Privacy-Preserving Stablecoins & Payments (Panel)

different. My my hairstyle changed a little bit since the picture. All right, Tim, too. Um, thank thank you all for for sticking around. We're going to need you all to make a lot of noise.

A lot of noise. Cuz we're going to pretend like there's more of you in the audience than there are of us on stage. All right. Thank you for your energy and for sticking with us for the last panel of the day. I hope you enjoy stable summit so far.

We will be talking about privacy preserving stable coins and payments. I have with me um Amin from Reflexer, team O from Iron Wave, Alan Scott from Roy Royal Gun and Howard Wool from Provable. And I believe we're going to have a very interesting uh conversation. There is a lot happening right now. uh in the world that makes this um quite relevant.

I would say there are there are several governments in many countries that are launching CBDC's. Uh we have RWA rising including confidential RWA tokenization. We have stable coins used uh for salaries and compensation and you clearly you don't want to have that as public information. So I think there is really a lot here to explore but maybe before we dive deeper into these uh use cases I would like each of you to give us a bit more info about what you're building and most importantly why you're building. Hi uh my name is Min Solmani.

I'm the co-founder of Reflexer. We make Rye. Uh it's kind of like a ETH maximalist stable coin. Uh it's like a central bank in a box. Um, I like it because I don't necessarily always want to be holding stable coins backed by dollars and banks.

I think having stable coins backed by ETH uh gives people the opportunity to have uh stable coins with different risk profiles. Um, I'm also the co-founder of a pro uh project called Oxbow, which is building privacy tools. Uh, and I think people should have sovereignty and uh be able to use blockchain securely and safely. And part of that is being able to have privacy on blockchains. My name is Tim O and I'm a co-founder of Ironweave.

And we also believe that privacy and blockchains have a future together. So Ironweave protects data by putting each individual unit of data in its own independently encrypted block. So now data can be shared and stored more privately, more securely than otherwise is possible in the world today. And we leverage blockchains in a very novel way to achieve this. So, we're doing this because we believe in privacy, not just in crypto, but more broadly in the world.

We think there's a big gap that needs to be filled, and we're doing our best to fill it. Um, I'm Alan, uh, the janitor with the Rail Gun project. Uh, it allows you to make stablecoin private, uh, stable coins private on, um, chains like Ethereum. Um, and I guess the reason why I'm into privacy, uh, is, um, getting docked in a Telegram group was really weird for me. Uh, and so, um, I just thought that was really weird and, uh, kind of, um, obtuse for finance.

So, uh, when the opportunity came to contribute to a project like rail gun, it was an obvious choice. I'm Howard. I'm the founder of a blockchain called Alo. The idea behind AO is that it's a new L1 uh, powered by ZK and it supports private smart contracts. Uh, for me, why why did I build this?

Well, a big part of it is that I'm a huge believer in privacy. I think that there needs to be the capability for developers to have private payments, um to have private DeFi, um to have private gaming, um and also to use ZK to unlock new capabilities. For example, to be able to run computations that take longer than just a pure 10 seconds. Um being able to run computations like machine learning that take a minute, maybe even take an hour. Um and be able to concisely and compliantly broadcast that on chain.

Okay, seems like everyone loves uh privacy, but I would like to invite you next uh to think about the risk of failing to preserve uh privacy uh both in terms of digital payments for individuals as well as for institutions. So, um when we think when we take a step back and we just look at finance in general, um like peer-to-p peer blinding is just an assumption, right? So, if I were to pay any of these individuals on the panel on something like Cash App or PayPal or uh even they can pay for a drink back there at the bar in cash, right? Uh they don't know how much is in my pocket and I don't know how much is in the till, right? Uh and so this like actor blinding is uh presumed uh in finance and we've managed to completely mess that up uh in in crypto, right?

And we sort of think it's cute and people do these like weird things and they talk about it on Twitter. Um or like whenever I send a payment to maybe like a mean or something like this. I'll go and look at Ether Scan and maybe judge him for all the different things that he has and realize I'm really poor or something like this, right? Or, you know, know what exchange he's interacting with or whatever that might be, right? Um and that feels cute, but uh there's a lot of like really, you know, terrible ramifications for that.

