8 days ago • cryptodaily
What is EUDI and how does Dusk Network’s Citadel fit in it?
On 10 February, 2023, the European Union published an exciting, but incredibly complicatedly named document, specifically The Common Union Toolbox for a Coordinated Approach Towards a European Digital Identity Framework: The European Digital Identity Wallet Architecture and Reference Framework, or ARF. We will dive into this document and what it means for Europe and for Dusk Network here, and to keep things brief, will follow the EU’s own suggested abbreviations for this document: EUDI and ARF.
What is EUDI?
The concept of a European Digital Identity (EUDI) has been brewing for a while now. All the way back on the 3rd of June 2021, the European Commission announced its intention to lead the way in making this product available to all European citizens. Now, almost two years later, the EU is ready to start moving on to the piloting phase. But piloting what?
In effect, EUDI is a form of identification that can be used by any citizen of any European Union member state, by any company operating in the European Union, and accepted by any business or government agency in the European Union. Rather than replacing pre-existing identity mechanisms (i.e. national ID cards), EUDI sits alongside those as an auxiliary digitized identity system. For example, a bank in the Netherlands would continue to accept the Dutch identity card for new account openings, but would also accept EUDI for non-Dutch residents, meaning that they would only need to support two forms of identity verification. This is a step forward from banks’ current options to either learn how to support a plethora of identity certificates OR to restrict services to only people with Dutch IDs.
EUDI would not be limited, however, only by the services that a member state’s identity card is used for, but rather would also extend to any interaction where attributes about a person need to be proven. The use cases that the EU itself identified are far and wide, including:
Secure and trusted identification to access online services
Mobility and digital driving license
Professional business certifications
Paying for things where different prices occur, such as toll roads
Health records such as patent summaries, or ePrescriptions
Educational credentials and professional qualifications
Digital Finance products
Digital Travel Credentials (such as passports and visas)
Currently, proving identity and credentials in the European Union is confusing and prone to errors. In fact, a huge number of different certifications are needed for whatever it is that a citizen is trying to do, which also differ in number and style from member state to member state. True to the European mission to harmonize all member states into a single trade and travel area, they wish to solve this problem with one single EUDI for all.
What is ARF?
ARF is a recent document that marks the beginning of the EUDI pilot phase. It is essentially a checklist for each member state to agree upon and harmonize before piloting can commence. This includes:
Defining roles and responsibilities of every player in the EUDI process.
Outlining functional and non-functional requirements of the EUDI Wallet.
Identifying potential building blocks.
Since each member state’s implementation of EUDI needs to be interoperable with all the others, it is critical that everyone starts by building on the same set of standards and using consistent terminology. This is important when it comes to specifics like certifying the validity of an ID or document. For example, if a certificate has an expiry date, it should automatically become invalid on or after that date. But should the issuer also have the ability to revoke the certificate at any point before the certificate naturally expires? And if something is valid ‘until it is revoked’, does it need an expiry date just in case? The ARF sets guidelines for how all these things should be set up, how the information would flow between the parties involved, and who should have access to what.
This is crucial, given that multiple parties are involved in even a simple transaction like issuing a discount rail ticket to a student. In this example, the parties include:
The student.
The railway operator.
The university (which verifies the student’s status).
A national student body (who may also have to verify the student).
The operator of the railway station (if different from the operator).
The train ticket website that sold the ticket.
As you can see, even a seemingly simple transaction like purchasing a train ticket for a student can involve up to six different parties. Can you imagine what kind of complexity might be involved in dealing with sophisticated financial instruments?
Why does Dusk Network welcome this?
At Dusk Network we believe that the ARF specifications are an important step towards improving privacy and security in the EUDI process: two of our main priorities. The above (fairly simple) example of a student purchasing a train ticket highlights the need for selective disclosures. They would allow individuals to share only the necessary information, while simultaneously making unsafe practices like sharing copies of IDs or requiring personal data completely obsolete. You can think of selective disclosures like showing someone your driving license, but with your fingers covering all the information except your photo, since that is all that is really needed.
