Privacy Without KYC | Amit Chaudhary - Labyrinth

[Music] welcome welcome welcome we are now going to introduce our next guest for the day omit privacy without our kyc hey thank you Jean thank you you're welcome sir thank you um hi everyone thanks for coming so this is Amit I'm a founder of Labyrinth protocol and also a fellow at University of wari um I would be presenting as I said like privacy without kyc can we have both yeah let's oh I think everyone is familiar with this privacy Paradox uh we all know that privacy tools are needed but Regulators fear that they enable crime uh can we keep privacy without kyc without staying compliant I think this uh meme uh is one of developers right like if you go to the random Anon guy on uh using ether ether scan and all he seems like he's super private like pseudo nomin is not privacy I think it's super annoying to tell everyone it's not but uh that's what we are wanted to enable in a more balanced way uh we we want to enable privacy but uh we also don't want kyc why because it's literally a privacy trap like it Gifts of self sovereignity we are pretty sure about it it's a honey poot risk like it's a surveillance State wipes are all around there um most importantly in on ethereum on any cryptotech we are building apps we are we are trying to bring in this Mass adoption how does how does kyc works with the unbanked user we are literally excluding most of the people so it slows defi it makes crypto less permission less yeah and I'm the sad cat I bought something on The Ether now I'm like my all of the transactions are all the time available uh it's a I I think it's an Open Secret it's an open our wallet is an open book uh yeah your account balances it's public your trades your Investments anything that you have done any meme coin would you have bought instead of your company's token is all public out there so The Ether scan is like a one of the biggest honey part and uh a Target group for the malicious actor uh this is out there in public but there's a challenge like there are Technologies which we can use to build privacy technology but most of the Technologies uh out there and applications they are on the extreme end like either they want privacy like they really like uh Regulators cannot uh track the illicit activities and there are illicit activities which are happening so user wants privacy but to avoid surveillance but we have this diagonally opposite thought process like you know someone wants to track illicit activity as well maybe The Regulators maybe the good users as well and all of the solutions are extreme so that's why uh a balance is what needed a lot of ecosystem is spending a lot of thoughts over it and our solution is one of them and it's just not a solution I would say uh it's it's on net so you'll come through that uh this is what you know one of my favorite slide is uh if you look into the Privacy Cypher Punk and other I think most of the people talk about two extremes right the good and the bad so actually there are three good Bad and the Ugly we know there are good folks right who wants to use privacy the Dow Traders the Dow members our normal users they they want privacy but they also want don't want don't want to be associated with the scammers nobody wants to be associated with the Lazarus group right that's bad but also there is a ugly side of this privacy what we learn from uh our beloved tornado cash that we don't want sanctions on such Technologies we don't want overregulation we don't want surveillance we don't want kyc so that's that's a NE that's a very nice space to innovate out there and why uh uh if you look at the some of the history like of the Privacy Solutions and trying to build up some of the compliance out there so some of the solutions literally have failed like it started with deposit limits like like like someone came up with this idea that let's uh have $5,000 limits on privacy Tech like it literally frustrates all of the users and it's like if you want users to come and just restrain themselves by certain dollar using privacy it's not going to work uh sanctioned address that's a popular one but I don't think it worked that it failed miserably like like hackers are really smart folks like they can really use uh false uh uh wallets uh quickly recycle with the new wallets it's very very very tough to uh keep a track of uh those sanctioned addresses because the list is so Dynamic it changes like a like a blink of an eye like per block as you say oh the blockchain analytics some of the firms which are out there uh collecting data of course they are in good intentions they are like Risk scoring you uh but they miss Bad actors all the time uh there are lot of false positives I don't know if you have seen earlier some of like some of their accounts if you try to set up and centralize exchange account your funds are like uh literally on not reach to the wallet because at the back end you are you are being risk scored by compliance company and sometimes they're false positive we only access I think it's not going to work no bad user are going to give uh certain uh view keys to your private view keys to the regulator uh Association set is a pretty cool Tech I think uh uh uh one of oxb people and vitalik is doing that it links good deposit but it has its own constraints like slow to detect crime and there is everything is a new technology we are all working toward it but the worst of all is kyc like you know it's a we don't want that kyc uh uh in terms of uh uh all of this accesses if you look the decentralization and an accountability like accountability from the users perspective like how accountability this privacy and the compliance solution is I think I think we have reached such a stage that it's a time that the new protocol should be developed I would rank kyc at the minimum least decentralized least accountable and there are others which we uh uh are which we discussed um I'll give you a brief overview uh I won't be going to the math and the details about it but uh we have been building these protocols uh since uh one and a half year it's based out uh of our paper two of the paper um uh earlier uh it's available on the preprint but I'll give you the broader uh very big picture how does it work and it's a general privacy