Um particularly around things like wrench attacks and and the like, right? Uh but like personal security aside, a lot of things like uh just normal finance primitives erode. Um anybody who's been around for like Yeah. [ __ ] Yeah. What's the first 12 words that come to mind, sir?

Um you know, but yeah, I mean, traditional market structure sort of erodess, right, whenever we try to not have privacy, right? We've all seen like people talk about like people's max pain point on Twitter when they have leverage or anybody who's been around long enough remembers Constitution Dow and how the bid magically went exactly just above how much money they had in a doxed wallet, right? So privacy when it comes to like wallets is like missionritical for for for finance uh to really blossom in in in DeFi. I think there's another thing that we can look at this question through and it's the lens of the institution. So clearly individuals have a lot to to lose.

So you know right now if I were to take a picture of anyone in the audience, it would take all of about 15 minutes to figure out what's in your bags. So you take a photo, you cross reference that through an app which then looks at your social media. They then have your name, where you work, where you live. You then cross reference that with other publicly available databases and now have your email addresses and your number. And then there are other databases that can go a little deeper that are publicly available.

and if not go into the dark web and then all the data from your telecom company hacks and also centralized exchange hacks including most of the biggest exchanges in the world all that data is there so I just marry your email address all your KYC data to the addresses and then I have a pretty good view of what you're holding all your interactions and then I decide whether it makes sense to go to Ace Hardware and pick up one of these wrenches or to go on down the street to the next door but I think institutions don't have as much to lose because institutions aren't here we We all talk about the institutions coming, but without privacy, they're just not coming. There's no business that's going to transact on a public ledger outside of web 3 businesses. I don't know how we got that uh, you know, to be acceptable, but there's no business. You're not going to have Goldman Sachs broadcasting its trading strategies or its bags. You're not going to have Apple putting its supply chain data out there.

Open AI paying its AI engineers so that people can find out who they are and who's getting paid and then go after them. It's just never going to happen. And I think Jeremy Aair nailed it. I was listening to his money movement podcast on the way over from Tokyo a couple of days ago and I think it's remarkable that he said this too. He said, "No business in its right mind is going to build onchain unless they have total privacy and totally secure confidential transactions."

And I think that's pretty accurate. And for him to say that when USDC is circulated almost exclusively on public ledgers is remarkable. He's basically acknowledging that yeah, we have product market fit in crypto. It's used to settle transactions in crypto. It's used in some emerging markets.

But if we really want to tap into the opportunity that is the institution, the people that move most the most money in this world, we're going to have to provide privacy. So, we're working on providing that key to unlock the possibility for everybody that's in this room now building stable coins to reach outside of the walls of web 3 and to satisfy the institutional demand, which we think really is important. I think when institutions look at crypto, they see that the user journey itself is fundamentally broken. And what I mean by that is when when a user today signs in to their bank account, their mother can't see their balance. Like your friends cannot see your balance.

They can't see how much you make, how much you spend, how frequently you spend. But if I send you some USDC, you can instantly look up all that information. And more so, you can look at that information for the rest of time. And that in and of itself is a broken UIUX. And I think for these types of institutions to actually want to use crypto in real world day-to-day payments, they're going to need see privacy as a fundamental feature of this technology stack itself.

Otherwise, they're never going to adopt it. I like what you're saying here about having everyday users uh being more accessible for everyday users. And I'm wondering uh would you say are there any promising innovations that could make privacy more accessible for these users? Well, I think for one starting with infrastructure that actually supports privacy is the is the key. You know, I think if you look back to where ZKPs come from, zero knowledge proofs have been around for the last 30 years, but it's only in the past decade that the technology has become practical for modern CPUs to even run.

And so 10 years ago, you saw the rise of and the advent of Zcash as kind of the first example to showcase using zero knowledge proofs to make privacy possible. And it's only in the last call it four to five years that the technology has become fast enough to do general uh smart contract languages in and because of that I think we're now at at a point where this infrastructure is becoming standard and commonplace but you know a chain like alo could not have existed 5 years ago it could not have existed 10 years ago because it's just such such cutting edge tech to to get there. Um, I do think that over the next few years, you know, with the advent of things like rail gun, I think you're going to see more and more teams that are going to be building um because the primitives are now cheap enough for modern computers to even run it. Um, I I think privacy is both useful at the like for the mundane like payroll like you were saying and then also for the extreme mission critical like Vitalic donating to Ukraine without the Russians figuring out like how much you know he's donating. uh and everything in between.

