Loring Harkness, Shutter Network: Your Favorite Platforms, More Fair & Credibly Neutral | ETHSofia

[Music] well thank you everyone for being here today my name is Lauren harkes I'm with shudder Network and shudder uses Advanced cryptography to make your favorite platforms more fair and credibly neutral and this is the last presentation before lunch so I know all of you want to into some really heavy cryptography right okay we'll do something different let's play a game and actually to make things kind of fun and interactive uh can I get a volunteer someone to join me up on stage and play a game with me come on okay we've got a bunch of hands uh you sir uh in the hoodie yes come on up yes please yes give him a round of applause hello thank you for joining me so the game we're going to play today is a very complicated game it's called Rock Paper Scissors the game rules are really complex basically you have two players and on the count of three we're each going to show our hand there's three hands rock paper and scissors rock beats scissors scissors beats paper paper beats Rock if there is a tie you have an instant rematch understand okay let's go ahead anyways one two three okay so I lost now this game worked out pretty well because um we basically had all of the same information at the same time on the count of three we showed our hands and this works pretty well if we're playing a casual game uh maybe uh just for fun or to see who gets to ride shotgun in the car on a long road trip but what if we're playing for really high stakes would you still want to play this game let's go ahead and change the rules and we're going to introduce information asymmetry now now the rules of this version of rock paper scissors are a little bit different basically what's going to happen instead of revealing our moves at the same time he's going to show his move and then I'm going to have three seconds and I'm going to show my move sound great let's get started okay one two three one two Okay so he showed Rock and then I waited 3 seconds and I chose my move and I chose paper and if we do this um I'm going to win every single time he literally has no chance of winning because of the information asymmetry he's at a constant and fatal disadvantage give him a round of applause everyone [Applause] now who wants to play this game where you are at a disadvantage because of information asymmetry let's get a uh show of hands okay we've always got one Joker in the room um but this is a really stupid game right and no one would ever want to play against an opponent that has the advantage of information asymmetry but guess what you guys play this game all the time on chain and here's an example front running and sandwich attacks when you submit a transaction to an unencrypted mempool you're basically revealing your transaction data publicly and you're giving the opportunity for Searchers and block Builders to put transactions either before your your transaction that's front running or transactions both before and after your transaction that's a sandwich attack but in either case they're basically manipulating uh the transaction order in order to manipulate the price and to give them an advantage and essentially take money from you and if you think about this both in crypto and in traditional Finance The Ordering of transactions and information asymmetry is really really important and in traditional Finance we have tons of regulations and uh technological standardization to make sure that no one has a Advantage because of information asymmetry another example is Dow vote manipulation so if you're a member of a dow and you vote using a platform where all of the votes are revealed immediately as they're cast then everyone can see how you vote it and you can see how they vote it in real time and you can actually use that information to change your Vote or more likely than not it's actually going to be a voting whale who sees how you voted and then makes their vote accordingly and being able to see the votes publicly in real time has a lot of disadvantages one of them is uh voter critical thinking goes down because if I look at votes and I see that everyone is voting yes on a proposal I'm probably not going to spend a lot of time thinking about how I should vote I'm just going to vote with a majority another example is outright manipulation and there's two ways that whales can engage in vote manipulation right one of them is all of the whales can cast their vote immediately and then other people the Dolphins um and uh the shrimps they're going to look at that and they're going to say there's no way that we can overcome these whales so we're just not going to vote or we're going to vote with the majority the other way to do vote manipulation is even more nefarious a whale can basically sit on the sideline and wait until everyone else has cast their vote and if the vote is going their way they don't need to do anything at all they can just not vote but if the vote is going against their way they can cast their vote at the last minute potentially determining the outcome now let's fix this game and so we're going to choose uh a tried and true solution we are going to introduce a trusted third party yeah let's give a round of applause for trusted third parties no no one here should be Clapping Your Hands right now the whole reason that most of us are in crypto is because we don't want trusted third parties we want to eliminate them most of crypto has this Cipher Punk ethos of um eliminating the middleman going peer-to-peer using decentralization as a tool against uh corruption and the consolidation of power um and so trusted third parties are kind of like a Hydra yes they do solve the problem problem of information asymmetry but new problems arise in their place one of them as I mentioned is corruption so let's think about a game of rock paper scissors where we are playing for 00 million now let's also imagine that we're going to be hiding or encrypting the moves um as they're being made made and then revealing them after both players have shown their moves but we're going to use a trusted third party to do this well I as one of the players in rock paper scissors would actually be willing to bribe that trusted third party $99 million for them to leak information about my opponent's move so that I could plan accordingly and if I were that trusted third party I would have a really hard time turning down a bribe of $99 million the other problem is centralization of course and this um when we have trusted third parties they're in a position of power and in a position to extract value and what this creates is a downward cycle where the more value they extract the more entrenched they be become the more powerful that they become and we see this consolidation and centralization of power and that's exactly what we don't want so what do we do instead well this is where shudder comes in as a credibly neutral third party shudder uses a commit and reveal scheme basically to encrypt information and then decrypt it at a later point point in time in order to do this on a decentralized and credibly neutral basis we have a