Data leaks are becoming increasingly more common in society, and we at Dusk are alarmed that even the simplest of transactions carry a big potential for data leakage. The easiest way to protect users and organizations is to either store data in a secure encrypted format or to not get any exposure to it.
To address this concern, the ARF specifications point to a EUDI that must-have features such as certificate issuance and revocation, encryption, secure transfer of identity and other personal information, and a range of selective disclosure options.
That sounds a little familiar, doesn’t it?
Why use Citadel for EUDI?
Citadel is Dusk’s privacy-preserving digital identity solution that allows for privacy, compliance, decentralization, and a one-and-done approach to KYC. As such it would be a great choice for EUDI for multiple reasons, but mostly for privacy, compliance, and efficiency.
Privacy is a key concern for everyone involved in the EUDI process. Citadel is built using zero-knowledge proofs (ZKPs), which means that private data does not need to be revealed in order to confirm that a person has legitimate access to a service, is authorized to enter a country, or has a legitimate right to be somewhere. This approach to privacy and identity is new and revolutionary and allows for a solution that preserves privacy while still providing secure identity verification. In that sense, it goes above and beyond the EUDI’s current ambition of issuing a digital version of what already exists.
ZKPs have the power to prove that something is true without any other disclosure and in the case of the EUDI, that would translate into giving people the power to prove eligibility without having to share their identity. Whether they enter a country, open a bank account, or even access a service, Citadel would ensure that their data remains private as well as dramatically reducing any chance of hackers’ attacks.
Compliance is another advantage that Citadel offers, specifically programmable compliance. The EU can program its regulations into Citadel itself, which not only ensures compliance but it also makes it easier to update the regulations as things change.
For example, during Brexit, Citadel as the EUDI could have been used to update the system and change what was and wasn’t allowed, making it simpler to maintain compliance. Presumably, UK citizens’ EUDIs would have been made invalid.
Finally, efficiency is a crucial advantage of Citadel. Unlike traditional systems that require extensive data storage and compliance departments, Citadel eliminates the need for these costs. With Citadel, there would be no need to maintain redundant copies of databases storing the digital identities of approximately 450 million people, alongside entire legal, compliance, and cybersecurity departments. Only proof of eligibility would be transmitted, while data would not. If there is nothing to hack, there’s no need for all this overhead.
In conclusion, Citadel has the potential to provide both the EU and its citizens with the privacy, programmable compliance, and efficiency that they need to make digital identities a success. Thanks to its use of zero-knowledge cryptography and programmable compliance, Citadel offers a new approach to digital identity that is both secure and efficient and has the potential to revolutionize the way we approach identity verification.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
20 days ago • cryptodaily
Understanding Zero-Knowledge Proofs, ZK-Rollups, and ZK-EVM
Zero-knowledge proofs (ZKPs) have been a hot topic in the blockchain community, with many upcoming releases and new applications on the horizon. As a cryptographic tool, ZKPs are a formidable ingredient for decentralized, provable, and private communication. How ZKPs are used and whether they actually preserve privacy is highly dependent on the product’s use case and implementation.
In this article, we will explore the concepts of ZKPs, their applications in different use cases like rollups, ZK-VMs, and ZK-EVMs, and how it all relates to Dusk. We also delve into what scaling and virtual machines are from a high level.
Locked Boxes and Secret Words - ZKP Intro
Zero-knowledge proofs are a way of proving that you know something. However, the superpower of ZKPs lies in the convenience of their verification, rather than the proof generation itself. In fact, the verification of a zero-knowledge proof is so potent, that it can be used to exempt the prover from disclosing his knowledge. Zero-knowledge proofs provethatyou know, or that a transaction is correct, notwhatyou know or what a transaction was.
Think of it like a game of 20 Questions: imagine you're playing with someone who is trying to guess a secret word that you know. Normally, you would have to tell them the word if they guessed it correctly, but with zero-knowledge proofs, you can prove that you know the word without actually revealing it. Rather than revealing what the answer is to prove that you know it, you would have a cryptographic proof that proves that you know the answer, but not sharing what the answer actually is.
However, sometimes privacy is not the point. Say a complex calculation takes a lot of time to be performed, for example calculating a high number of permutations of DNA, or computing the end result of executing millions of transactions. You can simply provide a ZKP of the correctness of your result and let verifiers skip the calculation and validate that proof instead.