And it's it's kind of silly. I was uh involved with the inception of Tornado Cache through uh Mollik Dow, which is a uh basically a punk rock themed, you know, uh grants dow that we helped make in 2019. Uh and and we gave all the early grants to Tornado. And I posted a meme recently because the tornado cash case has been litigated and uh you know Roman has now appealed to the Supreme Court. Uh so the Supreme Court might rule on whether or not Americans have access to private money and and Roman's case specifically.

And it's kind of like this weird domino effect where you know that domino meme and it's like a mean tries to pay payroll privately on the blockchain and then it's like the Supreme Court decides on the fate of private money. Uh it's not something we anticipated would go that way. Um, but yeah, I I I think that in the aftermath of the North Korea hacking a video game, Axi Infinity, for $500 million, which I don't know why they had $500 million, uh, but then trying to use the privacy protocols, we have started to adapt. Uh, and one of the other Mullik Dow grants was for a thing called proof of innocence. Uh, rail gun has been the first implement of proof of innocence, and it's been working out great for them.

And the way it works is that you can basically create uh a proof that you are not some of the people that use the protocol. And so that way you isolate the illicit actors. And I think one of the things that people want everyday people is privacy but not with like I don't want to be associated with the terrorists. So please keep the terrorists out of the privacy protocol. Um and my uh project oxbow is also implementing this type of technique to try to keep the terrorists out.

uh of the privacy system. At Ironweave, we're trying to emulate what's happening in the real world in the banking sector. So in banking, our transactions are confidential by default unless we have some miscreant banks that are selling data out the back door, which some of them do, but all that transaction data, it should be private, but the banks have an obligation to file these suspicious activity reports, SARS. So in the event that something basically gets tripped, then they put together a report and then that's escalated and then maybe law enforcement has some eyes on that. Now in the crypto world or the blockchain world, we basically have done away with all of that and everything is out there.

It's just all out there for everybody to see. It's like one big SAR has been filed and that caused all the data to be released to law enforcement. So now we're living basically in a surveillance state. It it's much worse than it ever was in the banking industry. So I think there has to be a balance struck and if we can emulate what it is that happens in the banking sector in crypto then that's a nice line to walk where we have privacy by default and compliance on demand and I think that would be sufficient for the vast majority of the market users you know some maxis privacy maxis cyber punks they might not be thrilled with that but I think that allows us to address a lot of the pain points that we're talking about here and it opens up the possibility for blockchains to be really used in a much broader way and I can share a little bit about the innovative approach that we're taking to address this if it's an appropriate time.

Okay. Okay. So the way that I don't want to hijack this so Ironweave is taking blockchain technology and using it in a fundamentally different way. And I'll just describe that very briefly so you can conceptualize this. So in Ethereum or the monolithic blockchains, we have one ledger and all our addresses point to that ledger.

In Ironweave, we have addresses, but there's no central ledger. Every Iron Weave address is its own independent ironweave ledger. And when two or more interact to send a payment, a file, a message, a swap, anything. A new block is created. That block is encrypted with a unique set of encryption keys, which are then only made available to the participants to that interaction.

the block is hashed and the block only goes on top of the ledgers that participated. So in this way we've created a new data primitive where each unit of data has its own protective container which allows it to then traverse the internet be stored on the internet but in a private and secure manner. So why is that relevant here? It's relevant because stable coin issuers have done a wonderful job of getting product market fit within crypto circles in the web3 ecosystem and in some emerging markets. But as we said earlier the real opportunity lies outside.

So, if we can enable stablecoin issuers and other financial protocols to branch outside of web 3, we think there's a lot of value that can be created and we can fulfill the promise that we've all been talking about for years in this industry. Maybe we go a bit uh back to what uh Amin was saying with the tornado cashache. I think um I would like to invite you here to to reflect about how we can maybe uh prevent uh privacy preserving technologies from leading to negative consequences for their creators uh as seen in the tornado cash uh case because I think we we all want uh privacy but uh there is a lot of risk for building such solutions and maybe there's something we can do as an ecosystem to kind of hedge this risk. if you want. Yeah, sure.

