Ethereum Is Scaling!

Ethereum has seen an explosion in innovation and usage in the last few years. The “Defi summer” of 2020 was the blossoming of decentralized finance, later followed by the success of NFTs reaching the mainstream world.

While it was a great party for the Ethereum community, it has also made obvious the scaling limitations of Ethereum.

High transaction fees have priced out many users and led them towards alternative Layer 1 blockchains which often make trade-offs with security and decentralization to achieve more scalability.

But Ethereum is not giving up on scalability! Ethereum 2.0 will enable a higher transaction capacity, but also, and maybe more importantly, we’ve seen the emergence of Layer 2 scaling, and specifically the idea of a rollup-centric roadmap for Ethereum, which is already unfolding before our eyes.

The goal of Layer 2 scaling is to move Ethereum activity off-chain, on second layers. Rollups are a type of Layer 2 solution where the idea is to execute a batch of transactions on the L2 and post them on Ethereum in a compressed form called “rollups.”

Obscuro is an L2 rollup solution, alongside Arbitrum, Optimism, StarkWare, Zksync, and others. It means Obscuro users will enjoy fast and cheap transactions. But there’s another dimension to Obscuro that sets it apart from other rollups solution.

The Other Battle

Scalability has been rightfully identified as the main battle, which Obscuro is proudly fighting alongside his brothers in arms. But there’s a lesser-known battle taking place in the Ethereum world, a darker one, one we don’t talk about as much.

Sometimes, we hear frightening rumors and echoes. It is fought in the underworld and the dark forests. The enemy is hidden, invisible, and everywhere, lurking, creeping over us, breathing in our necks, waiting for us to make a mistake.

One single mistake, one second of inattention, and it might already be over for us. This is the battle for privacy. And there’s been many casualties.

Identity Leaks

The more innovations on Ethereum, the more ways you can leak details about yourself and your financial activities. And those details can be used by attackers to target you. NFTs are a good example.

It’s hard to resist the temptation of showing off your newly minted NFT or cool ENS domain on social networks, but this effectively links your Ethereum address with your social profile and makes yourself a target of hacking, identity theft, mugging, kidnapping, and blackmailing.

For example, this seasoned Ethereum user tells a daunting story. He was one click away from losing $160 million. He linked his social profiles with his ENS domain pointing to an address containing over $160 million in ETH.

He was then targeted by a sophisticated social engineering attack which took weeks to unravel and trap him. In the end, he had the lucidity to check the code and escaped, but if we envision billions of people using Ethereum one day, this type of attack will be devastating.

In Web3, there is no social safety net to save you from these situations.

While there’s a certain level of confidentiality guaranteed by the pseudo-anonymous nature of public blockchains, this is mostly an illusion of privacy, since most on-ramps and off-ramps in and out of Web3 are done via centralized exchanges, which store the real identities of their customers.

Web3 services are also a privacy black hole because RPC providers expose users’ IP addresses and other metadata even when no transaction occurs. They could potentially link addresses between themselves and even link them to real identities, and store or share this information.

Additionally, non-private transactions are susceptible to aggressive data-mining and harvesting techniques that certain advertising firms use to target non-consenting individuals while abusing their personal privacy.

MEV

Ethereum transactions are visible to anyone in the mempool before they are executed. It means they can be front-run and value can be extracted from them, a practice known as MEV (Maximal Extractible Value). The mempool is a scary Dark Forest, and monsters are real.

There’s a wide range of MEV attacks, and the MEV monsters are constantly finding new and terrifying ways to extract value from users.

If you’re a regular Ethereum user, chances are you’ve already been exploited by MEV, maybe unknowingly. It can be as simple as forgetting to set your slippage on a DEX like Uniswap, and there’s likely a horde of sandwich bots ready to feast on your transaction.

By some estimates, front-running was valued at $1.4 billion annually in early 2021.

We’ve seen how the public nature of smart contract blockchains like Ethereum makes them a very adversarial environment, not very suited for mainstream adoption. Paradoxically, Web2 is in some ways more private than Web3.

While you have to trust a centralized entity in Web2, you generally don’t expose your data to the whole world like you do when you use Ethereum. But friends, hope is not lost!

Obscuro: Let There Be Light!

Obscuro is combining state-of-the-art scaling knowledge with battle-hardened encryption technology to create an EVM-compatible environment with low gas fees and confidentiality.

Not only does Obscuro scale Ethereum, but it also offers encryption thanks to a powerful weapon: the TEE. TEE stands for Trusted Execution Environment. It’s a Secure Enclave found in CPUs where you can execute fully confidential computation. It’s a black box.

Obscuro leverages Secure Enclaves to create an optimistic-based roll-up solution on Ethereum where smart contracts are confidential. This is how Obscuro enlightens the dark forests of Ethereum: within Obscuro, your privacy is protected by default, and the mempool is hidden; MEV monsters can’t hurt you there.

To our knowledge, there is only one other brave warrior attempting to fight for privacy with an L2 roll-up solution on Ethereum; it’s Aztec and they are using zero-knowledge technology.

Obscuro developer Tudor Malene explains in this post why he thinks Secure Enclaves is a better-suited weapon to achieve general-purpose privacy.

This battle for privacy is not unique to Ethereum, and Obscuro can count on some solid allies like Secret Network on Cosmos and Phala on Polkadot. Together they are the three muskeTEErs of privacy, united by the TEEs they use to slay their enemies.

A New World

We’ve seen how Obscuro keeps you safe from the lurking threats of the Ethereum world, but privacy is not just about keeping you safe and protecting your identity, it’s also about enabling new blockchain use cases and inviting new participants to take advantage of Web3.

Financial markets present a compelling environment where privacy is needed to prevent inadvertent disclosure of positions and front-running of trades.

In traditional markets, dark pools, OTC trading, and sealed auctions are commonly used to exchange assets in a private manner.

Obscuro is an ideal platform for those use cases to bloom and onboard a new class of institutions and individuals to Ethereum.

Obscuro is also a welcoming place to empower businesses because they rely on privacy to prevent competitors from seeing valuable proprietary information like supply chain partners, investment strategies, primary sources of profit, etc.

And maybe it’s in the metaverse where the full potential of confidential computation is unlocked, who knows? As a general-purpose privacy solution, Obscuro allows entire smart contracts to be hidden.

And there are a lot of exciting ways to experiment with NFTs and gaming when you can hide the code.

• Loot boxes and nested NFTs: With Obscuro, we could make a game where players earn loot boxes NFTs and can exchange them on a market, even if they’re unopened. We need the private computation of Obscuro to prevent people from looking at the NFT metadata and seeing exactly what’s inside the boxes.

• We can build on-chain versions of classic games like Poker or Battleship where it’s essential your opponent doesn’t know your strategy or your cards.

• Exclusive content: As an artist, you can hide exclusive content in your NFTs, which only the owner of the NFT is able to see.

• Game lores: We can deploy the entire plot of an adventure game or a treasure quest on-chain, and no one will be able to look up the storyline in the code to cheat!

• Shapeshifting NFTs: We could imagine an NFT collection where attributes evolve based on any blockchain or real-world event, and no one could predict the changes because the code is private. Let’s say you’ve minted a character that looks basic at first, but you realize he morphs into a wolf every full moon. Wow, you’ve actually minted a super rare werewolf!

And certainly, a myriad of other use cases we haven’t even thought about. Obscuro welcomes new and creative ways to leverage scalability and privacy. If you have an idea, let us know!

Find Out More

If you’re interested in learning more about Obscuro, check out our litepaper or dive into our whitepaper. Chat with the community on Discord and follow us on Twitter.

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