Zero-Knowledge Proofs: The Key to Mass Adoption in Web3 | Mauricio Magaldi - Midnight Network

all right and we are back after the break thanks everyone who stuck around we got a great talk up for you next it is called zero knowledge proofs the key to mass adoption in web 3 and it's being given by Mauricio magaldi the head of product at midnight so please give a warm welcome to Mauricio good afternoon everyone pleasure to be here at eth Denver uh I'll talk a little bit about midnight why midnight and how we're approaching the use of Z knowledge proofs for amplifying web 3 um this is pretty much uh a vision of what we're implementing and how we're getting it to Market this year so first why midnight we believe that we can't afford the digital era without privacy this is a a human right in the era we live on so utility should not come at the expense of privacy and ownership we need to claim that back so midnight is a fourth generation blockchain that aims to offer users and developers the ability to protect human privacy and the freedoms of Association Commerce and expression and it is a blockchain that can keep a secret and we know that transparency is key but for many things in our lives we don't want the information to be flying around the internet and be mind for AIS or other purposes right so why did we choose to use ZK Zer knowledge proofs for midnight we know that it's usually uh the conversation is usually using ZK for scalability um ZK is originally thought of as a mechanism for privacy and we we are we're true to that in a way that Zer knowledge proofs they allow us to do something called programmable privacy where you can actually selectively disclose the information according to what your use case or your own privacy and security paradigms are and we chose snarks to do that because it's a simple way and and a non-interactive way to actually continuously evolve and one of the things that we are adding on midnight is the ability to actually upgrade the snarks as cryptography evolves and it's evolving super rapidly we are able to bring on uh new snarks into the system and continuously evolv to that which is not exactly what you can say for uh most of the blockchains out there so programmable privacy in our view unblocks this uh ability to um offer a widespread adoption of web 3 even removing and abstracting away that from users and developers so the midnight approach to privacy is composed of four larger elements Kachina um our hybrid apps minor and our dual token tokenomics and I'm going to go through uh each one of them and hopefully uh make a good case for why these things are important and why we're you know CH we're choosing to use them and evolve on them so in in a traditional web application we send a lot of information over the Internet both sensitive and private data end up flying around and this exposes not only users but also Enterprises to becoming honeypots of data and of and of course uh being exploited and no one wants that even though this is world the world we live in so when we try to bring this to the onchain world we have these public chain apps that we we know and love but in that context we allow correlation of public data and metadata which ends up doxing not only the things that we did but when we did it and how we did it and obviously this is not um good for everything in life or in business I would think that most of us here remember the Constitution Dow case where they were beat up by the CEO of Citadel on the bid for the US Constitution because the data was public on chain they knew exactly how much more to bid to beat the Constitution now right so that is just one simple very common example of how privacy plays a part in business and obviously in the lives of the people who actually chipped in for the Constitution Dow uh bid so imagine that in a larger scale and this is one of the things that definitely prevent Enterprises and large corporations to fully embrace the use of blockchain in their core critical mission system so uh we're trying to play around that by the use of ZK and kacina so the world the way midnight deps work the private data in the Kachina architecture never makes it to the blockchain only the zer knowledge proofs uh make into the chain and interact with the smart contracts so you can have shielded data traveling around the blockchain across transactions you can also have unsho the data as any other blockchain would but the companies interacting with your zero knowledge proofs can do that in the context of their applications so if you're a Dax or if you're a dow you don't necessarily have to have access to the data but you might want to do uh business logic just using information about the data which is represented by zero knowledge proofs Kachina itself it's a it's a it's a simple concept and it's complicated to implement I'll try my best to simplify the mechanics of kacina that allow for select the disclosure so in this architecture you have a first step which is understand the onchain state so you retrieve the current state from the chain the the logic in your application or in your wallet will generate the proof proof interacting with the proof server and then the transaction submitted back on chain updating the state whether with new shielded information or with new unshielded information and that information on chain can actually be interacted with by the smart contracts so the private data never makes it onchain only the proof does and that's how you can decide how much of the information you get to share with the world and we can always be reminded that once something is known it cannot be unknown and once something's on the blockchain while then it's immutable so we introduced also hybrid apps hybrid apps is a very interesting Concept in which um right now we have cross-chain apps most families bridges are cross-chain apps where we have an application running Wallets on two chains and they have Smart contracts on two different chains um we're working towards and this is in research we're working towards a mechanism called multi-chain Signature which will allow a single hybrid app interacting with a smart contract and the call out is from one smart contract running on a chain to a another smart contract running on midnight and in this way not only we allow interoperability without you having to move your assets around but the goal here is to actually make midnight uh accessible to any chain in and in this way we can offer privacy to all of web 3 which is in my mind one of the missions for for midnight so it's a very Noel concept we're we're we're an R&D for this and we hope that this is going to make um the lives of programmers and developers uh much easier to tap into the midnight capabilities we also uh are using minor minor is uh it stems from uh a paper uh written by the scientists at um input output and we're using minor to bootstrap partner chains midnight is a partner chain to cardano and through Menor we can actually inherit security from the cardano validators you can think of this as the reaking of ADA which is the cardano native asset to secure midnight and with menor's Evolution we'll introduce uh the multi-resource consensus and multi-resource consensus is something um