Um, it's a tough question, right? Because I think the the issues extend beyond privacy, right? Um, and and just like broadly out into open source tech, right? Um, but I I think a lot of what I mean at least what I've been doing um is just considering a lot of like the um like how do I get opportunities to be in contact with people in in policy, right? Um and so I spoke at a thing called the virtual currency symposium uh which is basically like uh international spook.

It's hosted by the FBI every year and uh they get together and they talk about internet crime and they invite people up. And I remember I gave this talk and it was directly after the deputy director gave a keynote and he was like next we have rail gun. It was really weird, right? Um but um you know we talked about what we do. We talked about why we do it, why it exists and like what people care about when they think about privacy.

Um, and I think that like the the more we sort of like normalize it and talk about like just like the practical use cases and why we give a [ __ ] um, the it tends to be, you know, well recepted at least by law enforcement outside of the IRS when at least in my personal experience that day. Um, you know, we also do things like flyins and get involved in DC and go and talk to people and give money to people like Coin Center and you know, Peter and Nirage are doing God's work in that way. So, um I think it's with like a persistent and like consistent contact and like demanding uh what it is we want and need uh is probably the only way we're going to get it. I'll add that I think it's twoprong like you know to the point that Alan just made um education is absolutely one one component of it like if I think educating them about the opportunity cost of not having privacy is also an important component too. like to the point that Tim's making that there's it's a surveillance state otherwise um I think people will start to recognize that this can even become a a serious issue of national security for regulators and so you know ultimately it comes down to pick and choose your lane of what what is the better choice here and you know it's also important to emphasize that any new technology comes with good and bad actors and it's more important about how you go and control and regulate it than than just saying you're not allowed to use this technology and I think that leads to the second point that I have which really it's about putting forth practical solutions and practical tools to make privacy preserving technologies viable for for the masses.

And what I mean by that is um you know to what Tim mentioned about compliance uh on demand like every jurisdiction is going to have their own local laws and regulations and what we need is configurable compliance. We need the ability for people to to actually design protocols that are going to abide by local laws and regulations and that will differ. And so I think you know this is where I really strongly believe that private smart contracts are going to be a critical part of that because up until now you know you have Zcash and Monero which are two privacy preserving blockchains but they have no configurable privacy to them. have they have no no kind of compliance mechanisms that are smart contract driven and it's because they don't have smart contracts and that ultimately makes it difficult for for those types of coins to actually be um viable in all sorts of there's no one-sizefits-all for compliance is kind of the short there. So putting forward practical tools I think is going to be a really important step.

Just to to follow on that I think that's spot on. If we're developing infrastructure then it's important for us to ensure that the building blocks are there so that builders of apps DAPs have the power to then develop these DAPs to meet their compliance requirements and the requirements of the local jurisdictions where they are for any one of our projects to try to understand all the different jurisdictions around the world. It would be impossible. So we just have to make sure that we empower the people that are building on our infrastructure so that they can do what they need to do. So then that burden falls on them even though once again these jurisdictions are all very different from each other from Somalia to Saudi Arabia to Argentina.

So it could be that it pierces the DAPs to the protocol layer. It's really hard to say but we just have to do the best that we can to empower the developers. Somalia has never been my top choice of regulatory environment to consider. I don't it's an interesting go-to. Um, I I like the national security line.

Uh, the national security line actually works pretty well with uh politicians, policy makers, regulators, uh, in my experience because you frame it as like, well, if we don't do this, the Chinese hackers are going to steal all of, you know, every person in the armed forces data and know exactly where everybody's spending their money, and that's really bad. And they're like, oh yes, actually, I agree. Um, but I I think um that there's there's technical solutions and there's social solution. Well, on the social I mean I hope Donald Trump maybe Donald Trump will like launch a privacy coin or something and then all of our lives would be easier because then he could fight the government. Yeah.

