An early-stage Ripple advisor, CBDC inventor, and Air Force Major walk into a bar. What happens next is a conversation about the impact of privacy, the future of blockchains, and leveraging game theory for the good of all.
This Slogging.com thread by Akasha Rose, Anish, Justin Roberti, Oliver Gale, Arthur Tkachenko and Ramadan Ameen occurred in slogging's official #amas channel, and has been edited for readability.
Welcome Anish Mohammed, Oliver Gale and Ramadan Ameen from http://pantherprotocol.io to the Hackernoon Slogging arena.
Anish has been an early-stage advisor to Ripple, one of the original reviewers of Ethereum orange paper, and involved in the design & design review of dozens of blockchains and dApps, including Ocean and Boson. Oliver is an entrepreneur and CBDC inventor with 10 years experience building, advising and investing into blockchain and fintech projects. Ramadan is a Former Air Force Major, and start-up fractional CFO with 5 years at BlackRock working front, middle, and back-office with institutional relationships across the institutional spectrum.
Hi Akasha Rose thanks very much for giving us the opportunity.
We would be happy to answer any questions you have for us.
Anish hello thank you for joining us.
Anish If you look at the wave of new retail investors that have bought BTC over the past two years, how many of them are aware of the custodianship of their crypto assets? It seems like the vast majority don't realize that Gemini, etc. is actually holding the asset -- when you integrate a cold storage/self custodial feature, are you targeting specifically institutional investors? Or is there a benefit for the retail buyer who has perhaps accumulated some gains during the mostly uninterrupted BTC bull run?
Also, Anish I recently covered the proposal to the SEC about regulating fractional/limited run NFTs -- and now it seems that nearly everyone with any public profile is tokenizing some part of their lives. What can all these new NFT entrepreneurs do to protect themselves so they don't run into compliance issues when SEC establishes regulation (possibly as a security)? How does Panther help future-proof emerging compliance issues, which seem almost a given with NFTs since they are so enormously popular right now?
The issues on compliance and regulatory authorities is something which is a tough problem. We are trying to achieve a middle of the line solution which is to allow users to have the ability to do selective disclosure. As for all the NFT entrepreneurs, it's again a hard question to answer, there is always going to be regulatory arbitrage which folks try to leverage. Understanding the risk and making the right trade-offs might be a good path, again in this instance I shall add a disclaimer my legal expertise is limited
The purpose of offering self custody is to enable users, retail or institutional, to have direct control of their own zAssets. One of the major advantages of DeFi is the ability to eliminate and mitigate counterparty risk of those third-party custodians. The ultimate value to users is sovereign private assets. We see a future in which institutions prefer to allow users to manage their own keys as it reduces costs of storage to the institutions
NFTs or otherwise, the values to all users of a protocol like Panther is the ability to restore sovereignty over their data and who has access to it.
Doesn't keeping custodianship of the key to the user also shift the risk of a lost key to the user? It's one of the first objections to crypto you hear from people outside the blockchain industry.
Panther Protocol primarily focused on providing the privacy needed to enable "traditional" financial services to move to blockchain? (and therefore, more focused on enabling apps for enterprise and institutions, less for the retail buyer)
The beautiful thing is the ability to implement different key management systems at the wallet level. The user can use centralized wallet issuers who manage their keys entirely on their behalf, they can use a secure multiparty computation scheme for managing 1 of n keys enabling things like recovery services in the event they or the institution loses a key, or they can manage their keys entirely on the client-side. The reason we hear so much about this outside the blockchain world is there is a misunderstanding of the choices available and the flexibility afforded by this technology.
Hey Oliver and Anish, thanks for joining us. Can you tell us more about Panther Protocol, what it does, who it's for, and why we should use it?
What crypto-community should tell Elon about his latest "move"? While I agree, mining eating a lot of electricity. But data centers eat like 1% of energy worldwide. Should Tesla ban servers too?
Akasha Rose thanks for the question, we generally answer this in two parts, generally goes with real-world impact and use case and benefits. I try to explain how we are different, and we add to the table from a technology perspective. We try to marry both cryptography and game theory to provide privacy to users.
Zero-knowledge proofs alone would only provide limited value add in providing privacy. What we aim to do is to leverage some game theory to make sure there are enough participants in the protocol that privacy is a very highly likely outcome. The example that I generally use is that of using zero-knowledge proofs to prove one membership to a group of one to that a group of hundred thousand. We are leveraging game theory to both price privacy and to find equilibrium condition.
Awesome, I look forward to hearing from you about the real-world impact. For the complete crypto noob, can you explain what zero-knowledge proofs are and why they are important?
Would also like to hear more about the game theory involved and the different factors you have weighed up in the mechanism design if that's a possibility. i.e. what objectives did you put first in designing the incentives?
Akasha Rose happy to try to explain zero-knowledge in simple terms. In general, this is more like you have a room with just one door, if it's just you and me - I would be the prover and you would be the verifier. I make the claim that I can get out of the room without using the door. You would then close the door behind me once I enter the room. A few minutes later you see me outside. So my claim that I can escape from the room without using the door is proven to be true. But you as verifier don't know how I did it
The reason zero-knowledge proofs are important is until recently, there was a trade-off between privacy and authenticity. Zero-knowledge proofs can provide authenticity still providing privacy.
