Sebastian Bürgel: HOPR – The Peer to Peer Network Changing Data Privacy #463

Transcript

welcome to epicenter the show which talks about the Technologies projects and people driving decentralization and the blockchain revolution I am Frederica ANZ and I'm here with maheroy and today we're speaking with Sebastian Burger who is the founder of Hopper which is a mixnet that we'll talk about in just a second but we before we talk um with um with Sebastian about Harper um let me tell you about our sponsor this week our spawn says tell you how which is redefining the wallet as a public good um you can think of it like a community-owned alternative to metamask it offers a very smooth user experience and has an impressive user interface and

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community ownership and public goods by um sponsoring ether JS um and uh pledging two and a half percent of their total token Supply tool get coin academic head to tally.cash download to redefine your web 3 wallet experience and also we as epicenter hiring so we're looking for Community manager to help grow our audience and take epicenter to the next level so if you're passionate passionate about crypto and creating great content please let us know and contact us and for details can be found out are found in the show notes um and please feel free to share this

top um description with anyone who you think might be a good fit for this position Sebastian it's a great pleasure to have you on it's absolutely pleasure to be on my favorite crypto podcast to be here thank you for having me fantastic Sebastian can you give us a little bit of background about yourself um what what happened before blockchain I read you went to East Yeah so basically uh first of all the the university that I did most of my degrees in uh is called eth Zurich for the ones who haven't heard it has indeed nothing to do with ethereum it's been around for over 100 years before

ethereum existed but yes it's a funny thing so yeah my life prior to joining the crypto movement was actually in micro technology so um I did a PhD here at dth Zurich I'm focusing on using microfabrication and micro Technologies for biomedical applications um it's a pretty exciting thing to do I had a great project there but unfortunately then the crypto bug had had stung me and I decided that I would first need to take uh you know some unpaid vacation before I realized okay I have to go all in there's no way I can stay in this old Academia world I had co-funded a fintech startup here

in Switzerland and had a little bit uh feeling for what permissioned Innovation actually means and how cumbersome it actually is if you want to build something novel in the old school banking world so you know I'm very much a believer in permission less Innovation after the experience that I made there and yeah so then had to again pivot more towards crypto so I am co-founded a blockchain education and service company called validity Labs where I worked for a little over four years full-time in educating people on public blockchains and working on tokenization projects from startups to like large corporates

and Swiss banks and yeah it was there that we realized that there's really a um a Missing Link in the technology stack that builds up this web 3 and yeah that's I guess what we'll we'll talk about in a little bit and also kind of the discovery period of uh of funding Hopper okay so in a nutshell what does Hopper set out to do yeah so fundamentally any sort of crypto application is needs to send data across the wire somewhere right so for any sort of application that you can think about you need to send Digital Data from A to B and it might be you know your Bitcoin

transaction which you send from your Bitcoin wallet to some note which might be your own or might be a hosted provider it might be if you think about something totally outside of financial transactions maybe uh we're talking about something like filecoin right where you want to query and access data or maybe we're thinking about the graph right to access on-chain information you always have this setting where you need to send data from A to B and that data is kind of typically it's secure right it's end-to-end encrypted so I cannot um I cannot change the data and I cannot impersonate you usually but it's usually not private and that's what we set out to change

so if Frederica is requesting data from any web 2 or web 3 service she is kind of inherently also broadcasting her IP address and third parties can see things such as where she is when she requested the data how often she requested data and like how big this data packets are so even with end-to-end encryption there's a whole lot of metadata that all sorts of third parties not just like these evil um kind of three-letter agencies that I was thinking about C but also you know um more obvious things such as your internet service provider and other for-profit organizations they can see that data and use it against you so Hopper sets out to solve transport

privacy for the weapon web3 so I mean like stating this problem in a in in in in a different way like this problem has existed since the beginnings of the of the internet right so one way to maybe think about this issue is even in a normal postal system when let's say I'm sending a normal normal analog paper post to Frederica with a from so it's a there's a from address it is my address and the two address which is address and it goes to the postal system and is going to touch the Swiss and German postal systems in this case so anyone that is handling that uh envelope knows