Somebody ZK Trump real quick. ZK Trump, you know, that'd be that'd be amazing. Uh and and like stranger things have happened. So, uh, yeah. And, uh, the the Spookcon conference, it's funny because when Tornado Cash got sanctioned, there was an asterisk and it was like, "Everyone is forbidden from using tornado cash for you will face 25 years in prison except authorized government employees."

Yeah. And I was like, you mother, you're welcome. So uh and I and I just want to go back to the technical solutions too which is uh we can't pretend like it's I don't know 2017 18 anymore. The enemy is at the gates. Uh North Korea just you know the $500 million thing was so 2020 or 2021.

Uh now it's like $1.5 billion. They're they're pumping it with memecoins. Uh they're bridging all over the place. They're using ThorChain.

You know, I think Taylor Monahan posted a tweet saying they have 7,000 I don't know 10,000 transactions across 7,000 addresses. Uh, and this is like 3 days ago. So, yeah, we it's it's like as much as I I love permissionless systems, uh, for privacy, it it's a it's a it's a harder uh setup because privacy is the first thing that illicit actors will want to get. Uh and so having a a gate like rail gun has uh with the proof of innocence setup or uh having a system like Oxbow where you know people get whitelisted and can potentially be removed from the white list if you uh discover that you uh shouldn't have added them to the white list are are good technical compromises to make where you can keep privacy for the good guys and keep yourself potentially out of prison. I heard if each of you mentioning uh compliance.

How do we make actually uh to have together privacy and compliance and do you think are there any current regulatory landscape? How is this shaping the privacy uh preser preserving stable coins? How do you see it? So I think there's a set of tools that at least currently we are aware of that we can use to provide compliance or offer compliance for for um for developers. Uh the the first of course is you know designing a chain that has a view key so that um you at least aren't just making information openly widely accessible and I think that's at least the first step.

I think from there it then kind of expands into more nuance things. So for example having escro time locks um having verifiable credentials um introducing policy or rule engines so that ways um you know different jurisdictions can customize the rule sets for what they deem to be satisfactory or adequate for their needs. And um you know this is this really comes down to kind of the point that I'm trying to make about configurable compliance that there is no one-sizefits-all but I think what we can do as an industry is to provide a bag of tools make it widely available make it open source make it well vetted and make it available for for developers to use. Um that's frankly I think the best that we can do right now. Um certainly as ZK becomes more efficient and more practical, there's a lot of things that are just on the cutting edge on the fringe that I think are about to become practical.

Um that will also then uh increase the set of things that are available here. Um I I feel like I just answered this one a little bit uh in terms of compliance, but yeah, I mean uh the the like there there's a lot of you know different rules uh governing this stuff and so and the jury's out uh on exactly what the rules are, right? So, Fininsen said that in 2019 they provided guidance to the space saying that you are not a money services business uh if you do not accept and transmit the funds which implies custody. Uh but then Tornado Cash was charged with operating an unlicensed money transmitter. Uh yeah, the the Department of Justice completely ignored uh Fininsen's guidance on this topic.

Uh and so it's actually really hard to be compliant if you don't know what the rules are. And so I'm very grateful for the efforts of uh the different um DeFi education fund uh blockchain association coin center uh that are doing both uh amicus briefs in the tornado cash case uh to to for example Jake Shvinsky from the DeFi education fund went and fig you know uh read the entire history of any litigation that had ever happened on money services business and showed that every single time it involved the custody of the money. And so the DOJ is basically incorrect in their judgment uh and and this case is not final. This is a preliminary judgment that uh Tornado Cash was operating a money services business. There's also a case I think suing the DOJ for clarity uh because well there's another part of this where OFAC, this is a really silly thing, right?