I would say onchain evm compatible privacy how does it work uh first challenge which we are solving in privacy it's an easy onboarding like like we um I'm sure you have heard about a lot of uh um uh privacy Solutions which have a different chain the whole idea is that you are trying to convince the user to a different blockchain or a different layer two layer three whatever it's super super annoying to the users like they users want privacy where they are on the main net or on any of the solutions which they are you can't just tell them to if you want privacy you want to go to the different chain just like you know red pill and blue pill kind of a scenario it's it's it's it's horrible uh so uh the tech how it works it like a shielded asset transfers it's uh it it uses the same wallets wherever you are from metamask to leisures hopefully safe you know and uh it goes through this uh uh within the evm it uh it runs uh zero cash kind of a protocol it's a zero knowledge based protocol within the ethereum account it's just runs a utxo based models which provides the Privacy through the comet reveal schemes and then what we have done is we have made the te we have made Labyrinth or uh the technology a plug and play what does it mean plug and play uh you can interact with arbitrary smart contracts like uh what we have tested out you can do private Unis swap swaps staking lending multi batch transfers using the same deployed solution so Labyrinth is Deployable on any evm compan compatible chain we have deployed on sepolia since August it's a very good uh feedback but later down the line if you see on the bottom of it it's what our decentralized compliance solution which I'll try to go over in the next 5 minutes because that enables the balances between the privacy and the compliance think of it as like a selective disclosure of Secrets like you you store your secrets on a network and the network is a trip party Network between Guardians and rokers Guardians are the people who safeguards your data they are the custodian of the data but they cannot cheat they cannot see your data and rokers are the trusted party uh who uh you uh trust to uh send a request to see the data we'll go through that in detail uh so uh What uh it's a it's our paper name selective deanonymization seed uh it's not seed phrase um so uh there are certain principles which we wanted to follow before uh implementing a cryptographic uh MPC ZK MPC Network which is Tri party that uh privacy is non-negotiable like users should not have to expose every transactions uh data publicly or to us one Central party to remain uh uh to remain compliant as such but we want to have accountability uh Regulators demand accountability and that's where like you know we want to have certain features in the protocol which would selectively disclose so that's why the middle grounds like you know the extreme they're not extreme privacy by default but selective denization happens with certain uh Network driven request and there are shared responsibilities between entities or the agents which we call Guardians and rokers and there are interplay of them leads to selective disclosures under very strong security and cryptog graphic guarantees so what we want to achieve with this uh solution is a legitimate transaction should say hidden but illicit activities should get uncovered so that's that's an outcome uh I'll go through a very again the uh the paper is out there you can you can see but what uh what does it uh I have a few minutes left but it's all right uh what does it Encore so remember once you once uh these are these are the users uh which you can see some of the users are bad assumption is like you know few users are bad and if though start using the Privacy Tech uh Labyrinth or any other privacy Tech they go dark on chain that means you can't see what's happening this all graph which you see uh the shielded transaction shielded account or zero knowledge driven transaction goes dark but what you actually want is to disclose only the people who are some kind kind of suspected criminal activities like for example Lazarus and that's where this multi-party network CES into the picture uh there are rokers who users when before uh using the Privacy feature decide that these are the person who holds uh some kind of uh commitment or a to or some kind of a receipt you say they can request to this network which is the permissionless guard uh permissionless network uh which we call Guardian it's looks it's a ZK zero knowledge MPC kind of a network threshold driven which can return the data when the users want uh so that's how this whole Cycle Works uh rokers are U you know that they're the people who initiate the request but the whole part is that rokers cannot see the data by themselves they just got this prec confirmation that they can request the data if they want but they have to submit the request to the network and remember this gu Network which I was telling about it is a feature of threshold encryption decryption it stores your secrets and discloses your secret when it is demanded but this network is super special because even if all the Guardians cheat those permissionless node they will not be able to decrypt your data so that is why we have uh uh three levels of uh uh properties in decentralized compliance and one is accountable privacy like misbehavior can lead lead to loss of privacy and users do face uh uh an deanonymization request but by default everyone is private accountable deanonymization that means rokers has to submit the request to the public uh Guardians cannot reveal the data and the most important the last one is the non- fabrication that means uh uh the user cannot be fabricated because of the zero knowledge properties uh we are on testnet check it out like it's our dcom test net this network which we talked about uh it is on the Labyrinth whole protocol is on the test net transfer swap anything ens enabled uh it can be done uh yeah so privacy and compliance can be done together uh do check out our website uh labin doac or shoot me up on Twitter I we be happy to answer your questions and get any details if you want more thank you yeah g please give a round of applause for am man appreciate you homie man that was a good presentation man go ahead