decentralized keeper set which works together to generate the encryption and decryption keys and they use something called threshold encryption in order to ensure uh that they're working together so this means that X Out of n Keepers need to collaborate in order to a decryption key um of course we do have an assumption here of an honest majority of Keepers but we also have some other mechanisms to keep them in line number one we have snitching so that if someone does try to collude another keeper who is not in on the plot can recognize that and basically rat out the conspirators the second is we also have a state and slashing mechanism which creates Economic Security so the keepers themselves need to put down a Financial deposit which they will lose if they collude but also members of the shudder Community can stake Financial assets on their preferred Keepers who they trust and that leads to Greater Economic Security overall and this is a generalized encryption protocol which can be applied to a wide range of different platforms um it basically is encryption as a service which you can plug in so in the case of front running and sandwich attacks we actually launched shuttered nosis chain uh or shielded voting on nosis chain in July of this year and this is the first and only implementation of encrypted M Pools on a major blockchain basically what happens now um a user submits their transaction and it goes to an encrypting RPC which encrypts the contents of that transaction it then is added to the mempool and the builders confirm the order of the transaction in the block without knowing the contents and since they don't know the cont contents of the transaction they don't really know what to do with it they uh can't front run it they can't uh sandwich attack it they don't have any good information to censor it so what they do is they just commit to putting the shielded transactions the encrypted transactions at the beginning of the block and once that transaction is ordered in the block and the order is confirmed it gets passed to the validator and the validator together with this decentralized keeper set generates and applies the decryption key and then the transaction is processed as normal for Dow voting and anti-manipulation we have had shielded voting on Snapshot live for over two years now and it has been a tremendous success we have uh provided encryption services for uh over 650 Dows and we have encrypted over 300,000 individual votes and the way that this works is a very similar process when the user casts his or her vote on snapshot they immediately encrypt the contents of their votes so you can't see whether they're voting yes or no or something else and all of the votes are encrypted for the duration of the voting period after the voting period ends then uh snapshot together with the decentralized keeper set generates and applies the decryption key and reveals how everyone voted and the final results for that proposal so as I mentioned these are not the the only applications where we can apply shudder um it can be applied to a wide range of different uh platforms and applications so let's build a better game one of the areas where this is particularly applicable are concurrent Move games or simultaneous Move games or if you want yet another name uh games of imperfect knowledge these are games where all of the players need to make their move at the same time as other players without the benefit of seeing how the other player is moving a few examples of these concurrent Move games include of course rock paper scissors but also the prisoners dilemma a classic game theory example uh diplomacy C Against Humanity secret Hitler and many many others so you could take any one of these games and use it uh or and apply shutter to it to make it more fair and credibly neutral but you can also use it for Consumer daps and there's a wide range of different use cases here um one of my favorite examples is salary negotiations so think about every time you have applied for a job they make you an offer they say we'd love to hire you what is your desired salary and by divulging that information first you're actually putting yourself at a disadvantage in a salary negotiation so a much better way to do it is for both the employer and the employee to commit to their salary at the same time and then have them reveal after both of them have made the commitment the employer would need to say the maximum salary they would be willing to pay for that particular role and that particular candidate and the employee would need to say the minimum salary that they would be willing to accept now if there's overlap between them they have room to negotiate in good faith if there's no overlap between them all negotiations immediately stop because either there's no room for agreement or somebody has lied and therefore good faith has been broken and you don't want to continue negotiating anyways a few examples uh which are more specific to crypto include bounties if you're issuing a bounty you probably don't want all of these submissions to see one another and have the benefit of seeing the other other submissions it's also a similar case uh for rfps so if you think about a request for proposals in a setting of corporate procurement you want a competitive bidding process for that contract so you want all of the proposals to be encrypted until after the submission period has ended similarly if you're doing any type of auction uh you want the bids to be encrypted and this could uh have a range of different auctions my personal favorite is a donation auction where you have a prize people donate at different amounts and the highest donation ends up getting the prize you could also use this for token auctions as well uh a price Discovery mechanism and you can also use it for non um uh games something simple like a time lock gift where you give someone a gift and then it's only unlocked on a particular date maybe their birthday or a holiday in the future so that has been a brief introduction to shudder and again shudder uses Advanced cryptography to make your favorite platforms more fair and in credibly neutral and there's three ways that you can start um benefiting from shudder today number one if you have a platform which uh needs encryption or information symmetry please get in contact with us and our Dev team would love to help you integrate shudder number two if you're just a normal crypto user you can start uh benefiting from shudder by using shielded trading on nosis chain to prevent malicious me when you trade and you can use uh shielded voting on Snapshot to protect your Dow and your votes from vote manipulation and then third if you're a builder we actually have a hackathon bounty at the E sopia hackathon so if you build using shudder uh we have a wonderful prize um it's 50,000 Shu tokens which is the governance token for shutter Dow 0 x36 um and we have wonderful resources including a very simple API which we built specifically for this hackathon and which we announced just a couple days ago thank you very much if you would like to learn more about shutter please go to shutter. network [Music]