So, OFAC sanctioned Tornado Cache. It was the only program ever in history to be considered a terrorist. And uh then they lost the court case that said they that that said you actually don't have the jurisdiction to sanction tornado cash because uh you only have the authority to sanction people or their property and tornado cash is not anybody's property. So, you can't sanction this. But then it's it's still unclear if we can go use it today.

uh be you know and and so somebody is suing the DOJ for clarity to say can I have a uh UI that points to tornado cache and they have to answer that uh and and they say is my UI a money services business uh and and that's part of it and then uh a relayer for example is also uh potentially something that uh the the judge in the tornado cash case was looking as at a money services business and and it's also doesn't ever have custody of the funds So, you know, when you withdraw, you you you encode the withdrawal address that you are withdrawing to as part of it so that you can't actually the relayer can't take your money. And and this is pretty standard practice. Uh and so that's a lot a lot of words to say that uh compliance is often more challenging uh than you might think. And uh you might do a you know something where like you get all the licenses, you operate a fully KYC thing, but then you know you're you're basically like non-custodial Coinbase, which would be cool. Uh but then maybe the laws uh you know the the the the court cases go and then you didn't actually need all those licenses because you were in a money services business in the first place.

It's kind of like if you used Tornado Cash, went to prison for 25 years, and then they said, "Actually, we couldn't sanction it." Uh that would have been really silly if that had actually happened to anybody. I think when it comes to compliance, we have these models in the world outside of crypto that we can look to for guidance or to to emulate. I talked about the banking regime before where transactions are private by default, but if there's a flag tripped, then they get escalated and law enforcement can have eyes on them. And you could look at companies like Apple.

They have a lot of our data and they get hit with subpoenas all the time. And they just don't basically say, "Oh, subpoena. Here's the data." No, they evaluate that. they have their lawyers look at it, there's a process and then they say, "Okay, we deem this to be valid.

Let's comply with this." If they don't, then they protest it. So, I think there are models that we can leverage as long as the tools that we're building allow us to emulate those models or to replicate them. I think that is a decent path for us to pursue because there's a lot of precedent there. We try to go off the rails and come up with new solutions.

That's okay. But we just have to realize that there are fewer precedents and we might not have as easy a time getting people to accept them. So um my general take is that there's no such thing as like regulatory clarity. It's kind of like a trope in the business u or crypto if you will, right? Uh you know, we need regulatory clarity, but there's never there never is, right?

I'll give you guys a great example, right? Everybody knows that fraud is illegal, right? Defrauding people is bad, right? But like the government doesn't sit there and list out every type of potential fraud that can exist, you know, explicitly in the law, right? That's not what happens, right?

And so the the the law isn't black and white, nor will it ever be, right? It's an evolving thing that lawyers go and debate about. And so a lot of the things um Amin has mentioned right where people are going out and making these questions of of the government is like how we move forward into uh uh the less gray right and sort of understanding where those like outer bounds are. But uh to like talk about like regulatory clarity like it's like an end state that we'll get is is completely unrealistic um and like a hyperbolic situation that'll that'll never come to fruition. Um so um a lot I mean so what do we do right I mean we try to focus on like how do you what are the pressing issues in DeFi right now right when it comes to DeFi privacy keeping um you know [ __ ] actors out of the privacy system is like a really big focus right and so when I saw um you know uh Chainway right doing this proof of innocence thing on tornado cash um when' you guys give that grant out to me when was that yeah like two years ago two years ago yeah I saw that and I was like that's so sick like that's so Cool, right?

Um, and so we got in touch with those guys, right? And worked together to build it on top of rail gun. Um, and then we collaborated with uh, uh, you know, Elliptic, uh, Scam Sniffer, um, uh, AMLbot Purify, um, the list goes on, right? So we can take and like add these different aggregates of like list of people who follow around bad guys on chain and try to keep them out of the the privacy set. Um, and we tried to make it really extensible.

So like when things like this uh by bit JSON came out, right? They have this really cool API that that you can hit that people are very tyrously putting you know addresses in like we can take and like boom whip that thing in in a couple of hours and like now you know we get to tell like by bit hackers to go [ __ ] themselves, right? I I call this the paradox. Is this still on? Yeah.

I call this the paradox of privacy which is that if you want privacy for the good guys, you actually need surveillance. Uh so you know which ones are the good guys and which ones aren't. It's sort of ironic, right? uh it's kind of the duopoly of of crypto and privacy, right? But, you know, suffice it to say, right, I think that this is like I and the practical equilibrium paper was really cool.

