Garbled circuits aren’t the first proposed solution to the blockchain confidentiality problem. We have seen zero-knowledge rollups, fully homomorphic encryptions (FHE), and trusted execution environments, each subject to its own unique vulnerabilities. What beneficial aspects of garbled circuits stood out to the COTI team?
In the world of secure multi-party computation (MPC), garbled circuits have been around for a while. In their original iteration, they weren’t suitable for use on the blockchain, however, a recent breakthrough in garbled circuits reduced real-time, round-trip communication, sped up computation times and enabled the protocol to be used on the blockchain for the very first time. In terms of speed, Garbled Circuits enjoy a lower computational complexity and latency than (AHE/FHE) based solutions. Benchmark performance tests demonstrate computation speeds and major improvements to latency when compared to fully homomorphic encryption. This also directly translates to the storage required by the protocol to maintain the system’s private state. With a ciphertext size of only 32b, garbled circuits have a storage requirement that is much smaller than FHE.
Garbled circuits also demonstrate abilities that other technologies cannot. As an MPC protocol, garbled circuits can handle multiple parties in complex interactions making them suitable for privacy-centric features and dApps like confidential voting systems and privacy DEXs. With the use of decentralized sequencers, garbled circuits also enjoy a robust, distributed network that is much less susceptible to censorship and single-point-of-failure (SPOF) like those recently discovered in other solutions. With such a dramatic improvement in performance, garbled circuits emerged as the clear option for privacy solutions on COTI V2.
How do garbled circuits enable the same privacy protections as a bank? How is COTI using garbled circuits to solve the privacy dilemma?
Banks today offer a type of privacy that keeps your financial information out of public view and only shared with the bank. Despite this, security breaches, hacks, and improper access have repeatedly exposed our private information, even from within the very banks we are supposed to trust. It’s an unfortunate side effect of centralization, where everyone’s private information is stored in one place, controlled by a single entity. This is something that Web2 can’t adequately deal with. Today, there is a much better alternative: a decentralized internet based on blockchain technology, where users own their data. However, on a public blockchain, we can’t store sensitive information, such as bank balances or information, because everyone will see it. With the current state of things, you need to decide what you should sacrifice: ownership of your data or the privacy of your data.Most people are not willing to reveal their bank accounts, their purchase history, who they vote for, their medical records, etc. Businesses, even more so, need their infrastructure to be able to keep secrets. Whether it’s commercial, legal, or sensitive information, we’ll never see adoption before data protection is granted.
This is why COTI is the first to implement Garbling Circuits, built by researchers from Soda Labs. Garbled Circuits enable selective privacy within multi-party transactions by allowing developers to easily determine which parties may decrypt data or process encrypted logic, in part or full, balancing transparency with data protection. Paving the way for the next wave of Web3 innovation and adoption, COTI unlocks a whole new world of use cases, including confidential transactions, Artificial Intelligence, DeFi, decentralized identification, and more. In my opinion, it’s all about freedom. We want people to be free to both have ownership and the freedom to be who they are online, without fearing about their privacy.
COTI launched in 2017 as an “Enterprise L1″ with a full suite of technology solutions. As an industry veteran, what has COTI learned over the years, and how has it adapted to the rapidly evolving crypto landscape?
In the early days, scalability and throughput were the biggest challenges facing crypto projects. While many projects made sincere improvements to their stack, the introductions of technologies like L2′s and sidechains meant those concerns were largely a thing of the past. This is especially true on Ethereum, the network with the most liquidity, the most users, and one of the most commonly used programming languages within Web3. Despite this, Ethereum is plagued by the same limitations faced by all public blockchains. Every transaction, every asset and every wallet address is laid bare for the world to see. While originally touted as an advantage, the inherently transparent nature of a blockchain has unfortunately become an obstacle to its own growth. As more and more businesses across Web3 begin to collect and manage sensitive information, solutions for privacy aren’t just convenient, they’re crucial for survival in the future.
Part of COTI’s resilience comes down to being able to adapt to an ever-changing landscape with many moving parts. Technologies improve, laws change and markets evolve — and those who don’t adapt will get left behind. We recognized fairly early on that privacy would be the next big challenge within Web3, hence the pivot to a privacy-centric Ethereum L2 based on garbled circuits.
What challenges does COTI face in developing a regulatory-compliant V2? How are regulators responding to garbled circuit and multi-party computation technologies?
In our industry, regulators are often more concerned with projects that use anonymity to shield the identity of its users. Some of these services are often used by bad actors hoping to hide money laundering and other illegal activity. The distinction must be made however, between anonymity and confidentiality. Anonymity is the complete masking of one’s identity whereas confidentiality refers to the selective disclosure of information to authorized parties. Confidential blockchain design helps businesses meet regulatory requirements by enabling selective data disclosure. This approach ensures compliance with laws like GDPR and HIPAA while maintaining the security and privacy of user data.
The COTI Foundation launched a $50m ecosystem fund in January, with Soda Labs as its first recipient. How has the collaboration between COTI and Soda Labs been? What other types of privacy solutions is the ecosystem fund exploring?
Dr. Avishay Yanai and his team at Soda Labs have been transformative to the COTI V2 development so far. They’re responsible for the breakthrough in Garbled Circuit technology, and with our support, we were able to implement the protocol on the blockchain for the very first time. They continue to support development throughout the various phases and will likely be a part of COTI for a very long time.
In terms of other solutions, we’ve also partnered with CIVIC to provide dynamic decentralized identity services and Dojima to expand our confidentiality products across their multi-chain ecosystem. We also received a lot of interest from native developers, banks and governments to take part in our Builders program, which supports the growth and enhancement of the COTI V2 network and ecosystem. We are in discussions with more than 50 different projects in various stages of pipeline development.
How has the developer community responded to the COTI V2 Developer Network since its launch in May?
The COTI V2 Builders program has welcomed a host of new developers into the COTI ecosystem since the Developer Network was launched on May 20th. We’re currently in discussion with a number of potential partners to build specific tools and enable privacy across various dApps. As mentioned earlier, our Developer Network is rapidly expanding. We currently have more than 400 smart contracts already deployed, which reflects the diverse and active participation we’re seeing. In terms of project engagement, we are in discussions with over 50 different projects that are at various stages of pipeline development. These projects span across 14 identified development categories, demonstrating the broad scope and potential of our platform. Additionally, we’ve received several formal grant requests which are now under various stages of review. This is a testament to the growing interest and confidence in the ecosystem we’re building.
What is COTI’s long-term vision? What are its most important goals or milestones moving forward?
We believe that privacy and the protection of sensitive data on a public blockchain is the biggest opportunity in crypto over the next 10 years, and we’re not alone. This includes Vitalkik Buterin, Ethereum’s co-founder and Brian Armstrong, the CEO of Coinbase. After successfully bringing garbled circuits to the blockchain for the first time, we believe in the freedom of choice, and are going towards mass adoptions. Our next stop is Testnet during Q3 and Mainnet and COTI V2 migration in Q4. This also aligned with our $50M Builders program, an ecosystem grant program set up to incentivize and fund developer projects.We’ve received a lot of interest from native developers to banks and governments. We’ve set our milestones to strategically align with broader trends in the blockchain industry, such as confidential DeFi, DID, AI (machine learning), and CBDCs, ensuring that COTI is paving the way for the next wave of Web3 innovation and adoption.