The developers of the Litecoin Foundation published two proposals for improving the protocol (LIP-0002 and LIP-0003), which provide for the integration of MimbleWimble technology to ensure transaction privacy.
If accepted, sponsored by Andrew Young, David Burkett, and Charlie Lee, users will be able to use the new confidential transaction format through expansion units, which will be released simultaneously with the main units.
According to the developers, the currently existing transparency of the Litecoin blockchain impedes “functional fungibility in a government regulated merchant world.”
Personal identifiable information collected from IP address, exchanges, or merchants can be leaked then tied to your addresses. Also services, such as chain analysis, provide risk-scores based on whether or not any addresses that they have blacklisted appear in its transactional history. This results in some businesses treating these coins as “tainted” and then sending them back to the owner, or worse yet, shutting down their account.
LIP-0003 "Motivation" Section
According to the documentation, coins in the canonical network will need to be sent to a special address, after which they will be available in expansion units.
To implement the update, you need soft fork. Clients with outdated software will be able to continue to work with the main network, however, transactions in expansion units will not be available to them.
It is assumed that the update will be activated a year after the release date. However, this can happen earlier, provided that 75% of the miners vote in favor of the decision.