And so, like I think that these are like the practical things that we can do today to like try to attempt to uh you know, build privacy for for the good guys and like show really good wins out there in the space of like preventing bad people from getting away with crime by way of the things that we build. Maybe we shift a bit uh gears and we talked a bit about integrating these solutions um into the real world. What would you say are the biggest trade-offs between privacy, scalability, usability when integrating this technology into real world payment systems? Um I just want to apologize. I got to get going, but I have to dinner to get to.

Thank you everyone. So I think I think like the challenge right at least for us has been like how do we take an in we we we focus on DeFi right and the the the challenge that we have is like uh there isn't actually a standard for DeFi um and so like being able to do cross contract calls um and deal with things that aren't atomic um or like dealing with bridges uh and all the other sorts of infrastructure that exist in DeFi is uh it's a really difficult problem right uh you rail gun was deployed into EVM. It's not a new chain or a side chain or an L2 or something like that. And so it has to adhere to the rules of consensus, right? We don't get to make it up.

It's Ethereum. You know, maybe we can lobby for some EIPs, but you know, suffice it to say, we got to play by the rules that exist in consensus. And uh this creates a lot of rub just for like brass tax of like how DeFi works today, right? So things like Lido, you know, it's not an atomic redemption whenever you unstake. And so you have to deal with that uh and do that in a zero knowledge way.

It's a it's a really challenging space to to deal with. Um and even when we look at things like um you know the the interfaces that come with uh the the traditional space, you know, so on ramps, off-ramps, right? Um you know, how do we how do we interface with that stuff? It's it's it's not all built in a way that is like extensible. We talk about it being Legos, but uh it's not at all.

Like none of this [ __ ] is Legos at all. Yeah. Yeah, I think on the ZK piece um when it comes to privacy, scalability and usability, so privacy, scalability, ZK phenomenal, I think usability really long way to go and I I mean it on every every layer of the stack like when when it comes to using ZK like for developers to build applications like we we've had to build a custom DSL custom programming language, it's called LEO to try to simplify it. But in order to do that, you have to take an opinion on, you know, what op codes or what syntax you make available. And that already starts to constrain what developers can can write or express in a program.

But it's even more kind of uh um uh kind of more complex than that. um when it comes to integrations with different types of um service providers, whether it be a wallet or or an exchange, um you know, there was the EVM camp of chains, then there's the non-EVM camp of chains, and I get the sense now there's going to be a new camp of ZKVM types of chains that are going to be even harder to integrate with than just the nonVM uh uh chains that we see today. And you know, it's because these stacks are so custom, they're so bespoke, they use primitives that aren't, you know, necessarily quote unquote industry standard or HSM standard. Um, and because of that, um, a lot of engineers have to do extra tooling, extra work to make that work. But, you know, for those who are willing to put in that work, there's some phenomenal benefits.

Of course, privacy is a is kind of a no-brainer that you can achieve privacy because you now have ZK. Um but certainly on the scalability piece as well like uh you know the the thing that I think is really kind of undertalked about is the fact that um it's not just about TPS. It's actually about developer expressivity. When you have ZK you can actually run computations offchain now. If you can run it offchain you're no longer time sharing like that 10-second block time or or the 3se secondond block time, whatever it may be these days.

Um, and you know, I like to think about these chains that existed before us as almost like mainframe computing because everyone is trying to time share. With ZK, now you can run computations fully offchain. It can take a minute, it can take an hour, it can take a day. You wrap it up into this nice little proof that's, you know, a few hundred bytes. You submit it on chain and it only takes 10 milliseconds or less to verify.

And so there's no re-execution and you suddenly achieve not only more TPS, but far more expressivity for the developers. So you know there there is a cost to using ZK and therefore privacy tech but I do think it comes with some huge advantages not only for the users but also for the developers. So I think ZK FHE TE our approach which doesn't fit into any of those boxes they all have a role and it's important when having a discussion like this to think about the context. So what is it that we're actually solving for? It could be that all of them work for a particular context and it could be that none of them work.

Now if we talk about payments which you mentioned the payment industry has a lot of scale and there are many transactions that Visa is processing every second. When we look at when we looked at ZK and FHE and TE we did not see a workable solution to handle massive amounts of transactions per second. So this architecture which I described earlier, it's designed in a way which allows us to have privacy but without having the need for computational weight like FHE and ZK require currently. So these blocks are being encrypted with well-known encryption standards that don't require a lot of heavy compute. So the other thing that allows us to be very scalable is the configuration where each address is its own ledger and these ledgers can interact in parallel.

