Privacy is a major concern for decentralized finance (“DeFi”) and general cryptocurrency users. The widespread belief in anonymity used to lead many to use currencies like Bitcoin and Ethereum, but this is quickly fading as more surveillance comes to light. A group of scientists are working to solve this problem through a project known as the Railgun Project.
This is hardly a new concern. For example, Tim Copeland wrote an article in early 2020 highlighting the trivial nature of “doxing” or the disclosure of sensitive personal information about Ethereum wallet owners just by using their publicly known wallet details.
That’s why the Right to Privacy Foundation sponsored a new DeFi project called Railgun earlier this year, which is being led by a group of scientists in Europe, Australia and Canada. RAILGUN, a data protection system based directly on Ethereum, from which you can interact directly with DEXs or Distributed EXchanges and other DeFi applications, enables users to participate in cryptocurrency and DeFi-based activities and ensure financial freedom without fear of being spied on by anyone.
Privacy with Ethereum-based ZK-SNARKS used to be considered impossible, but new breakthroughs in cryptographic technology have made it possible for the first time to only use smart contracts with Railgun.
What is RAILGUN?
RAILGUN is a collection of smart contracts (computer code that enforces rules and performs a function to meet transaction obligations in DeFi applications) that use zero-knowledge evidence (which are ways to prove certain things about entities without revealing what they are or sensitive details about you). This collaboration enables RAILGUN users to exchange currencies and use apps in the DeFi area without linking their original address or other activities. Your finances stay private.
According to the project lead researcher, Mr. Emmanuel Goldstein, the system will be fully available on the Ethereum network in July. Users can deposit ETH, USDC, renBTC, renZEC and other tokens into the RAILGUN system and become anonymous so they can trade privately with the tokens on file.
Unlike previous attempts to create privacy on Ethereum, no new nodes are needed, and no “Layer 2” or additional infrastructure based on Ethereum is needed.
“RAILGUN only uses zk-SNARKS in smart contracts, so everything is in the chain, with full Ethereum security and without compromises,” says Mr. Goldstein.
The project team has also announced that it will include a private DEX in the private system, and the ability for third-party wallet apps to automatically include Railgun’s privacy as a free feature. By creating an ecosystem where privacy, anonymity, transfers, trading and other activities take place in one place, all participants benefit from an ever larger and louder pool of anonymity. All users of the system are able to piggyback the activities of others.
How is RAILGUN different?
Previous iterations of data protection protocols have not achieved the flexibility, security and privacy guaranteed by RAILGUN. Proven solutions such as mixers lack functionality and convenience. For example, they do not allow internal shielded transfers, cannot interact with smart contracts, and users have to work in fixed denominations, which means that users cannot do business effectively with their protocol with ease or efficiency.
The technology behind RAILGUN
The core component that gives RAILGUN privacy and anonymity is the use of zero-knowledge proofs. Similar to Zcash, RAILGUN uses zk-SNARKs to prove the validity of screened transactions without revealing any information about the sender, recipient or transaction amount.
Once the evidence has been verified by the smart contract, it updates the Merkle tree which accumulates all generated banknotes (i.e. encrypted credit in possession of a public key controlled by the recipient) and cancels the used banknotes (i.e. in possession of the sender) . This prevents users from double spending or making money out of nowhere. To put it simply, zksnarks is a verification system and “zero knowledge” means that the verifier has no knowledge of the sender, recipient or the amounts of the transaction, which gives users complete privacy and anonymity.
Railgun delivers what users expect in terms of a modern user experience. If you’ve used MetaMask or any other popular wallet, it will be known transparently. You don’t have to worry about how the zk-SNARK proofs are generated or verified or how the RAILGUN smart contracts protect your privacy. All of the complex tasks are handled by the wallet itself, with no added complexity to the users. What’s more, it’s open source so anyone can check it out at their own discretion.
What can users do with RAILGUN?
RAILGUN will be for those who believe privacy is a fundamental human right. Users can:
- Conduct darkpool style trading where no one can copy your farming strategies
- Make confidential payments to your attorney when seeking legal advice in personal disputes.
- Make new coin investments without warning those following your wallet
- Build a shielded equilibrium without outsiders knowing the specifics of your diamond handbags
- Receive donations without outsiders being able to see the donation history
- Prevent spying and data gathering about your transaction habits
- Avoid being attacked by advertisers or scammers for your DeFi habits
- Stop checking your DeFi habits before having dinner with you
Where can users find out more?