Privacy is a major concern for decentralized finance (“DeFi”) and general cryptocurrency users. The widespread belief in anonymity once led many people to use currencies like Bitcoin and Ethereum, but this is quickly fading as the oversight grows stronger. A group of scientists worked to solve this problem through a project known as the Railgun Project.
This is not a new concern. For example, Tim Copeland wrote a item in early 2020, highlighting the trivial nature of “doxing” or disclosing sensitive personal information about Ethereum wallet owners, simply by using their publicly known wallet details.
For this reason, earlier this year, the Right to Privacy Foundation sponsored a new DeFi project called Railgun, led by a group of scientists in Europe, Australia and Canada. RAILGUN, a privacy system built directly on Ethereum, from which you can directly interact with DEXs, or distributed exchanges and other DeFi applications, allows users to engage in cryptocurrency and DeFi-based activities, ensuring financial freedom, without fear of ‘be spied on by anyone.
Privacy using Ethereum-based ZK-SNARKS was once considered impossible, but new breakthroughs in crypto technology have made it possible for the first time, using only smart contracts with Railgun.
What is RAILGUN?
RAILGUN is a collection of smart contracts (computer code that enforces rules and performs a function to fulfill transaction obligations in DeFi applications) that uses zero-knowledge proofs (which are ways to prove certain things about entities without disclosing what they are or sensitive details about them). These, working together, allow RAILGUN users to exchange currencies and use applications in the DeFi space without linking their home address or any other activity. Their finances will remain private.
According to the project’s principal investigator, Mr. Emmanuel Goldstein, the system will be fully operational on the Ethereum network in July. Users will be able to deposit ETH, USDC, renBTC, renZEC and other tokens into the RAILGUN system and become anonymous, allowing them to act with the tokens they have deposited, in private.
Unlike previous attempts to create privacy on Ethereum, no new nodes will be needed, and there won’t be a need for a “layer 2,” or additional infrastructure that runs on top of Ethereum.
“RAILGUN only uses zk-SNARKS in smart contracts, so it’s all on-chain, with full Ethereum security and no compromise.” Mr Goldstein said.
The project team also announced a private DEX to be included in the private system and the ability for third-party wallet apps to automatically include Railgun privacy as a free feature. By creating an ecosystem where privacy, anonymity, transfers, exchanges and other activities all take place in one place, all participants benefit from an increasingly large and noisy pool of anonymity. All users of the system can piggyback on the activity of others.
How is RAILGUN different?
Previous versions of privacy protocols failed to achieve the flexibility, security and privacy guaranteed by RAILGUN. Existing solutions like blenders are sorely lacking in functionality and convenience. For example, they don’t allow protected internal transfers, can’t interact with smart contracts, and users have to operate in fixed denominations, which means users can’t transact efficiently using their protocol, with any ease or efficiency.
The technology behind RAILGUN
The central component that brings privacy and anonymity in RAILGUN is the use of Zero-Knowledge Proofs. Similar to how Zcash works, RAILGUN uses zk-SNARK to prove that protected transactions are valid without revealing any information about the sender, recipient, or transaction amount.
Once the proof is verified by the smart contract, it updates the Merkle tree which accumulates all the generated notes (i.e. the encrypted balance belonging to a public key controlled by the recipient) and cancels the consumed notes. (i.e. owned by the sender). This prevents users from doubling expenses or creating money from scratch. To put it simply, zksnarks is a proof system, and “zero knowledge” means the verifier has no knowledge of the sender, recipient, or transaction amounts, thus providing users with privacy and anonymity. complete.
Railgun comes with what users have come to expect in a modern user experience. If they’ve used MetaMask or any other popular wallet, it will be familiar to them. They won’t have to worry about how zk-SNARK evidence is generated or verified or how RAILGUN smart contracts protect their privacy. All the complex tasks are handled by the wallet itself, without additional complexity for the users. Plus, it’s open-source, so anyone can audit it as they see fit.
What can users do with RAILGUN?
RAILGUN will be for those who believe that privacy is a fundamental right as a human being. Users will be able to:
- Do darkpool style trading where no one can copy your farming strategies
- Make confidential payments to your lawyer when seeking legal advice on personal disputes.
- Enter new coin investments without alerting those following your portfolio
- Build a protected balance without strangers knowing the specifics of your diamond handbags
- Receive donations without strangers being able to see donation history
- Prevent snooping and the collection of data on their trading habits
- Don’t be targeted by advertisers or scammers based on your DeFi habits
- Stop all dates watching your DeFi habits before you dine with you
Where can users find out more?