from N2 and he knows that pieces of data and if Frederica and I communicate very frequently well they know that these two individuals write to each other uh every month hence they are friends or something like that can can be gathered without reading any of our of our letters and that the postal system can do now shifting to the Internet it's it's exactly this exactly very similar where it's um the message is originating from my IP address so that's the from and it's going to another IP address which is freezer equals which is the two the except the thing is

in the internet I'm I'm sending messages much more frequently then I'm sending physical envelopes uh so I'm doing a lot more communication than we used to like 30 years back let's say and and then the other the the other issue is that the people in the postal system is like a Swiss post and the German post that was handling the metadata which is the from N2 but on the internet the metadata might be handled by lots of different parties um and I might not know any of these parties and these parties may not even be any kind of like sort of official

organizations like the like the postal service at all right yeah I think it's a I think it's a great analogy and uh to to make it a little bit more drastic there's this great meme going around Twitter every now and then where uh people are actually uh somebody was receiving not a letter but actually a little packet and this packet was unfortunately wrapped in kind of some shrink wrapping format and to make matters worse and to highlight why there's a privacy issues when you send stuff around it was actually kind of a female sex toy right so that could be publicly seen and was probably very embarrassing to the person who received

it so yes that's a great analogy and um so what Hopper does there to to take this analogy back to what we do at Hopper is people are so weird taking these packages we are chopping them down into little pieces that look indistinguishable from one another right so you cannot see any more okay Frederick is typically sending like these large envelopes when she's sending like you know some contractual agreement and she sent like some small things which looks like a postcard for more personal stuff so and that sort of stuff is what we're chopping down in like little uh into like uh little things and from these little um from these little elements you cannot

deduce anymore what was being sent right so that is the first step of how Hopper protects metadata better than um yeah traditional ways of of sending stuff around on the internet uh some what like maybe maybe it's a dumb question but like many people would think that kind of the vpns solve this issue right so many people start using a VPN when I think the normal experiences you want to watch a TV show and it's not loud in your in your country and so you download your VPN and then the the VPN service pretends as if you you're in another country and that

seems to give some kind of confidence that uh Hey a VPN can protect where uh my information is originating from so aren't vpns actually solutions to the problem of Transport level privacy yeah so it it depends what users want to achieve right if you just want to achieve that the operator of the website does not see where you're sitting right now then you know a VPN does a fair job of of obfuscating that but what's important to realize is you're fully trusting this one VPN operator to with your entire browsing data right all apps that you're using on your phone

if you're connected from a phone all websites that you're surfing right so they see all that information [Music] um and you're trusting a single entity so the trust Assumption of a VPN is that one server operator you know their isps and and all the infrastructure that they have around them is trustworthy and that trust is more often and not broken right we see kind of on an almost weekly basis how there's a new VPN logging incident and these logs so connection data logs are actually accidentally um becoming public knowledge to The Wider internet so you know that's a that's a pretty poor trust assumption maybe let's talk about different kind of

privacy um preserving tools just to kind of categorize them at least mentally um so I mean we know there's um other mixed Nets like Nim and then there's decentralized vpns like Orchid um then there's onion routing right like um tour and then there's like these whisper protocols like secure scuttlebutt and in a way there are privacy preserving so maybe we can group them together so um how is a mixnet fundamentally different from um an onion router yeah so first of all like when you talk about onion routing

maybe just as a recap for for the listeners who might not be familiar with onion routing onion routing is very popular in a system that's called Tor and many people here might have heard about Tor from the tour browser right that you can access um like information privately so what does it actually do right so onion routing is basically onion encrypting so putting multiple shells of encryption around the payload that you send around which is then sent through multiple hops in a network and thereby obfuscating where data came from and where it goes to right so that's that's what an onion routing system like like Tor actually does now I mentioned before the trust Assumption of

