Avalanche - Enabling Privacy and Compliance with specialized Blockchain│Martin Eckardt│ETHDam 2024

[Music] next up we have Martin from Avalanche I'm looking forward to this one take it away man thank you uh is it the other clicker yeah yeah it's uh oh it's another one this one sorry oh there we go two clickers yeah I like to confuse my speakers awesome uh thanks everyone for showing up uh I'm Martin I'm uh from the aabs team uh so uh the company um building the Avalanche Clan and very happy to talk to you guys about uh privacy today um and how that can be implemented and I think if I I have one thing to say to you is uh so if you remember one thing it's don't reinvent the wheel right like um we see many many blockchains implementing privacy today and um what we see is they Implement a lot of things they don't necessarily Implement because what I think is exe uh privacy is mainly on the execution layer right so maybe you don't have to re invent like uh consensus layer networking all this kind of thing but uh let's start so kind of like uh just to give you a feeling of what Avalanche is right like we had like the first generation of blockchains which are single chain single asset Bitcoin zcash right like there's a very limited feature set to the blockchain and then eventually ethereum came around and now we have multiple assets on chain we can do all kinds of things smart contracts and uh then the third generation of blockchains we see today are multi-chain networks so it's very important that distinguish uh the distinction here is uh now you have multiple chains in a single Network and all these chains can cater to different use cases right some may be catered at uh Enterprises some may be catered at uh gaming or whatever right uh and there may be also some that are catered towards privacy right and uh it's really important to understand like how this is different from a single chain system right like where you have only a single chain uh and the uh if you're familiar also with other Stacks you know like poka do Cosmos op uh layer twos layer 3es uh it's a similar idea um but there are slight nuances which I will talk aot about in a little bit um so the the general idea with these multichain networks is that you move from a single blockchain with one validator set and a fixed set of features to a network of different blockchains that can Implement different things and um how does this look in practice in avalanche today is we have uh the valid dator set of the Avalanche Network um they all validate the primary network if you think of it as a highway right a blockchain as a highway um uh then we can just uh build multiple highways in parallel so these are completely independent uh by taking subsets of the validators and uh just adding them and there can be overlaps and everything but the beautiful thing about it is we can get a lot of throughput um but uh keeping shorttime to finality uh how is this different from layer twos each of these blockchains is independent and is not settling to a layer one right so each of these blockchains is a layer one and um why is this important um because uh we want to achieve fee isolation and uh why is this important for privacy um because privacy is expensive right like usually privacy involves some kind of cryptography cryptography means computation and if you go somewhere in the developing world and say like hey you can do private transfers but each transfer cost you 80 cents they're going to look at you and be like thank you very much but that's not happening um so what does a fee isolation mean generally fees mean if you think of a blockchain as a highway many cars on the highway we raise the fees right we want to disincentivize people to use the highway so um if we uh have uh little to no cars on the highway we're going to incentivize people to use the highway so we are making it cheaper right like so think of a a a as a highway that has a toll that varies with the demand um so uh how does this look in practice right like uh let's say the first Highway here lots of users uh the gas fees go up and the other ones are going down and each of these highways can have its own gas token so even if the underlying asset you know like fluctuates in price you know 10x bull market everything is great um uh this is actually terrible news for the users because transactions get very expensive now right like in dollars right maybe not in the itself but in dollars all oh yeah that happens too sometimes and uh now so we talked about a little bit out fees so how we can kind of manage the whole situation around privacy is expensive right like moving privacy um off putting it on the shoulders of multiple chains can make it easier um for the computation but uh one very important thing is also customizability right like so maybe you know like our highway is great but in some instances we want to enable different modes of transportation traveling by boat traveling by train this is very easy to do in a multichain network very hard to do on a single chain system so that's why you see many of the Privacy Solutions we see today on its own blockchain or Asis right like uh it's it's quite hard to do something like this on the ethereum main net um so uh one thing you can do is obviously you can put up an EIP with some new novel um um cryptograph protocol um but this process will take a lot of time and uh it will be you have to really bring like broad Community consensus that this is a great idea and that you want to merge it into go ethereum so if you have your own chain you can do that pretty quickly right like because uh you just have to align a small community around that chain uh if you look at the stack of ethereum you can see solidity evm uh Gasper there like the smart contract layer the uh execution layer and the consensus layer in avalanche we have these different chains and what you can see is we have like one shared consensus and networking layer but each chain has its own execution layer so how does this help you with privacy so um there's a there is something that you can now do you can tweak this execution layer to your needs let's say you know you have some some researcher comes up with uh a new um cryptographic protocol instead of now putting up the EIP waiting for a year uh you can just build this into your execution layer and use this whenever you feel like it right so how does this look in practice I don't want to get too technical but the general idea here is pre-compiled has anyone here heard of pre-compiled before they also come in in ethereum yeah I see one okay think of it as a general idea of taking a go Library go Li goang is a very popular language right like uh also web 2 so every cryptographic protocol is basically implemented in one of these languages go or rust first first wrapping that in a solidity interface making it available as a smart uh as a smart contract it's not really a smart contract but something like this so with this it's quite easy for you to make all these protocols without reimplementing them just available to your evm in contract that looks something like this right we have shun at 56 and you can see that we are interacting with it as if it was a smart contract but it's actually not uh if anyone's interested in uh there a little more I'm happy to jump into it later this how the pre-compile code looks then but um yeah so what's the idea here right we can really optimize performance by reusing well audited and very well optimized go implementations in solidity smart contracts right we don't have to reimplement them we never want to roll our own crypto right so we can just use that and we also have um can increase