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An end-to-end solution for privacy in DeFi
If you’re new to Panther, you may be asking yourself what it is and why it exists. Panther Protocol provides DeFi users with interoperable, fully collateralized privacy-enhancing digital assets, leveraging zkSNARK technology and offering a novel price discovery mechanism for privacy. Existing privacy protocols are incomplete because they fail to be composable with public decentralized finance infrastructure and are not compatible with regulatory compliance.
In a previous post, we looked at the various reasons why privacy is so important in a world where surveillance is becoming ever more ubiquitous — and how Panther’s approach to selective disclosure means that aligning privacy requirements with the need for compliance is now a problem that has been solved for the first time.
This solution means that users of Panther Protocol are able to mint zero-knowledge zAssets by depositing digital assets from any blockchain into Panther vaults and using these zAssets across a full range of DeFi applications. In other words, Panther enables the creation of interoperable, zero-knowledge assets (zAssets) collateralized 1:1 by their original counterparts.
While the experience for Panther’s users will be seamless and easy to understand, the protocol itself consists of various composable moving parts which all work together to allow for private transactions within existing DeFi public networks. At this point, it is worth a deep dive into the architecture to highlight some of these components that will make up the system.
As ever with a protocol that is being developed, some of this technology may be enhanced over the coming months and years.
Principal actors in the Panther Protocol system
Users are the system’s primary users — in other words, the owners of assets who interact with the Panther ecosystem via a wallet interface, whether this is an existing third-party wallet or a Panther wallet. Panther is equally suitable for both retail and institutional users, so the term ‘Users’ is deliberately agnostic.
Service Providers are entities that provide applications which support private transactions of zAssets by Panther users. Optionally, they may also request to verify attributes of the users and their transactions, e.g. in order to satisfy regulatory compliance requirements, but this is not an implicit part of their role.
If the user is prepared to do so, they can voluntarily disclose attestations to Service Providers, thus establishing the trust relationship of a Service Provider towards a user of their service and allowing them to interact privately whilst reducing the risk exposure of the Service Provider.
It is also conceivable that the model could be used to establish trust in user-to-user (peer to peer) transactions, or even between Service Providers (business to business).
Trust Providers are entities which provide verifiable statements (attestations) about users, which allow Service Providers to increase their level of trust in those users.
Trust Providers are publicly visible and reputable organizations. They could be banks, specialist KYC providers, certification authorities, government departments, notaries or a partner working on their behalf such as an electronic signature provider.
In our permissionless model, anyone can become a Trust Provider, and it is up to the Service Providers to decide which Trust Provider(s) they will trust. If a Service Provider announces that they will accept equivalent attestations from multiple Trust Providers, then a user wishing to transact with that Service Provider also has some freedom in which of those Trust Providers to use.
Panther will make it easy for the users to receive and securely store these attestations in a decentralized manner, and to retrieve those attestations and pass them to any Service Providers which need them. The attestations can be provided and verified either off-chain or on-chain; in the latter case, zero knowledge proofs are required in order to avoid public disclosure of confidential data.
Principal technical components of the Panther Protocol system
The composable elements of the protocol that will be used by the above three groups of actors are as follows:
Panther Vaults: Autonomous, zero knowledge, self-custodial smart contracts which act as decentralized custodians for collateral of zAssets.
Our current design uses mixers on an Ethereum sidechain to implement Panther Pool functionality, with the Panther Vaults holding native ERC-20 assets on Ethereum Layer 1. We will provide a token bridge to allow transfer of tokens between the sidechain and Layer 1 DeFi smart contracts. In order to provide a seamless experience for the user, stealth addresses and adapters will be deployed to support operations for DeFi protocols such as Uniswap.
Panther Pools: Allow users to privately transact on any Layer 1 blockchains that are integrated with Panther (we call them peerchains) through the use of 1:1 zAssets issued on that peerchain.
Pools may be established in any currency, whether these contain stablecoins or any other cryptoasset. We assume that users may choose different currency pools, if none of their native currency pools is suitable for them, or if a pool of other currency is more suitable to their use case.
Panther Privacy Miners: Nodes in the Panther ecosystem which provide zAsset liquidity to Panther Protocol and earn Panther Tokens.
Privacy Miners are Panther Protocol network participants that provide zAssets to Panther Pools in exchange for Panther tokens and through rewards granted by the Panther DAO.
The role of Privacy Miners is likely to change over time. Their role at the early stage network will be critical to bootstrap liquidity in Panther Pools. As the protocol scales organic transaction volume, it is expected that privacy mining rewards will diminish naturally. Similarly, as volume increases, the cost of privacy decreases, creating a virtuous cycle. We will write a later post about the role of price discovery in terms of privacy.
Panther DAO: A decentralized autonomous organization for protocol governance. In the later development phase, governance decisions related to treasury management will move from Panther Foundation to Panther DAO.
Relayers: A network of proxy nodes for relaying transactions onto the peerchain in a privacy-preserving manner.
Panther DEX: This will be developed in subsequent phases to enhance the level of decentralization, and to become an industry-leading Layer 1 inter-chain DEX with privacy features.
The Panther Token ($ZKP) is a finite supply privacy-preserving governance token that represents a right to vote on governance proposals on the Panther Protocol. It is designed to support the function of the protocol and provide incentives for its maintenance.
Some examples of how the Panther Token will provide utility are as follows:
- To provide one (but not the only) way to pay for mint and burn fees that occur whenever an Ethereum-based asset is used as 1:1 collateral against tokenized private zAssets
- to provide one (but not the only) way to pay relayer fees for new private Ethereum addresses
- to compensate miners, using open market pricing mechanics, for creating liquidity within the Panther Pool on Ethereum
- to fund with a portion of transaction fees the Panther DAO and any future implementations of Panther Improvement Proposals (PIPs)
- to allow quadratic voting within the Panther DAO
- to compensate Trust Providers for providing attestations about users.
In the second phase of Panther, in the interchain DEX implementation, $ZKP could also be used for paying various fees on the DEX.
It is worth noting that there will only ever be 1,000,000,000 $ZKP.
An example of where $ZKP will not be used is when processing transactions and smart contracts using native ETH to enable a simple user experience when using zAssets and interacting with DeFi.
There has only been room here to provide an overview of some of the Protocol’s moving parts, but in later posts we will examine specific components and sit down with the tech team to unpack the technical aspects in a more detailed manner.
Panther is a decentralized protocol that enables interoperable privacy in DeFi using zero-knowledge proofs.
Users can mint fully-collateralized, composable tokens called zAssets, which can be used to execute private, trusted DeFi transactions across multiple blockchains.
Panther helps investors protect their personal financial data and trading strategies, and provides financial institutions with a clear path to compliantly participate in DeFi.