Privacy on Polkadot Recap

On 22nd February, we hosted the Privacy on Polkadot event, featuring a series of talks and discussions with members of the Polkadot Ecosystem around the topics of bridges, rollups, shared security and privacy in DEXs and DeFi.

The event was supported by our media partner Zero Knowledge Podcast. To view the recordings of the event, view the playlist here. Follow ZKValidator on Twitter to hear about our upcoming events and to support us, stake your DOTs, instructions here, or KSMs, instructions here, with us.

Event summary:

• Polkadot Pioneers Prize is an initiative from the Web3 foundation that has allocated 80% of 1 million DOTs (~17 million USD) to foster the innovation of Zero Knowledge applications in the Polkadot ecosystem. Grants that will be distributed during 2022.
• Astar Network is building an “app store” for the blockchain. Astar is the Polkadot-native dApp hub supporting Ethereum, WebAssembly, dApp Staking, and Layer2 solutions.
• Moonbeam is a native Ethereum Virtual Machine (EVM) in Substrate that allows cross-chain connectivity and access to the Ethereum and the Polkadot ecosystems.
• Manta Network is building a privacy focused hub on Polkadot with flexibility on the assets used as well as a payment gateway and swapping application.

In this blog post, we will summarise each of the presentations and the main points discussed during the panel discussions.

Polkadot Pioneers Prize

Watch the video here

The event started with Alistair Stewart and Alexio Sanchez from Web3 Foundation presenting their initiative Polkadot Pioneers Prize, an incentive prize program with the goal of propelling technical innovation on the Polkadot network. Prizes are funded by the treasury with close to 1 million DOTs (~17 million USD) available.

The project will distribute the funds towards Zero Knowledge solutions and other innovations in the Polkadot ecosystem. The Zero Knowledge category of the program makes up 80% of the fund. The allocation will be towards zk projects, audited zk protocols on Polkadot, zk games, general purpose computation, and ID verification, amongst other solutions.

Zero Knowledge Cryptography has been granted the majority of the budget because of its impact on privacy and its potential not just for Polkadot, but for blockchain more broadly. The second area targeted by the fund is the development of infrastructure for Polkadot, specifically, incentivising the implementation and delivery of alternative implementations of Polkadot nodes including full nodes, authoring nodes, and/or collator nodes. The intention is to create a more resilient network, and provide builders with more options to integrate with Polkadot. The program will officially launch in Q2/3 this year.

Astar Network

Watch the video here

Sota Watanabe, co-founder of Astar Network, presented the project, which aims to become a next generation multi-chain smart contract hub on Polkadot, supporting EVM, WebAssembly and multiple bridges.

The project launched mainnet in January, after pivoting to building their current smart contract hub. Currently Shiden, which lives in Kusama and Astar, their parachain on Polkadot are both live.

Astar is working on ZK rollups, and has integrated with zkSync. Soon, they will connect to bridges from Ethereum, Binance Smart Chain and the Cosmos ecosystem.

Astar is looking to become the “App Store” for blockchain, a hub where users can easily access all the apps available in a user-friendly way, without commission and will soon deploy the v2 of their interface.

Moonbeam

Watch the video here

Derek Yoo, CEO of PureStake and co-founder of Moonbeam, gave an overview of the project, its current state and future plans. Moonbeam is an Ethereum compatible blockchain built in substrate, which allows native-cross chain integration via XCM.

The main value proposition of Moonbeam versus other EVM compatible blockchains is that by being part of the Polkadot ecosystem, Moonbeam can offer functionality and support for a wide range of use cases that a standalone EVM cannot offer. Moonbeam is aiming to become the door to Polkadot for any project with an EVM code base, due to the ability to deploy their apps without making any changes.

According to Yoo, the dApp deployment architecture has been evolving from mono-chain to multi-chain. Rather than copying and pasting the dApp in multiple chains, there is a shift towards native multichain, which means a dApps can span the functionality of multiple specialised chains while maintaining a unified user experience.

Manta Network

Watch the video here

Shumo Chu, co-founder of Manta Network, shared the status of the project, which aims to be a privacy layer for Polkadot.

According to Chu, Manta Network is a shielded protocol based on the “Bring Your Own Token” approach used by Zcash. It can be defined as a privacy provider with flexibility on the assets used.