In the context of cryptography and computer science, zero-knowledge proofs can be used for a variety of applications, from enhancing privacy to scaling, voting systems, digital identity verification, and more.
What makes something zero-knowledge?
The requirements to be considered zero-knowledge are; completeness, soundness, and zero-knowledge.
Complete; if the statement is true then a verifier will be convinced. It is sufficient and needs no additional proofs or work.
Sound; if the statement is false, no amount of cheating can convince the verifier otherwise.
Zero-knowledge; no information is leaked and all the verifier learns is that the statement is true.
The key feature here is that no information is leaked and all that has been proven is the validity of a given statement.
For example, if I want to prove that I am a student and am eligible to receive a student discount, the only information the verifier learns is that “he is eligible for the student discount”. They don’t learn where I’m studying, what I’m studying, when I started studying, and not even if I am actually a student or I acquired the eligibility through some other means (i.e.ad honoris). Just that I meet the criteria.
From Traffic Jams to Lunch Rushes - Blockchain Scaling
Scaling refers to the ability of a network to increase the processing power of its infrastructure by adding more operators. In decentralized networks, however, it often happens that increasing the number of nodes (operators) results in a much slower capacity to process transactions and increased costs. Think of it like a busy highway: just like how traffic can slow down and become congested on a busy road, networks can become congested and slow down as more users join the network and start using it. This is why the capability of scaling is paramount for a blockchain.
You can think of it like a restaurant during the lunch rush. Networks capable of scaling are like establishments that can increase staffing, equipment, and space to keep up with higher demands without customers experiencing any significant degradation of services or higher costs. On the other hand, the networks that are not equipped for scaling are like expensive but poorly managed restaurants where customers get continuously turned away, or have to wait much longer to be served during peak times. In short, if a blockchain is not able to scale it may become slow, expensive, or even crash during peak load.
There are several different types of solutions that can be used to scale blockchains. One approach is known as Layer 2 (L2) scaling, which involves creating a secondary ledger that is meant to redirect traffic away from the main blockchain, known as the Layer 1 (L1). Think of it like a subway that runs under a busy street: just like how the subway can sustain a much higher load of travelers than the street above, L2 scaling solutions aim to increase the load of transactions that can be processed by a blockchain without congesting the settlement layer (the main layer or L1). Although the concept might be simple, there is no single implementation that satisfies all cases and researchers have proposed a variety of architectures each presenting different pros and cons. The main ones are State Channels, Rollups, Plasma, Sidechains and Validium/Volition.
These architectures normally complement a so-called network partitioning strategy, which involves processing batches of transactions in parallel. The most popular partitioning strategy is called sharding.
Sharding involves dividing the main blockchain into smaller, more manageable pieces called "shards." Each shard processes a subset of the network's transactions, which improves the speed and efficiency of the entire network. These subsets can be created based on proximity, processing similarity, or random distribution to balance the workload Sharding can be compared to a restaurant with multiple kitchens, each with its own chef, servers, and maître D. Each kitchen is a shard, calibrated to efficiently serve a specific number of tables. Customers are distributed evenly among the available tables, so each shard can provide the same high level of service without being overloaded. Ultimately, all customers’ payments end up in the restaurant’s bank account, which in this example represents the settlement layer.
Similarly, sharding can help to ensure that blockchain transactions are processed quickly and efficiently by breaking the network into smaller pieces that are then presented and settled on the blockchain’s main layer.
Exploring Rollups and ZK
Rollups are currently one of the most popular scaling solutions for blockchains. They work by aggregating a large number of transactions off-chain and then submitting a single transaction to the main blockchain that represents all of the off-chain transactions. Think of it like a grandma preparing a large batch of cookies: rather than baking each cookie individually, the granny can prepare a large batch of cookie dough and then bake all of the cookies at once. This helps to save time and resources, while still producing the same delicious result.
