Navcoin Is Becoming A High-Utility Privacy Platform
In an article last month we published some initial information about our upcoming Navcoin Core protocol upgrade named Discovery. We touched upon a few of its very exciting features such as a proposition to start burning transaction fees and removing them from the circulating supply, improvements to our privacy coin xNAV, an on-chain naming service called dotNAV, Super Proposals and more.
Today, we’re happy to elaborate even more on the upgrade and tell you about another set of features that we think will be really important to Navcoin and its ecosystem going forward. Navcoin is rooted in privacy, and so we’re excited to announce that we’re evolving into a high-utility privacy platform that new and existing projects can use to obtain privacy. As part of that, we’re introducing the ability to mint Private Tokens as well as non-fungible tokens (NFTs) with the same privacy-preserving properties as Navcoin itself, enabling on-chain trading of those through the innovative and combined use of atomic swaps and BLS signatures.
Private Tokens and NFTs will initially be disabled on mainnet, but our network has the ability to activate them anytime through a Consensus Change Consultation vote. This allows time for developers within our ecosystem to build new tools and infrastructure to support these features in production.
We’re introducing the ability to mint private tokens on Navcoin’s blockchain. These tokens are built on top of our self-developed privacy protocol blsCT, the same cryptographic protocol that enables private transactions on our network through xNAV. Transferring value through a private token will veil transaction details such as the sender, receiver and amount.
Using an innovative on-chain trading protocol, it’ll be possible to make trustless trades of one private token for another using a unique network-wide order book. Similarly, you can also trade private tokens for xNAV. Although we’re not introducing support for smart contracts, we’ve designed a new protocol based on blsCT to allow a privacy-enhanced DEX on top of it.
Private Tokens can represent arbitrary tokens created by users of the Navcoin network as well as other coins that have their value pegged and backed by another underlying asset. To better understand the benefits of private tokens, let’s look at a few examples of what they could represent:
- A private token pegged to an underlying asset such as BTC or USDT
- A private tokenized asset such as real estate or in-game items and collectibles
As a first step for Navcoin, we’ll expand our bridge infrastructure to allow bridging BNB and any other other BEP-20 token as a private token.
Non Fungible Tokens
Non-fungible tokens are unique digital assets that can be created and traded on blockchain networks. We’re introducing the ability to mint private NFTs on Navcoin’s blockchain benefitting from the same privacy-preserving properties as xNAV. Although the NFT’s associated metadata will remain public for verifiability purposes, their transfers will benefit from enhanced privacy hiding the sender and receiver.
Blockchains without privacy features have shown to leak huge amounts of metadata related to NFT ownership with the entire collection of a collector available on block explorers.
With the privacy benefits of blsCT, NFT collectors will no longer need to be concerned about keeping their items private.
Privacy-Enhanced On-Chain Trading Protocol
With many centralized exchanges now enforcing KYC, a lot of the trade activity has moved on-chain. Here at Navcoin we understand the importance of our users being able to trade freely, and so we’re introducing the ability for private tokens to be traded inside Navcoin’s blockchain.
The protocol is as simple as it’s innovative. Let’s say Alice owns Private BTC. Bob on the other hand has xNAV and wouldn’t mind trading them for Private BTC, and so he sets an order on his wallet specifying the price of which he would execute the trade. As the order stays within his wallet, no one will know that he’s interested in selling his xNAV.
Alice has been reading about Navcoin’s latest news and is truly excited about the project. She can’t wait to buy some xNAV using her Private BTC. To buy xNAV with Private BTC, Alice constructs and broadcasts a transaction using a private messaging protocol based on xNAV’s mixing protocol. It goes like this:
- Alice adds inputs up to the amount of Private BTC that she wants to use to buy xNAV
- Alice adds an output sending the amount of xNAV that she wants to buy to herself
This transaction is invalid as it’s missing the xNAV inputs and the Private BTC outputs, and so sharing it is completely safe and doesn’t compromise any of Alice’s funds, even if she already signed it. In order to facilitate the trade, Alice adds some metadata to the transaction specifying the amount of xNAV that she would like to buy and at which price, and then sends it to the network.
When Bob’s node sees this trade proposal, it’ll pick it up if the price matches the order that he previously set. Bob will then add xNAV of his own as an input to the incomplete transaction, as well as an output with the amount of Private BTC that he should receive.
Thanks to BLS signatures, Bob can sign the new inputs and outputs, aggregate the signatures and get a completely valid transaction where Private BTC and xNAV are exchanged privately and without further interaction. Alice doesn’t learn about Bob’s identity or holdings, and Bob doesn’t learn about Alice’s.
At this point, the transaction with the trade can be further mixed with other xNAV or Private Token transactions to increase its privacy and obfuscate the transaction graph, so that it can later be broadcasted or included in a block to reach finality.
The privacy-enhanced on-chain trading protocol used in the example above is valid for both Private Tokens, NFTs and dotNAV names.
Private Tokens, NFTs and our on-chain trading protocol mark the beginning of something truly unique for Navcoin as a privacy platform and the industry as a whole.
Our development team has already started looking into adding support for these features in Navcoin-js, so that they can be used in our light wallets (e.g. NEXT or NavCash) as well as to build new applications such as a decentralized exchange platform (DEXs) for Private Tokens and NFTs.