Akasha Rose, for more detail I would point to our white paper when it gets released. However, I shall try answering this. In general privacy in mixers implies we need to incentivise folks to participate in the privacy mixing pools - loosely speaking. The larger the size of the pools the better privacy, but it becomes more expensive. So it becomes the optimisation of where the equilibrium condition exists where we can provide privacy at the optimal price point.
The most important factor for any open source community is the community itself. The people that align to the vision, mission and values of the project take ownership of it and in that way it decentralizes, becomes anti-fragile and ultimately, when successful, makes its way into the cultural fabric of digital and real-world society. Panther aims to enhance, protect and preserve human sovereignty. Restoring privacy using zero-knowledge proofs allows for all users to control their data and thereafter share it according to their preferences.
What are zero-knowledge proofs? Proofs that someone knows a value without revealing the underlying information. In a simple sense, in most disclosure settings the important thing is to satisfy some set of conditions. With zkps we have the ability to prove things like AML transaction compliance without revealing the underlying data.
What do you think the future holds for Ripple and Ethereum? Anish ? will they continue to dominate by Market Cap? Or will other blockchains take over?
Full disclaimer - I am guilty of being one of the original reviewers of Ethereum Orange Paper, and have given talks at Swarm summit. However in my humble opinion, given the massive network effect and the very large developer community - if Ethereum manages to solve some of the scaling pains and delivers eth 2.0 in reasonable time scale it is very likely that Ethereum would still the major “flavour”. Some of the recent developments in Eth ecosystem such as EIP1559 indicates folks involved in ecosystem design decisions are keeping their ears close to the ground and looking at possibilities. In many ways, Ethereum is a victim of its own success and it should be able to leverage that success to be a dominant player in future.
Ripple has a relatively large network effect of users, financial resources, strong lindy effects, and is likely to successfully defend itself in legal actions brought against them by the SEC, in my view, so it will continue to perform in the near term. Longer-term, I see Ripple as a niche payments protocol.
Both those perspectives are very interesting! Do you think there will ever be room for a privacy token like Panther or one of the others to be in the top 3 by market cap?
There are two perspectives to this, one is that of something which I describe as “institutional”, entities that depend on their market strategies to earn their revenue, and second is that of the average users in the world of central bank digital currencies.
For the above-mentioned institutionals - loss of privacy might result in loss of “alpha” - or their ability to have their own strategy. To compare this to real-world, take Renaissance Technologies the worlds largest hedge funds - we hardly know their strategies. However in Defi world, as it stands that doesn't exist.
Following our chain of thought, assuming that CBDC’s don't really support privacy, then arbitrage - which is driven by data - especially in the case of FANG- I believe would give rise to increasing need for privacy for average retail users, once they are cognizant of what is happening and the price they pay for lack of privacy. Assuming if either one of the above turns out to be true, the chances that privacy protocol such as Panther being in the top three could be pretty high.
Oh, that's really interesting, I hadn't seen it like that!
You are most welcome 🙂, our team is very diverse, so it gives us a different perspective. And we are open to being challenged 🙂, so ideas get their tires kicked as well ....
Of course, there are different perspectives on what drives value to those protocols which are dominant today and emerging protocols seeking to offer different properties, like interoperability or transaction throughout, to the market. In my view, there are a few core properties of public blockchains that make them contenders for dominance in the market.
First of all, a blockchain solves the Byzantine General’s problem of coordinating actions amongst adversaries who have an incentive to collaborate but also to betray each other under certain circumstances. As such, it’s fair to say that each of these protocols imposes friction into the network in order to reach consensus.
The real question then is what compromises are worth making on the consensus mechanism to achieve the use case, eg. store of value vs. payments. Outside of the consensus cornerstone of value are a wide range of use cases for protocols built for layer 1 or layer 2. When we began Panther we assessed the industry from first principles and it’s clear to us that privacy is a ubiquitous use case and a digital service demanded by every party in some way.
By creating a protocol that effectively prices and creates network effects for the privacy of any digital good in a multi-chain manner there is an opportunity to enhance all networks in this way. In this light as a meta protocol, Panther is positioning itself to become a ubiquitous service and a leading blockchain.
Well, that is very good to hear!
@channel any further questions for the Pather Protocol team before we wrap up? It's been a very enlightening thread!
Thanks, Panther team for joining! We'll see you next time!
Akasha Rose, it was our pleasure! Thank you so much for hosting us and we look forward to doing this again very soon.
About Panther Protocol
Panther Protocol is an end-to-end privacy protocol for DeFi. Panther provides DeFi users with fully collateralized privacy-enhancing digital assets, leveraging crypto-economic incentives and zkSNARKs technology. Users are able to mint zero-knowledge zAssets by depositing digital assets from any blockchain into Panther vaults. zAssets will become an ever-expanding asset class for users who want their transactions and strategies the way they should always have been: private.