ZK-rollups, or zero-knowledge rollups, are a specific type of rollup that use zero-knowledge proofs to provide additional security guarantees and, in rare cases, some privacy. In a ZK-rollup, transactions are bundled together by the rollup and processed by a smart contract on the main chain. A prover generates a proof that the transactions are valid. This proof is then submitted to the main blockchain, along with a small amount of additional data that is needed to verify the proof.
It's worth noting that most ZK-rollups don’t provide any privacy guarantee since they use zero-knowledge proofs for the efficiency of their verification, rather than privacy. Validity rollups, which is the more correct term for most ZK-rollups, simply bundle a large number of transactions together and submit them to the main blockchain as a single transaction, by using zero-knowledge proofs to verify their validity. Technically speaking, they only use the completeness and soundness properties of Zero-knowledge proofs, but not their zero-knowledge property, so while they may not initially share all the details of a transaction in the transaction hash, it is often decodable and not as private as users may think. The primary reason for doing so is to be able to reconstruct the rollup chain in case of failure.
Playtime in the Digital Sandbox - Virtual Machines intro
A virtual machine (VM) is a software program that emulates a computer, allowing users to run programs in a simulated environment. Think of it like a playpen: just as how children can play in a safe and contained environment without disturbing the rest of the room, developers can run programs on a VM without needing to worry about the physical hardware that is running the code. This can be useful for a variety of reasons, such as providing a consistent development environment across different devices or operating systems.
The Ethereum Virtual Machine (EVM) is a specific type of virtual machine that executes smart contracts on blockchains that are compatible with Ethereum. Smart contracts are self-executing programs that can perform various tasks, such as managing digital assets, validating digital identities, or executing financial agreements.
To continue on the restaurant metaphor, think of the EVM as the chef in a kitchen. The chef has a set of available ingredients and follows various recipes to prepare different dishes. Just like a recipe, smart contracts can use and combine the available instructions to define complex tasks that the EVM then executes.
The ZK-EVM is a special version of the EVM that uses zero-knowledge proofs to provide additional security guarantees for smart contract execution. In a ZK-EVM, the zero-knowledge proofs are used to verify that a smart contract has been executed correctly, which has been a large problem for most ZK-rollups that are currently live. Many ZK-rollups couldn’t leverage the existing Ethereum tooling and ecosystem to build smart contracts and instead had to build their own languages and VMs to support smart contracts. ZK-EVM designs are determined to solve this and prove that a smart contract has been executed correctly according to the EVM specification. Zero-knowledge proofs here are used to verify the correct computation of any arbitrary EVM instruction.
How does all of this relate to Dusk?
As the leading blockchain platform for confidential smart contracts and regulatory compliance, Dusk Network is at the forefront of leveraging zero-knowledge proofs to ensure privacy and security for its users. By utilizing zero-knowledge proofs, Dusk Network is able to keep transactions private, hiding both the assets and amounts being transferred from other participants on the network.
At the core of Dusk Network is the Piecrust VM, a virtual machine that has been designed to be as optimized and efficient as possible when accessing, storing, proving, and verifying zero-knowledge proofs. This VM is specifically designed to be ZK-friendly, meaning that zero-knowledge proofs play a crucial role in every aspect of the network.
Dusk Network is not a ZK-rollup or a ZK-EVM, it is a ZK sovereign L1 blockchain that has its own Proof-of-Stake consensus mechanism and doesn't rely on third parties for settlement. Additionally, Dusk Network has its own VM implementation that does not enforce EVM-compatibility, thus allowing the platform to avoid all legacy limitations and trade-offs of the EVM. In fact, smart contracts on Dusk's Piecrust VM compile to the much more modern and portable WebAssembly (WASM) bytecode.
For third parties looking to extend Dusk Network's existing ecosystem, creating ZK-rollups and ZK-VMs would provide great ways for Dusk to offload computation from the main blockchain and provide verifiable computation from external sources onto the main blockchain. A ZK-WASM VM could provide a pathway for a ZK-EVM equivalent solution for Dusk, enabling everyone to prove that a certain computation took place and is provably correct.
