Private Finance: Blender launches as the industries only free ERC-20 Privacy Mixer in the race for privacy on ethereum.
ADD.xyz has been working behind the scenes to develop their proprietary digital asset mixer, ahead of a year full of regulatory hurdles and threats from governments across the world.
Nigeria became the first country in 2021 to outlaw the use of cryptocurrencies, in particular Bitcoin, as they became the largest nation in the world in Bitcoin P2P trading volume. In statement by the Nigeria’s Securities and Exchange Commission (SEC), in a letter issued to all banks, exchanges, mobile networks and third party services, that the facilitation of Bitcoin trades was banned. The ban comes as millions in Nigeria, as well as other countries follow suit, moving to digital assets to curb massive inflation and corruption across governments on the continent. Similarly, regulators with the US Financial Crimes Enforcement Network (FinCEN) have put the wheels in motion to force all non-custodial software providers to KYC their users; resulting in any individuals using decentralised wallets being forced to submit identity documents in full view of the financial authorities.
ADD.xyz has finally launched a new privacy solution in the DeFi space, dubbed the Bl3nd3r, aptly named after its blending function for users. Users deposit DAI & ETH, with other currencies being enabled over time. The service uses a well known encryption method called ZK-snarks, using proofs and keys to allow users to submit and withdraw their digital assets to brand new ERC-20 addresses with no previous chain of transaction history.
The latest developments on privacy technology are now being heralded as ‘PriFi’ or Private Finance, as DeFi companies are being polarised with some opting for regulated solutions such as Debit Cards, having the requirement to know who their users identity.
How to use ADD’s Blender
It’s relatively straightforward to track a users spending habits on the blockchain. Both Bitcoin and Ethereum transactions are publicly visible. Only one transaction is needed to trace back and expose the full transaction history of the user.
Mixers are one of multiple solutions which have been developed over the past few years.
A transaction mixer works by mixing together the deposits from multiple pseudo anonymous users, before the transaction arrives at the designated recipient address. Once mixed, it becomes mathematically challenging due to the cryptographic mathematics used to mask the users and their transactions. Knowing who the users are and the amounts is near impossible.
ADD.xyz’s Bl3nd3r mixes transactions using zero-knowledge proofs, which obfuscates users and their deposited assets. By using smart contracts, depositors have some level of transparency in having third-parties verify that those contracts work as intended, while still keeping user privacy intact.
How much does it cost to use?
At ADD, we believe in providing financial access to services for as many users as possible. That’s why we’ve decided to launch with no fees at all, unlike Tornado Cash who does charge? We will maintain the running costs so that users don’t need too. At the moment, there are considerably high gas costs due to the ethereum network.
Is it safe? Audits
ADD’s blender has been fully audited by Peckshield in our initial V2 platform release. In fact, or initial smart contracts were based on Forks of Tornado.Cash, so you can rest assure that the base of our contracts are safe.
How to start: https://add.xyz/blender
Most importantly, as a decentralised anonymising software, there are no third parties which take custody of your assets or are able to execute administrator operations in order to disrupt the process. Your funds are non confiscatable.
Users of our Bl3nd3r will be able to mix Ethereum and DAI initially.
How does ADD.xyz Bl3nd3r achieve privacy in Ethereum?
ADD.xyz’s Bl3nd3r enables privacy for users when sending transactions by disrupting and breaking the connection between the sender and recipient address. There is no way to link the withdrawal from the Bl3nd3r from the sender, this is done by using complex smart contracts with zkSnarks proof, which accept deposits into our liquidity pool (Bl3nd3r) and spits out the assets to a new address, by using the proof (or a key) provided at the time of deposit.
By using zkSnarks, all transactions are 100% anonymous, ADD.xyz’s Bl3nd3r acts as a proxy between parties.
As the users deposits assets, a secret and a unique hash is created and sent to the Bl3nd3r Smart Contract. The contract then adds this hash to a list of deposits.
Once you have clicked on deposit, you will be taken to the coin options. Select an asset to move forward.
Once you have selected ETH, you will be shown the deposit amount options. To increase anonymity, all users will only have the options of 0.1, 1, 10 or 100 ETH.
As you continue to confirm the transaction by sending your deposit. Users will receive a special note. It is VITAL that users backup this note, preferable on an offline device to ensure it’s kept safe. Having access to this note is all that is needed to withdraw your funds from the privacy pool.
When a user decides to make a withdraw, that user states the note (similar to a key), which is an equivalent to the secret to unlock a specific hash from the smart contracts list of total hashes on the Bl3nd3r. The user also needs to designate a brand new ethereum address to receive the ETH.
We understand that there is final line between privacy and history. That’s why we hae opted to allow users to clear their cache via the platform, or otherwise historical transactions will be stored in their browser session for up to 14 days before it expires. This allows users to see what deposits have been ‘spent’ (as in withdrawn). Transaction histories will automatically generated after the first deposit made on the privacy platform, and will be shown on the start page of the mixer.
Towards Measuring Anonymity
It is important to be able to measure quantitatively the guarantee that is given to the system. The degree of anonymity can be increased by using multiple anonymity networks such as Tor, Crowds, Mixmasters, I2P and others.
The measurement of anonymity can be gained by assessing the ‘Anonymity Set’, which will give a gauge of how many other deposits within the bl3nd3r that your transaction can be mixed with, until it’s withdrawn. As the liquidity within the Anonymity Set increases, so does degree of anonymity.
Off-chain to On-chain — Staying Anonymous with deposits
On-ramping into anonymity networks and blockchain privacy protocols is a major challenge. When sending ETH deposits, users data can be recorded in various forms, while you enter a liquidity network and exit anonymously, privacy is still compromised at the point of the on-ramp into that specific anonymity network. Its the classic chicken and egg problem.
That’s why ETH Bl3nd3r enables two different on-ramp options:
- Using a web3 wallet (Metamask, Trezor, Ledger, Wallet Connect, Formatic and Trustwallet, etc)
- Or via Relayer
The first deposit method may lead users to create a new Ethereum Address, and that leads to the on-ramp vulnerabilities raised previously. The second deposit method via relays is more secure — here is how it works
We use a relayer to forward your deposit from a brand new ETH address into the ETH Bl3nd3r, providing you with the zkSnark Proof and Hash. This masks your initial depositing address, providing greater all-round privacy.
Full Stack Interoperability with Lending
Users may want to Mix their Ethereum deposits in the Bl3nd3r before depositing to the DeFi lending Platform, which can now be done in one single place.
Once the development phase is completed, our operator addresses for the Bl3nd3r will be set to 0x000000000000000000000000000000000000 on pool instances (0.1 ETH, 1 ETH, 10 ETH, 100 ETH and 1000 ETH).