pretty curious because imagine if you could bring Bitcoin miners to secure your chain in addition to your own staking or bring eth validators to do the same or salana validators to do the same the goal here is to break the barriers and tribalism of any other blockchain and allow midnight or any uh chain using minor to actually reward The Wider ecosystem which is uh pretty intrinsic to what we're trying to do with midnight is to just break the barriers so the multi-resource consensus is is uh on the road map and we're already doing that with cardano and we're going to introduce that gradually with other chains and and this is one of those things that we've grew accustomed with in crypto that I'm on my chain I'm on my Lane don't touch me I don't want to talk to you about anything but in the sense the uh technology is evolving in such a way that if we can actually tap into these types of resources in a coordinated manner we can get the best of each chain for any of the applications we're running and then we start going away from I do this on the blockchain to I solve this to my user which is core principle that sometimes we in crypto kind of tend to forget so multi-resource consensus under minior is one of those things that are so uh wildly untapped that I think when we bring this out to the world later in the year this is going to blow people's minds um and one thing that uh we're bringing in with with midnight is this uh dual token tokenomics midnight will have uh two different um Native tokens one of them is Knight Knight is is a governance token and it is an unshielded token meaning it's the same as any uh blockchain out there but it has one specific functionality which is it generates dust and dust is the fee resource it is a shielded resource meaning it protects data and metadata and it has a very interesting behavior when you when you use to to thust to pay for your transaction fees it will refill over time and I know that the the the the the theme here at ethen this year is is the regenerates and very uh very much so dust regenerates in your wallet as as you use it uh if you move your knight away if you give your your night token away or you use it for some particular other uh application uh it will Decay over time dust will Decay over time so it's a very interesting behavior that allows uh uh very U interesting uh mechanics and use cases this is not entirely novel but the way that we are resolving for shielded transactions and unshielded tokens uh ended up being very elegant and I think that the tagline here is it it will generate dust forever night generates dust forever in the sense that if you hold night as part of owning the network you can indefinitely use the network we call it the buffet pricing like pay want sit as much as you want so it if you own the network with Knight which is our governance token you can actually generate dust indefinitely and as many times as you want you can use the Network pay in dust this is also a way for us to build um regulatory compliant apps because U I'm a former Chief data officer I've implemented um tools and and and applications in the context of gdpr like regulations banking secrecy acts and with this type of tokenomics we can actually enable um the dep developers to build regulatory compliant deps and one thing that I feel very much uh um like an advantage about this type of tokenomics with the Dual tokens one being a shielded resource the other one being uh a unshielded token is that if you think about the traditional Arrangement on fees on blockchains you have the native asset for you which you hope appreciates in price over time but every time you need to use that chain you Chip Away of that you cannibalize your stash you take away from your bag and you own less of that chain than you would otherwise right so if you're a CFO for instance and you have uh the ability to use a system with high volatility in pricing imagine this scenario not only you acquire the original asset which potentially appreciated over time in price and now you have to use that to run your business so you're going to reduce that asset and pay that as an expense now you don't know how much you're going to pay because this is very volatile and you don't much you don't know how much you're going to pay when you have to refill your treasury with that asset because the prices will move so imagine if you don't have to do that and you only have to huddle your asset and it generates your fee resource that you can actually play with and more importantly if you're a CFO you locked in on the price because you have a Capa that you bought it's on your balance sheet is an asset but you have repeating refilling regenerating fee resource to use the system I don't think we can offer better predictability in price than that so I would hope that people when we put out the uh tokenomics paper later this year later this quarter um will be able to uh blow people's minds with the the level of detail and the Ingenuity that the research team has put onto this and being a former um Financial Services guy myself I'm like this sounds pretty good to be true let's stress it so we're running a test net uh with all the tokenomics when when we when we launch test net uh the tokenomics going to be available for everyone to try and crack it so hopefully we'll we'll be able to so um what's next for us uh we are on test net so testnets live we have Sho the tokens right now uh you can program on the Kachina programming model using compact which is our uh compact language it is a typescript language uh with um with a circuit tree Library so you can actually program your zero knowledge proofs uh lace wallet lace is a staple cardano wallet it also supports midnight um we are going next into what we call the scale test net which we're going to obtain support uh from the main at spos spos is the validator um acronym for for cardano where we're going to introduce the unshed tokens uh we're going to bring some Partners uh online that we're working with and uh we're going to have further decentralized block production and hopefully uh later this year we're introducing M at uh there is a uh road map of capabilities we're bringing to bear um and we're going to introduce composable privacy in which uh asmart contract can actually tap into the proofs of another smart contract which is pretty cool cross Cham Bridges with our partners and we're going to launch with decentralized own chain governance for several uh governance actions so if you're really deep into Dows I think you're going to like this um and we're here at e Denver uh we have a happy hour uh at 4: uh today uh at the centeno room and um we're running also a hackathon with uh with a buildon there is a uh judging tomorrow so check out in the captain uh ethereum stage here at the build Hub uh it starts at 11: tomorrow morning and we're also running a virtual hackathon so if a developer and you want to you know test your skills with types script R in zero knowledge proofs uh you know just scan this it launches on March 10th we're still picking up the theme so I hope this is a very enjoyable uh there are prizes and there's also bragging rights so please do join us and that was all I had for today thank you and lfg