In conclusion, ZKPs have a significant impact on the blockchain industry by enabling more efficient and secure systems. With their potential to improve privacy and scalability, it is worth paying attention to how ZKPs will continue to shape the blockchain landscape in the years to come. ZKP-enabled dApps are still few and far between but will become more common as ZK-friendly blockchains like Dusk enable confidential smart contracts to be built. We encourage readers to learn more about ZKPs and explore the potential applications of this innovative and revolutionary technology.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
28 days ago • cryptodaily
Dusk Network gives financial freedom with user-controlled assets
Dusk Network’s mission is to return complete and direct control to the user over their own assets, while at the same time making sure that they are always fully compliant.
Emanuele Francioni, one of the founders of Dusk Network, shares the mission and vision of the future of finance that Dusk provides. In a recent blog post he points out the limitations of the existing financial system. He follows this by arguing how Dusk Network provides the solution, and gives a brief explanation of zero-knowledge proofs. He goes on to show how compliance for the individual can be fully automated, and ends by explaining how Dusk Network can solve the inefficiencies in financial markets by tokenizing assets such as stocks, bonds, mortgages and many others on-chain.
While the mission might appear deceptively simple, it does require a fundamental rethinking of mainstream technology. Such an overhaul comprises a decentralized ledger to serve as a global settlement layer, zero-knowledge cryptography to safeguard private data, and essential protocols such as Citadel and Zedger. Citadel enables privacy-preserving digital identity on Dusk, and Zedger provides a regulatory framework for the compliant handling of financial instruments.
Francioni: Our team is composed of experts in diverse fields who are working towards our common mission. The research team is dedicated to exploring new developments in zero-knowledge cryptography, computing security, and FinTech. They are responsible for developing breakthrough technology such as PlonKup, Succinct Attestation, Phoenix, etc. The development team then implements those technologies into our software libraries, which form the foundation of our blockchain and virtual machine stack. Dusk’s libraries are also widely adopted by many other projects.
We also have a team of regulatory experts who tackle official matters that most other projects tend to avoid. With so many different aspects in play, it's clear that Dusk is a game-changer.
To sum it up, we want to give you an overview of the key building blocks of Dusk, how they fit together, and most importantly, why and how they will change the way we approach finance and ownership for the better.
The topics we will cover are:
The current limitations
Dusk’s solution
Zero-knowledge proofs
Automated Regulation
On-chain tokenization
The limitations of the current financial system
The current financial system has a lot of limitations, many of which we take for granted and blindly accept just the way they are. Those limitations present challenges to both individuals and institutions.
Individuals have limited autonomy over their assets due to the custodial nature of our financial systems. We let someone else hold our assets, from government bonds to salaries in a bank. This is mainly because the practicality of holding gold bars or piles of cash at home is quite debatable.
Institutions, on the other hand, have huge overhead costs and allocate significant resources toward regulatory compliance and data management. This process is replicated across each bank, with very little scaling or universal solutions, despite the other banks doing exactly the same thing. Not to mention liquidity being fractured across all these custodians.
The lack of self-custody translates directly into a stagnation of innovation in the financial market and an abundance of inefficiencies.
For example, arbitrage, which aims to correct and profit from price inefficiencies, is risky and out of reach for most people in traditional financial infrastructure. In contrast, the DeFi market provides innovative technology, such as flash-loans, that are freely available to everyone. The lack of self-custody and direct control over digital assets stifles innovation and creates barriers to financial inclusion and economic freedom.
Dusk’s solution
Dusk's solution is to provide infrastructure that is intrinsically compliant, private, and efficient. We believe that by embedding these principles directly within the core protocol, we’ll not only enable greater opportunities for innovation and wealth, but, most importantly, we will help the transition toward a fairer and more inclusive economy, where direct ownership and value play a fundamental role in empowering everyone to achieve financial freedom.
The protocol is engineered as a decentralized ledger technology (DLT) capable of providing fast transaction settlement, as well as immediate finality, and sybil-resistance. Every node in Dusk’s network is equipped with software with native support for zero-knowledge cryptography (ZK), which ensures the privacy and scalability of the ledger and its transactions. This is different from all other blockchains that use ZK, where the technology is kept separate from network protocol.
Instead, Dusk protocol makes use of ZK cryptography everywhere, from Rusk, our confidential smart contract platform, to all other functionalities, such as Citadel, a zero-knowledge proof, soulbound NFT that is ideal for digital identity and universal KYC.