Manta Network works by minting the user’s public tokens into shielded tokens, which can then be sent to other shielded accounts. The shielded tokens can be transformed into public tokens again. Manta’s value proposition is to bring privacy to all the chains in the Polkadot ecosystem and is the first project to run a zk-snark on Substrate.

Currently, the dolphin testnet is live and since being deployed in December, the testnet has surpassed 20k transactions.

The next upgrade for Manta will be MantaPay 2.0, which will be launched in late February or early March. New features include:

• Reusable addresses: targeting a more user-friendly experience
• View keys for selective disclosure and regulation compliance
• 10x performance boost on prover (1/10 of the zCash Sapling implementation constraint count)

Panel discussion about bridges, rollups and shared security

Watch the video here. This panel was moderated by Anna Rose and featured Derek Yoo (Moonbeam), Pranay Mohan (Nomad) and Rob Habermeier (Polkadot)

For Polkadot parachains, interoperability is achieved through the XCM protocol. Messages are transferred between chains in a format that is interpretable by sending and receiving chains. Through the shared consensus mechanism of Polkadot parachains, the legitimacy of messages can be easily verified and security is guaranteed. For interoperability of blockchains beyond Polkadot parachains, the execution environments will differ and an alternative approach to XCM may be required, such as Nomad’s bridging solution. Nomad is an interoperability protocol for sending messages between blockchains. The protocol uses an optimistic mechanism that allows the state root of one chain to be confirmed optimistically and sent with a trustless relayer to the destination chain. There is a challenge period where a fraud proof can be submitted if a message is not genuine. In particular, for EVM chains, where there is no clear standard for interoperability, bridges can be designed in a multitude of ways with grave consequences for a badly designed bridge. Nomad is one such solution for bridging, and it was established during the panel discussion that different designs can exist, but there must be a baseline of security.

The term bridging in itself can infer many concepts with the main use case of transferring tokens. For instance, bridging could refer to connecting rollups to a main chain or data availability layer, connecting multiple layer one networks or moving between parachains. Bridging can also take on a more general purpose, for example, cross-chain functions calls or moving general data packets between chains which is factored into XCM’s design decisions. Consequently, use cases in the realm of privacy could be implemented in the future with XCM. Currently, private bridging is limited to moving assets in and out of private zones.

Panel about privacy in DEXs and DeFi

Watch the video here. This panel was moderated by Anna Rose and featured Shumo Chu (Manta) and Guillermo Angeris, Researcher.

In this panel, both speakers shared their views regarding the main challenges of private AMMs. For Guillermo, the hard thing about any general private application is that the global state always leaks information about what is supposed to be private. This is why it is hard to make full privacy guarantees where there is a global state. For Shumo the real problem is on the AMM scheme itself. It is hard or almost impossible to trade without knowing the price. That is why Manta’s privacy promise is not leaking the user’s identity rather than price.

Guillermo introduced the definition of Differential Privacy, which is a method that allows the user to choose between leaking the price while protecting its identity or paying a higher premium to protect all aspects of the transaction.

The importance of hiding identity or price varies according to the speakers. Hiding the ID of the user is important because people don’t want their whole history of transactions leaked. For example, it can be sensitive for use-cases such as payrolls. Meanwhile, hiding price is relevant because it can help traders stop others from reconstructing their strategy. This is important for high-frequency trading, as a frequently observed practice is discovering another traders strategy and front-running them.

Event Metrics

Feedback from attendees was positive with 96% of respondents rating the event 4 or 5 out of 5. 73% of respondents said privacy is valued or highly valued in Polkadot, scoring 4 or 5 out of 5. Since the event was funded by the Polkadot treasury, we are sharing in the table the budget using an approximate DOT average price for the past two months of $18.

Conclusions

From this event, we can conclude that privacy within the Polkadot ecosystem is far from being pervasive. Initiatives such as the Polkadot Pioneers Prize, allocating almost $14 million towards Zero Knowledge projects, may help to push privacy forwards in the ecosystem. The interconnected nature of parachains could allow projects such as Manta Network to offer their privacy capabilities as a service to other networks in the ecosystem. However, there are still some difficulties regarding absolute privacy in AMMs due to the leakage of some data when operating within a system using the global state. Concurrently, the bridging space prioritises security and privacy is considered to be secondary.

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