Let’s end the taboo of on-chain privacy

Let’s end the taboo of on-chain privacy

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As transparent Central Bank Digital Currency (CBDC) pilots continue to gain traction, on-chain privacy has exploded into one of the polarizing issues in the Web3 industry. However, as is the nature of polarizing extremes, neither absolute transparency nor absolute privacy will serve users' real-world needs.

In fact, the privacy vs. compliance issue has existed and has already largely been solved for, across states and time. Existing systems based in the physical domain tend to operate on the principle of default privacy. As such, state-approved mechanisms are implemented to mitigate against fraud and other dishonest practices. These introduce and enforce transparency, such as mandatory financial reporting and audit requirements. Furthermore, additional privacy protections are extended to individuals and private enterprises such that their financial reporting isn’t exposed.

In contrast, those blockchain-based, public-ledger systems that underpin DeFi operate on default transparency. This means public ledgers require additional mechanisms that preserve privacy. Then, as per their physical domain equivalents, discoverability features must be implemented to prevent money laundering, tax evasion, and other forms of malicious activity from eluding the state.

The issue, therefore, is really about Web3 accepting that while DeFi does “solve money”, it must also solve for a balance between privacy and compliance, because money will always be in the domain of the state’s law enforcement (even when the state no longer prints it).

Going beyond early teething pains

Most Web3 advocates believe that blockchain ecosystems have the potential to provide the best conditions to operate an integrated global economy that is prosperous, liquid, resilient, and fair. However, institutions are never going to agree to operate in a fully transparent environment. Compliant on-chain privacy is the catalyst required to push decentralized financial players to penetrate the mass market.

To achieve this, the Web3 community must shake off the tendency to polarize DeFi privacy projects as teetering between terrorist financier and a tyrannical surveillance facilitator. While the nascent public ledger privacy sector has been met with litigation and critical delistings — it becomes clear that now is the time for a mature solution set that respects the financial privacy rights of institutions and individual users, while providing the compliance features of its physical-domain cousins.

Now is the time to get serious about adoption. And, to achieve widespread adoption, Web3 needs to engage in a more nuanced conversation about the integral roles privacy and transparency play in facilitating the fundamental process of exchange, maintaining fair and free markets, and enabling institutions to conduct daily operations. In short, these issues are a matter of existential importance to the future of decentralized systems.

On-chain privacy, a problem solved

Panther Protocol has developed the mature, considered solution set that allows institutions and end-users to balance their privacy and compliance needs. 

With Panther, institutional players have access to a suite of DeFi tools to manage dedicated trading spaces, called Zones, to trade digital assets in Shielded Pools — revolutionizing private trades with public, on-chain settlement. 

Panther Zones are highly customizable, as are their disclosure mechanisms. The Panther suite empowers institutions to leverage privacy-protocol trades with allowlisted assets and counterparties. Designed with the operational efficiencies of institutions in mind, Panther simplifies portfolio and asset management with a suite of features that provide unparalleled privacy, security, and compliance support for public on-chain transactions. 

Panther Protocol recognizes that the path to adoption isn’t about the mechanics of privacy, transparency, or discoverability, per se; it’s about providing meaningful abstraction to the end user. Panther’s Privacy Protocol is doing for the on-chain domain what the Microsoft Office suite did for the personal computer — delivering abstractions that make it usable. However, unlike Microsoft, Panther presents a Web3-native protocol based on chain-agnostic, decentralized principles.

Here at Panther, we believe that those who understand institutional operations and pain points intimately and who apply the technical know-how to develop versatile on-chain systems with refined privacy functions will be the major winners in Web3’s next major wave: the institutional onboarding process. We intend to spearhead that revolution.

Interested in customizing your own trading Zone? Reach out to us at contact@pantherprotocol.io.

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