I recently spoke with Matan Almakis, the Head of Project at Data Ownership Protocol. In our conversation, we discussed the challenges of transparency in blockchain systems, balancing privacy and compliance, and ensuring ethical governance in a decentralized ecosystem. We also touch on the future of the crypto industry and what it will look like in the next five to ten years. I hope you enjoy it.
Hello Matan. It’s great to have you for this conversation. Let’s begin with your origin story.
Thanks for inviting me. I’m stoked to share my story and talk about all the cutting-edge work we’re doing at Data Ownership Protocol (DOP).
My professional journey began in the blockchain space around 2021. At the time, I was a researcher at Lamina, Israel’s first IoT-focused Layer-1 blockchain. You could say this was also when I truly explored my knack to drive growth for pioneering blockchain startups and help them reach their full potential.
As someone with a B.A. Degree in Social Sciences and Sociology, I’m always looking to solve real-world problems through whatever I do. And then, I did an M.A. in Organizational Development and Consulting, which gave me the skill set to build companies.
By combining the two, I could embark on a journey to build startups that solve problems for the masses, as we’re doing at DOP. I’ve been with them since July this year. It’s great to be a part of something big, something so visionary.
We’re transforming data ownership completely, and that’ll impact many lives in many different scenarios. And part of my job role is to make sure this happens the way it’s supposed to.
Okay. So, transparency is often hailed as a USP for crypto and web3 protocols—it’s pretty much the holy grail for many. But resonating with Vitalik, among others, you point out the problems of over-transparency. Can you please elaborate on that?
Sure. That’s a great question.
First of all, transparency has its merits. The on-chain visibility that blockchain systems enable is indeed groundbreaking in many ways. It prevents black boxes, for instance. Plus, you can avoid manipulations or, for that matter, trace criminals. The Ilya Lichtenstein and Heather Morgan case is an example here.
But from a privacy and autonomy perspective, transparency is a two-way sword. Because anyone can watch your on-chain activities, even with ‘pseudonymous’ identities, digital privacy effectively goes for a complete toss.
More so, with advanced analytics and sleuthing tools available in the market now. Joining the dots to link users and transactions, despite using privacy solutions like ZCash or Tornado Cash, has become pretty easy nowadays.
Above all, as Vitalik highlighted in a recent research paper, existing on-chain privacy mechanisms are often in conflict with emerging compliance obligations. This compels users to play a zero-sum game: all or nothing.
You either reveal everything or don’t use blockchain-based systems at all. That’s not done. Compliance and privacy can very well work together—we have proof.
To continue that point, how are you solving the compliance-privacy conflict, and what does it mean for end-users?
We’re pioneering user-controlled selective disclosures for on-chain data. That’s basically turning Vitalik’s theoretical vision into a practical solution for the mass market. Moreover, it’s about taking crypto privacy to the next paradigm, i.e., data ownership.
Contrary to existing privacy solutions, DOP will help end-users access full data control, zero-knowledge KYC, and customized data disclosure. DOP users can also participate in the ecosystem’s development, building on top of our open-source framework.
DOP is a way to empower crypto users by enabling them to only disclose as much information as they deem fit. For example, while paying a merchant, you can only show what coins you hold in your wallet without revealing the exact balance or past transaction details.
Because your transactions aren’t altogether exposed to the public, you face lower risks of front running, social pressure, phishing scams, extortion, data scraping, etc. But the best part is that this doesn’t hurt compliance.
Counterparties can verify whether the coins they’re receiving came from any known exploit or sanctioned entity. We can achieve this using ‘association sets’ and advanced zero-knowledge cryptography. It’s thus a win-win situation where we serve both ends: privacy and compliance. No conflict. No harm.
Dealing with user data is tricky terrain where you have to ensure you are meeting ethical standards. How do you ensure that?
Centralized control over the process of creating association sets and storing data are two of the biggest ethical concerns in our domain. We’re addressing both from the very beginning.
DOP is committed to adopting decentralized frameworks to build a fully self-governing ecosystem where the community has the final say. We will further establish a DOP DAO to nominate a rotating committee of node operators, algorithmically, to monitor the platform for risks.
Maintaining a shared blacklist of prohibited wallets will be a key responsibility of this committee. External entities and users can also flag concerning activities, submitting proposals, and investigation requests via dedicated channels.
Finally, DOP will implement a token-based governance mechanism to let the community participate in the decision-making process. This crowd-sourced approach will ensure that DOP mitigates threats and risks without any centralized points of failure or control.
You couldn’t have built something like this without facing technical challenges, could you? Please tell us about the major ones and how you’ve overcome them.
Of course not. We faced not one but many challenges.
Balancing privacy and compliance—the very basis of our solution—is a massive challenge in itself. No one has ever done that before, really. At least not at scale.
But we found a way to make this possible with ECDSA hashing and zk-SNARKs, among other elements. Anyone interested in the details can read our white paper.
We also had to ensure seamless cross-platform interoperability so that DOP is relevant across the board. Restricting users to a proprietary wallet would have been restrictive. Multi-wallet compatibility was thus a must-have for flexibility, familiarity, accessibility, and, most importantly, a rich user experience.
That’s why we embedded universal compatibility into DOP’s technical architecture, making the protocol future-proof.
Before parting, where do you see the crypto industry in the next five-ten years, and how does DOP fit into this roadmap?
Crypto is still in its early days, and there’s a long road ahead. But despite all the noise naysayers create, especially when something negative happens on the fringes, this is the best time to be bullish. I see a very bright future—something altogether different from what we’re used to, something user-centric.
And I say this with such conviction because the tools and systems we need for such a future are already coming around. From robust proof systems to data ownership solutions like DOP, most of the core stack will be ready in the next five to ten years. That’s when crypto and blockchain-based systems will become what the Internet is today, minus the flaws and faults.
As for DOP, we’re super excited now that our technology is ready. We’ve recently deployed the Testnet for the public to get a glimpse of what’s coming. Starting off with Phase I—Private Transactions—this is the beginning of a revolution.
The Testnet phase will be live till Q1 2024. We invite users and developers to explore the protocol, check for bugs, and provide feedback about the experience in general. We’re testing features that’ll be live on the Mainnet as well, so you get a complete picture from the get-go.
Plus, to incentivize testers and early adopters, we’re distributing 1% of DOP’s total supply as testnet tokens. This will have a 2-year vesting period with monthly claims, which each unique tester will receive based on their wallet and IP address.
There’ll be no double counting. We’ve worked hard to ensure a fair game. Happy testing. Happy building.