The next thing we must consider is regulation. In order to break out of the crypto sandbox and interact with real-world financial instruments, it’s necessary to ensure compliance with the regulatory frameworks that govern those assets, such as stablecoins, but also bonds, ETFs, or other kinds of securities. Here is probably where Dusk protocol shines the most. In fact, by enabling compliance to be encoded, we can ensure the integrity of transactions and entirely remove the possibility of any violation.
You may have heard the expression “code is law”, well we made it so that law can now be encoded.
The self-driving car
To illustrate the importance of self-custody, let's imagine owning a car. Since you own it, you can use it anytime you like and don’t have to ask anyone for permission. You can even modify it, change its interiors, paint it, add a better sound system. This is the self-custody element. It’s yours. You have direct control over it.
But even if you are in control over your car, you still need to follow the rules of the road. You can’t drive on the opposite side of the road, for example, and there may be places you can’t drive or park. There are limitations on what you can legally do with your car.
However, with a self-driving car, all limitations are automatically enforced. Self-driving cars would come pre-programmed with compliance baked in, removing entirely the possibility of any traffic rule violation.
In today’s financial ecosystem, you are not allowed to take direct ownership and control over your assets. It feels just like using your own car as a taxi, driven and handled by someone else. The absence of built-in regulations means that someone else is driving (i.e., performing operations on your assets) on behalf of owners who are not trusted to follow the rules. As a result, without custody over your property, you must rely on the custodian to perform any operation you desire. Unfortunately, traditional brokers have no incentives to introduce novelties, but instead see them as a risk and a liability, considering that any undesired side-effect would threaten their license.
In contrast, the DeFi market provides innovative technology (i.e. flash-loans, AMMs, liquid staking, etc) precisely because the owner is directly responsible for his or her assets, and can freely operate according to his or her own risk appetite. This fosters access to financial inclusion and economic freedom and helps correct inefficiencies in the market. For example, arbitrage of DeFi assets is possible without the use of a leverage instrument and as such it presents very few risks and is accessible to everyone, while in traditional finance arbitrage operations involve higher risks due to leverage and are out of reach for most people.
Zero-knowledge proofs
At Dusk, we believe that privacy is a right, not a privilege. That's why we co-founded the Leading Privacy Alliance, and it's also why zero-knowledge proofs (ZKPs) are such a critical part of our project.
To provide a quick overview of ZKPs, they enable users to prove something to a verifier without revealing any information. An example I like to give is if you’re trying to get into a bar and need to be over a certain age. Using ZKPs rather than showing your ID and sharing your date of birth, your name, your address, etc, you would generate cryptographic proof that you meet the criteria. No other information is provided, just that you satisfy the minimum age requirement.
Privacy is essential for both traditional financial instruments and new web3 ones. The absence of privacy is an obstacle to mainstream adoption, since it's highly improbable that professional organizations will ever accept settling their dealings in the open and having their whole financial history public.
At the same time, we don't want to promote secrecy or backroom deals. There has been a long-standing lack of transparency in the financial system, which has led to people becoming distrustful of the institutions that govern and regulate them.
ZKPs help us to keep our critical information private from unwanted prying eyes such as blockchain snoopers, overreaching governments, and even angry ex-partners. They allow us to stay above board and ensure that transactions are legitimate, while also protecting sensitive information.
While the concept of ZKPs is fascinating, the research required to create a system that can construct these proofs at scale and speed is significant. That's why we have a dedicated research team that is working hard to push this cryptographic tool forward and turn it from a concept into a reality that can power global infrastructure.
Citadel
Citadel is a ZKP, privacy-preserving, soulbound NFT product that we have developed, and it has many advantages for both individuals and institutions.
KYC can be very costly for institutions. They have to invest large amounts of money to store and validate data and identities while also complying with regulations. They must confirm that people are who they say they are, secure the data, and store it in a way that is compliant, particularly in the case of EU institutions who must comply with GDPR. This is particularly prohibitive for small and medium enterprises for whom the costs of compliance in holding a user’s data are not offset by the advantage this can offer.