a VPN being kind of poor so now in in such onion routing systems typically your trust assumption is that the first and the last note are not colluding right so as you see data going into an kind of tour-like network and when it comes out you can link the incoming and the outgoing traffic and in relatively trivial ways can see okay this data is actually originating from Frederica and she's requesting you know this Wikipedia page for example right Wikipedia actually has a has a tour page which is which is kind of useful um so yeah that's that's significant Step better than a VPN but it's still not a very strong trust assumption that

can be broken by multiple um like note operators in the network and obviously strong as we call them Global passive adversaries so now moving on to the next category of mixed Nets which have been specifically designed as tools that allow you to defend against this Global passive adversaries right like again the three letter agencies and like uh but not just three letter agencies but really also strong and big internet service providers and Cloud operators which have network-wide overview so and in this mixnet category there's mixnet's is an active field of research for a few decades

um and in the mixed net category like what is what is fundamentally new is that only since a few years it is possible to incentivize these mixed Nets and it is something that makes Nas like Hopper um solve in a in a fairly unique way that you can pay the operators of such a network without revealing their privacy so that is that is something that is quite fundamentally different between mixed Nets and you know these incentivized mixed Nets which we which we currently see like copper and then you mentioned decentralized vpns so I think um when was that I think 2019 there were a bunch of dvpns coming up Orchid uh as you mentioned one of them and the trust Assumption of of a dvpn is

actually kind of problematic if you think about it so the the kind of um like the the motto of these dvpns is hey let's decentralize the VPN operator but what you're doing there is you're saying hey no there's some person on the internet which is relaying traffic for me and thereby I'm trusting a render on the internet with all my connection metadata which indeed is not a very good trust assumption now some of these dvpns evolved and try to make it a bit better for example Orchid recently introduced this multi-hop routing which goes in a similar direction as Tor in fact so I think that is that is some breakdown of of how some of these

systems work and again it comes down to trust assumptions is it correct fundamental diff difference between tor and Hopper is that in Hopper you are able to add a layer of incentivization that doesn't exist in in inter meaning inter when the message goes from A to B it is going through a bunch of relay nodes and volunteers essentially run those relay nodes which is why the number of Helia nodes are very limited maybe six six thousand or seven thousand of them whereas in Hopper you are able to actually pay these nodes in the middle

and therefore hopefully make a more scalable system yeah so that is one important difference is on the incentivization side so you mentioned like there's a few thousand of these tour nodes like the last also called Tor exit no there's actually under 1400 nodes right so it's really not very very big and you know torque clearly has issues scaling to internet scale um despite having been around for for over a decade so um but the other important difference that we should briefly talk about is the packet mixing so mixed Nets are called like that because they're not just forwarding packets as they hop through network but they're mixing them up so

imagine Maher is a mixed node operator mayor will receive packets from Sebastian he will receive packets from Frederick and a bunch of other people now Maher is doing two things as a mix node operator his node is obviously doing that for him automatically right so Maher is transforming packets so that incoming and outgoing packets look different and he's mixing them up so he's sending out packets after a short delay in a shuffled order and by doing so even a strong adversary that sees every packet going into Maher's computer and coming out of mayor's computer cannot link incoming and outgoing traffic and this unlinking is a strong privacy property of mixed node specifically that Tor doesn't have

and it's one um yeah one one core differentiator between mixed nodes and traditional onion routers this requires a base level of volume though right so basically if you have I mean so basically otherwise you're You're vulnerable to all kinds of attacks right I mean so basically if I just went to basically if my hair only receives packets from me um then basically that that would be absolutely no benefit and kind of mixing the map other than kind of adding latency yes that's absolutely an important point right so as as people say privacy loves company right when I'm alone I sometimes bring this analogy imagine you're

