
+        @dataclass
+        class User:
+            sk: Field
+
+            @property
+            def pk(self) -> Field:
+                return nf_pk(self.sk)
+
+        alice = User(sk=Field.random())
+        bob = User(sk=Field.random())
+
+        alices_note = SecretNote(
+            note=InnerNote(
+                value=100,
+                unit="NMO",
+                birth_constraint=constraints.Vacuous(),
+                death_constraints=[constraints.Vacuous()],
+                state=Field.zero(),
+                nonce=Field.random(),
+                rand=Field.random(),
+            ),
+            nf_sk=alice.sk,
+        )
+
+        bobs_note = PublicNote(
+            note=InnerNote(
+                value=100,
+                unit="NMO",
+                birth_constraint=constraints.Vacuous(),
+                death_constraints=[constraints.Vacuous()],
+                state=Field.zero(),
+                nonce=Field.random(),
+                rand=Field.random(),
+            ),
+            nf_pk=bob.pk,
+        )
+
+        ptx = PartialTransaction(
+            inputs=[alices_note],
+            outputs=[alices_note],
+            rand=Field.random(),
+        )
+
+        bundle = TransactionBundle(bundle=[ptx])
+
+        assert bundle.verify()
diff --git a/coordination-layer/transaction_bundle.py b/coordination-layer/transaction_bundle.py
new file mode 100644
index 0000000..899caed
--- /dev/null
+++ b/coordination-layer/transaction_bundle.py
@@ -0,0 +1,16 @@
+from dataclasses import dataclass
+
+from partial_transaction import PartialTransaction
+from crypto import Field
+
+
+@dataclass
+class TransactionBundle:
+    bundle: list[PartialTransaction]
+
+    def is_balanced(self) -> bool:
+        # TODO: move this to a NOIR constraint
+        return Field.zero() == sum(ptx.balance() - ptx.zero() for ptx in self.bundle)
+
+    def verify(self) -> bool:
+        return self.is_balanced() and all(ptx.verify() for ptx in self.bundle)