With Citadel, they no longer have to bear this expense. Individuals can complete their KYC once using Citadel and then receive a cryptographic seal of approval that they can use to interact with various services, from trading to streaming, which establishes a kind of global identity layer. This frees up significant resources for companies, who can allocate their resources to more meaningful activities.
For individuals, Citadel offers the benefit of protecting their data, as well as the assurance that their information isn't held in multiple locations. Not only would they enjoy the convenience of completing their KYC only once to access all available services, but they would significantly decrease the chance of having their personal information stolen or doxxed (which happened with Celsius, FTX, LastPass, etc).
Automated compliance
The cost of compliance is immense. The amount of resources required to comprehend, implement, and enforce it are enormous, not to mention the cost of prosecuting fraud, money laundering, and other illegal activities.
By being the custodian of their users’ assets, institutions are very distrustful of anyone’s implementation but their own. This leads each institution to duplicate the technology infrastructure that implements the exact same sets of rules, alongside maintaining duplicates of their users’ personal data and KYC/AML information, despite the fact that the rules and this information don’t vary across platforms.
To explain the supreme inefficiency of such a practice, let me offer a silly, but efficacious similitude. If the regulations were a song everyone has to listen to, each institution is paying a different band to come to perform the song for their users, rather than redirecting them to a single online streaming platform. In this example, Dusk would be the online streaming platform everybody can use.
With Dusk, the features of user’s self-custody and compliance automation at the protocol level, offer the opportunity for a universal infrastructure for each standard regulatory framework which the network supports (at the moment those are MiCA and Mifid II).
In short, by adopting Dusk, each institution would intensely benefit from avoiding the staggering costs of creating and maintaining their own system infrastructure as well as developing new products such as KYC-as-a-service (which they could offer without any transmission of personal data, thanks to the power of zero-knowledge cryptography equipped by Citadel).
Tokenize everything
The final point I will touch on today is our belief that there is a huge inefficiency in the current financial market, which is that different asset classes cannot move freely. With Dusk, we can tokenize a vast range of assets on-chain, from stocks to shares to bonds to your mortgage and more.
This will allow for greater capital efficiency, as while a bond and a stock might be different things off-chain, on-chain they are just bytes and can be traded and moved with more fluidity and ease. These types of activities are currently either impossible or very costly with a high barrier to entry.
Through blockchain technology, we can see real equality of financial opportunity, and open up the full suite of financial instruments - including those not yet seen - to everyone.
The future of finance and ownership
At Dusk, we are fully committed and dedicated to revolutionizing the financial industry, and our approach to doing so is unparalleled. As far as we know, no one else is addressing the issues we are, and we're proud to be blazing this new trail.
To help others understand what we're building, we're starting a new initiative where our team of experts - including researchers, developers, and thought leaders - will contribute articles that delve into their work, vision, and expertise. We want to make it easy for everyone, from crypto investors to institutions to developers, to understand and get involved with our groundbreaking project.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
36 days ago • cryptodaily
Market ingests today’s inflation print. How did crypto react?
U.S. CPI data has just been revealed and shows a slight fall, but not as far as expected.
Inflation not defeated
The Consumer Price Index year on year has just returned a figure of 6.4%. This is worse than the forecast of 6.2%. Does this mean that the crypto market will continue its recent move downwards?
Price changes rose across many elements of the CPI basket. Fuel oil rose 27.7%, gas utilities 26.7%, transportation 14.6%, electricity 11.9%, food in the home 11.3%, and food away from the home 8.2%.
Looking ahead, markets are pricing in three more interest rate increases, over the next three FOMC meetings, and further ahead in December there is the chance of the first interest rate cut.
Therefore, with 3 rate hikes now priced in, the market has full knowledge of what is coming and the worst case scenario is accounted for (obviously discounting a black swan event or worse/better than expected future inflation figures).
Large volatility
Within 5 minutes of the inflation figures being revealed $1.2 million in long positions were liquidated, but given the volatility around this time, $1.2 million in shorts were also liquidated.
