v0.0.41 Release - PIVX token swaps
The Sentinel Desktop Client v0.0.4 introduced not only the first blockchain-based SOCKS5 P2P routing network (URL to SOCKS5 article) but also a blockchain-based in-wallet ERC20 token swap (centralized prototype). This swap features provides users with a safe, anonymous means of accessing Sentinel’s native utility token $SENT without the risks associated with traditional cryptocurrency exchanges.
The Ethereum platform allows any native ERC20 token to be stored at a single address and provides a common fee token for transactions. However, Ethereum has yet to implement any transactional privacy protocols, which is a cause of concern for many users.
Sentinel’s solution to the lack of privacy on the Ethereum network is an interoperability solution that allows ETH/ERC20 token holders to swap tokens to a chain with properly implemented transactional anonymity protocols and then swap the anonymized tokens back to new Ethereum addresses.
Sentinel’s latest 0.0.41 release includes PIVX to SENT transfer which is the first step of the Ethereum anonymization process. Soon the SENT to PIVX bridge will be released and the transaction flow will be complete.
Zerocoin Cryptocurrency Protocol
The importance of fully anonymous cryptocurrency transactions.
Zerocoin protocol is a mixing protocol that obscures the origin and transactional history of a cryptocurrency, severing the link between the sender and receiver and providing a high degree of anonymity.
Coins are pooled together in an exchange for a temporary currency called Zerocoin, with exchanges recorded on-chain.
Zerocoins are then claimed by submitting a “zero-knowledge proof”, a computationally intensive process that proves ownership without requiring any personal information or transaction history.
Claimed zerocoins are converted back to the initial cryptocurrency with no link between input and output transactions. Users remain completely anonymous and are safe from:
- Malicious tracking of the user’s cryptocurrency history.
- Hackers targeting your ERC20 address.
- Fungibility issues due to scam accounts attached to the transactional ledger.
Advancing the Zerocoin protocol.
PIVX is the first Proof-of-Stake (PoS) cryptocurrency to adopt the Zerocoin protocol, enabling eco-friendly staking with complete anonymity.
The PIVX wallet allows you to convert between PIVX and zPIV, the Zerocoin equivalent of PIVX. This essentially creates brand new Zerocoins, which are then tracked on a public ledger.
Unlike other Zerocoin implementations, zPIV offers some unique and useful features:
- A user can hide the zPIV coin balance.
- Small fixed denomination spends to avoid tracking large transactions.
- Fast verification and network synchronization requiring just 0.5 seconds to convert and 2.5 seconds to spend zPIV.
- Multiple denominational spends in a single transaction.
- Automatic conversion option from PIVX to zPIV.
Using the PIVX to SENT centralized swap bridge
Convert PIVX to SENT in the Sentinel Desktop Client in 2 easy steps:
- The user initiates the process by entering the ERC20 deposit address that the converted PIVX will be sent to.
- The user then has to send PIVX to the specified address shown in the client which will then trigger the conversion and the transfer of converted tokens to the user specified address.
Internally, the client executes the following actions:
- Upon receipt of the escrowed funds, the Sentinel-ETH node signals the PIVX node to transfer PIVX to the user-nominated address via an automated smart contract.
- The Sentinel client transfers the amount required to the address of the Sentinel-ETH node.
- The Sentinel-ETH node then communicates with the PIVX node via APIs, requesting a transfer of an equivalent value of PIVX to the PIVX address. It does so by taking an average of various exchange API inputs.
Anonymization of Cryptocurrency
The obtained PIVX can be converted into ZPIV and back within the PIVX wallet, providing the user with anonymized coins without a transaction history.
In an upcoming release, PIVX can be converted back to any supported ERC20 token via the Sentinel centralized swap bridge.
Extending Sentinel’s Token Swap to include PIVX’s Zerocoin-enabled network allows users to obfuscate the transactional history of their ERC20 tokens. This effectively hides their crypto-asset’s paper-trail from malicious third parties.
This swap process is fully centralized as of now however the team will be working towards a decentralization solution. The primary hurdle to decentralization is the dynamic pricing of the concerned tokens. Details on oracle and swap price settlement consensus will come soon.