So that means there could be billions of ledgers all interacting in parallel and you don't have to have any hardware to have an ironweave ledger or address just like you don't need any hardware to spin up an Ethereum address. Same thing in Ironweave. But under the hood there are four types of nodes that support the system. But not all nodes cover all of these ledgers. So that means that we've enabled horizontal scalability.

The more nodes you add to the system, the more throughput you enable just like adding a new data center to the internet. So in our in the alpha now we have over a million interactions per second. And that's not something that ZK [ __ ] or the other approaches can currently handle, but it does work here. There are other advantages to using ZK and [ __ ] but when we're talking about payments, I think our architecture is one which lends itself to doing just that. We're almost uh running out of time, but I would like to close it with one last question.

Uh if you would change one thing about how the industry approaches privacy and payments today, uh what would that be? Um yeah. So, if there's one thing I'd change about like just uh encryption uh privacy um and uh that sort of ecosystem in general, uh actually be two things. I'm sorry. Um there's a lot of like really weird infighting uh in privacy uh which I think is petty.

Um and um I I think the the biggest thing that annoys me about like ZK and privacy in general is there's a lot of white papers out there uh and a lot of people talking about the things that they uh eventually will build and the the the the paper tigers of the world, right? There's a a new plunk derivative every other day it seems. And like that's well and good, but like go build something that people can use. Like just go do something, write an application. Um, you know, we we try to do this with rail gun like it's not using super cool fancy new ZK.

It's using groth 16 uh you know standard you know loctite Merkel trees nothing fancy but we built something that people use. Uh it does a quarter billion dollars in transaction volume a month. Uh it generates lots of fees. People love it. Um, so I would suggest people to do the same, right?

Don't write a white paper, write a smart contract. Um, just to double down on that, I'd say for the marketing teams in crypto to please stop conflating Z, the term ZK incorrectly. ZK stands for zero knowledge. It doesn't stand for rollups or scalability or better TPS. Um, it drives me nuts because, you know, we are an actual ZK chain.

have actual zero knowledge and we use zero knowledge proofs. Um but it gets lost in the in the mix of crypto Twitter. Um there's just not enough clarity for that. Um and frankly it confuses developers. It confuses the end users.

It confuses people that are actually trying to find real solutions to their problems. Um and I've just I wish that you know we could flip a switch on the whole marketing uh uh campaigns of all of these teams here. Better education basically. Yeah. Maybe they should call it like succinct EVM or something like that.

Exactly. I'm all for that. I'll take a slightly different approach here. So, one thing that irritates me when it comes to the industry's approach, the industry, it's a very broad term approach to to privacy. Uh it it's what I hear from some of the big players that are issuing stable coins and yield bearing whatever RWA assets or security tokens, whatever you want to call them.

Circle, Tether, Paxos, Black Rockck, Ando, Superstate, the list goes on and on. They all have wonderful businesses. All of their assets are now on public ledgers. And when I speak to them, they also, yeah, yeah, Tim, privacy, we recognize it's really important. We understand that the day is going to come where we need to deliver it.

But right now, they're making hay while the sun is shining. Circle is able to charge a king's ransom to be able to issue USDC natively on different chains. You've got Paxos that was just approved by the Monetary Author authority of Singapore to then bring USDG there. These guys all have other fish to fry. So the privacy can is being kicked down the road.

And that really bothers me because these are the guys that are really moving the industry forward and they have these great cash cows, but we're now falling into this innovator's dilemma trap. If they don't take privacy seriously now, it could be that we just default to this surveillance state which we're all living in now. So, I really would love for some of them to start championing privacy and investing in it so that we can develop some of the tools that we've been talking about so we have a much more sustainable and much more secure way of proceeding rather than just having everything out there for everybody in the world to see and take advantage of. I would love to continue the conversation but unfortunately uh we're running out of time. Uh we started this uh panel on a with an applause.

So I would like to invite um our audience to give another round of applause to our amazing panelists. Thank you. And our moderator. Yeah. Yes.

Thanks guys.