The Dollar Index (DXY) spiked down to 102.600 and then wicked up to test resistance at 103.500, before settling back. Bitcoin seesawed around, plummeting to $21,500, surging up to touch the $22,300 resistance, and then settling somewhat at $22,000.
Altcoins were the same. There was a general downturn as soon as the CPI was announced, but then selected altcoins really took off to the upside.
Usual altcoins lead the field
The same altcoins and the same narratives that have been running over previous weeks were the main tokens to head the charge higher. AI coins were the leaders, with Fetch.AI (FET) and SingularityNET (AGIX) leading the way.
Liquid staking coins were just behind, with Lido (LDO) looking the best here. The ZK coins put on some decent gains with Mina (MINA) and Dusk Network (DUSK) doing well.
Then there were the odd few individual tokens that have constantly been pumping over recent weeks. Render (RNDR), Fantom (FTM), and GMX are among these.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
42 days ago • cryptodaily
How Dusk’s Zero Knowledge Solution Is Helping KYC/AML Compliance
Dusk Network recently announced the launch of Citadel, a bespoke KYC and AML solution incorporating zero-knowledge proofs, digital self-sovereign identity, and automated compliance with regulations.
The framework lets users control what they share and with whom. But why is this tool needed?
The Challenges Of Mass Adoption
Blockchain technology and cryptocurrencies are quickly moving toward mainstream adoption. While a desirable development, it also prevents several complex challenges with unforeseen and often detrimental effects. Mainstream adoption is more complicated than simplifying the UI/UX, as many moving pieces need to be aligned to transition into a broader economy, and while important, improvement of the UI/UX is just one part. Another critical aspect of mass adoption is Know Your Customer (KYC) and Anti Money Laundering (AML).
Why Do KYC And AML Matter?
Banks and financial institutions generally require KYC to verify the identity of their customers. Meanwhile, AML refers to the legal infrastructure put in place to curb the illegal use of funds. Both are relatively common in the traditional financial ecosystem because these operate in highly regulated environments requiring effective KYC and AML procedures and compliance. For crypto and blockchain technology to interact and gain acceptance in mainstream finance, it would also need to meet KYC and AML requirements.
While decentralized exchanges and applications may still be accessible, regulated assets are a completely different ball game. However, while crypto enthusiasts may have reservations about these procedures, these processes are enforced by regulators, and financial institutions are required to comply with them. When it comes to crypto, users already subject themselves to KYC and AML regulations when using centralized exchanges but still maintain some degree of anonymity when they move to the blockchain. However, this approach hinders broader adoption and interaction with highly regulated assets.
Zero Knowledge KYC
Dusk Network has created a blockchain capable of enabling users to interact with regulated assets in a “crypto way.” The company states that its intention is to enable users to retain self-custody of their assets, maintain privacy, transact in a trustless manner, and open themselves to a host of economic opportunities. Institutions and companies can tokenize their assets on the Dusk blockchain and enable mass adoption.
This required KYC and AML to be in-built into its technology and paved the way for zero-knowledge proofs to come into the picture, allowing users on the Dusk Network to verify the identity of its users without having them reveal it. This means users can interact with regulated assets without revealing their identities.
How Does This Work?
Transactions on the Dusk blockchain would require KYC and AML only initially. Once this is completed, users can utilize the complete list of financial services and opportunities and create their portfolio of crypto and real-world assets. Users on the Dusk Network can then trade with whoever else that has completed the same process as them. Companies can tokenize their assets on the blockchain and program their regulatory compliance. This helps solve three pressing issues. First, it automates the process of checking and verifying the details of users and ensuring no rules are broken.
Secondly, it removes the ambiguity of granting pseudo-anonymous entities access to services, and lastly, it removes additional compliance costs associated with storing and handling customer data. Once verified, users can seamlessly trade and transact without revealing their identity or providing their credentials every time they trade a regulated asset.
An Ideal Solution
According to Dusk Network, this approach is the ideal solution to ensure seamless mainstream adoption. Users can be assured that their privacy will be protected when interacting with regulated assets and the mainstream financial ecosystem. The use of privacy-preserving zero-knowledge proofs has helped automate regulatory compliance, sparing companies the added costs of spending resources on background checks and identity verification of their users.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.