interoperability by using cryptographic functions of other networks but actually you can even go one step further right you don't even have to stick to the evm so you can also come up with your own virtual machine maybe move based maybe rust based and build these privacy features much much deeper into the virtual machine itself right and um this opens like completely new um uh doors for you um but obviously it's a lot more work than just building on top of the evm you lose all the tooling and everything right um so I think the last thing is just like the question is like okay like we are now Distributing all this on different chains um we're having all these benefits of these different chains but what is the downside of it right um we are losing Atomic interoperability now we are on different chains right so how do we solve for interoperability within the Avalanche Network and um that is like the unique feature I think um where we have native interoperability I'm not going to get into too much detail details but basically it's a simple public um uh it's like a asimetric uh cryptography protocol um where we just use kind of like the validators of each Network as a bridge wardens or Bridge validators so no trusted third party right and um yeah so this kind of like the technical flow where we collect signatures from the validators create a aggregated signature and then submit it to the to the destination chain um yeah so if you want to learn more about like how to build these virtual machines if you're a developer or just uh we also have some non-technical courses uh highly encourage you to check out avalanch Academy um and uh there are like some courses what we talked about today was mostly customizing the evm so these both are non-technical courses um which help you to get started in general and if you want to build in privacy I highly recommend um checking out our accelerator program we're looking exactly for these kind of uh protocols that are um targeted and it's two cohorts a year um there's a $50,000 Cent per team um we accept around like 15 companies Max and at the end of the day there's a $400,000 price pool for the teams so if you're interested um please uh reach out uh or chat to me later um we'd love to see more privacy focused teams and um yeah uh would love to answer any questions I hope I think I made up some good time nice awesome thank you are there any questions what sort of uh projects are you seeing apply for these uh uh I can't what you just called it the code base yeah ex so I think uh currently we mostly see consumer apps right like so uh bringing more people on chain uh best case uh that weren't there before uh why is this the case um if we go back to the the thought of fee isolation having your own fee asset on your own chain uh this actually opens uh the doors for web two user adoption right like Web Two users the concept of paying transaction fees is very foreign to them right like you do something in a social media app you click on the button and even if it only charges you 5 Cent very very odd so um all these protocols that want to onboard these users either have the challenge of explaining to them why every action now costs uh subsidizing it right they just eat the cost um and this is like the both of these options are not so great so what most of these apps are doing is Now launch on their own blockchain uh with control over the fee asset which makes it a lot more frictionless and doesn't force them to subsidize it right and uh that's what we see a lot uh I saw an interesting project uh a prediction Market a at with two users leveraging blockchain to make it a lot easier with the all the uh Regulatory Compliance because they don't they never hold on to the assets right like uh and it's all onchain but the users basically have no idea yeah so at the end you talked about interoperability um my question is so we have these multiple chains uh there's probably a way how the chains communicate with each other right yeah and then you need to have some standard communication protocol or an SDK or something but then since it's a distribut Network there's a problem of trust right so then you end up with some oracles or not or that's that's a beauty this explodes right yeah uh the that's a that's one of the larger differences uh between the multichain networks for example uh in Cosmos it's a pure SDK right so you have no notion of the entire network you have control complete control over the entire stack but you don't really have a notion of the rest of the network an avalanche we have this thing called the pchain um called platform chain basically you can think of it as a registry of all validators in the Avalanche Network so basically a table of all these are all the validators this is their uh public key um and these are the blockchains they validate uh so now the notion of the bridge Oracle we can actually just use the validators itself as a Oracle instead of introducing a trusted third party right so uh imagine like it was really easy to have interoperability between ethereum and Avalanche or any chain if if you knew who the others validators were right uh I'm more than happy to jump into it a little bit more in detail but the general idea is how can we reuse a trusted instance like a trusted entity for this interoperability without introducing the classical Bridge wardens that are then hacked and all the money is gone very sad yeah that's what we want to avoid there yeah but more than happy it's a little bit of longer discussion but uh more than happy to dive into it yeah um thanks for the talk if I understood it uh the intersection with privacy is about lowering the computational cost of privacy what um like what are you looking for in terms of projects and privacy for codebase is it specific ways to for individuals to control the information is it for projects to become more privacy compliant just kind of tying it in with the legal talk earlier yeah I would say uh we are very agnostic about the actual use case uh it's more for us like really enabling these new use cases right like um so uh as a technology provider we are pretty low in the stack and now we just want to enable kind of like the end consumer products that are leveraging this and that are doing something that is only possible which isn't possible on ethereum even on a layer two where every transaction you know can cost especially the computer computational intensive ones can cost quite a bit have you had a privacy audit over like there everyone talks about security Audits and this came up on a panel earlier where someone talked about the concept of doing a privacy audit um have you had that for this particular thing for um Avalanche itself yeah for Avalanche yeah so since Avalanche is only consensus and networking layer there is no real privacy right it would be on the exec ution layer and uh so far there there is no meaningful uh privacy so we do have one project in the pipeline I think they are still install and they are doing private ec20 transfers um so okay trying to solve the Holy Grail of we all have ec2s how can we transfer them without anyone knowing because everything is public because I think that's and thanks for answering I think one of the things that's come up a lot is just how users need to be able to choose their level of privacy in away and I think the concept of a privacy audit is something that gives that potential user kind of some kind of third party attestation of like yes this is actually private because the reality is the end user never knows and so yeah just a thought yeah time for one last question no thank you very much that was really good thank you [Music]