standing in this in this football stadium and you only hear one voice in the football stadium and I know Maher is the only one standing in football stadium I know it was meher who was shouting right but if there is you know 50 000 people standing around me here and I hear some noise I have no idea if it was mayor who was shouting or any of the other 50 000 people and the same thing applies to mixed Nets um you do want a large number of users in a diverse set of users right I don't want to you know infer from any of these you know packets which are being sent around um this mixing that oh now that was probably an ethereum user right you want a large and diverse set of users and the second thing that mixed Nets can

provide and which we are working on at Hopper is so-called cover traffic so effectively we're providing this kind of background noise right so even if you know you can say there's a party but the party is not very busy yet so we're having some background music that gives us a certain level of noise in the in the room already Now cover traffic is kind of bogus traffic which is sent through the network but which importantly is indistinguishable from real traffic in the network and by having cover traffic in the network you kind of solve a little bit of chicken and egg problem of how do you bring privacy to the early users of such mixed nuts and yeah that is that is something which uh several mixed Nets like offer use

okay then maybe let's talk about the protocol itself so um maybe let's start in the beginning so who is the actual Hopper user is it individual users or do I as adapt designer decide to use hopper for my messaging layer yeah so um it it really depends so ultimately it's it's if you're using the internet today right you're typing in your browser maybe https or nowadays you don't even type that anymore you don't feel that under the hood you know this HTTP is protocol is using TCP right so you don't you don't really see or feel that but you use it and I can totally see the same thing happening on the web

3 that you will use Hopper behind the scenes but so the first applications that we're kind of excited about is to bring privacy to ethereum-based wallets let's say a more private version of metamask for example right so in such a setting what I would hope for end of day is that um you replace the transport mechanism between your wallet and the RPC provider so that's typically providers such as inferior inference like the default um endpoint which gives gives you access to the ethereum blockchain and I would see this entry point and exit point between your wallet and the RPC provider being Hopper so you are a

user which doesn't necessarily mean that you need to pay for um you know for the service like we can we can talk about the business models that you can map onto such a system which is quite diverse so in metamask can I can I specify I want to connect um to uh to the ethereum system via Hopper so not yet like we're working towards that and actually we had a first kind of public ux hackathon with metamask uh just a week ago here in Zurich to think about like how would that even work right so how do you expose that to the user and go through exactly all these questions right do I as a user need to make a conscious decision and you know

how do I configure it and so on so we're actively working with wallets towards that as we're as we're building out the network um but no Hopper is not um is not having any active adapts that use it yet um however if you want to play around with it we have kind of a hosted version of the hopper Network we call it Hopper playground um so on playground.hoppernet.org you can like just you know at the click of a button you will get a bunch of Hopper notes that are being spun up for you and you can use some applications that people are working on so to give you some examples for some quirky first apps that people built is we have like a chat app right so something like telegram but much more private somebody has been

working on a private version of chess so you know the Chess World has recently seen uh some some little scandals and if you now don't want to disclose you know where you're sitting or who you are and just want to play chess and peace you can do that uh with hopper uh to give some examples okay so maybe let's let's um pretend all of this already works for say metamask or I mean even they have a playground say I I play Anonymous chess um so um this somehow you um you kind of package my data up nicely obviously it's encrypted oil packets are like as you said earlier

um so where does my packet go first and how does it know where to go yeah so effectively as you send a packet out through the hopper Network so the first thing to note is that the pack the the hopper packets are Source routed so that means you decide which path the packet takes through this mixnet and we think that it's important because privacy is something that is inherently subjective right so what might be private and trustworthy to me might not be private and trustworthy to you so you know I as a user or I at least as an application developer have to be able to make these choices so basically you as a sender

um can decide which path this packet takes realistically it's going to be your app right so your private version of metamask is going to determine a path a multi-hop path through the hopper Network to the to the recipient so then you will basically take this let's say it's an RPC request right I want to know how much balance do I have how many e's do I have on my wallet so that's being sent as a request through that Network now these packets it might be that this doesn't fit into a single Hopper package but we need multiple so data is either chopped down or padded to exactly the same size and it's not just the data itself but it's also the header of these packets

and the headers are needed to encode information such as like which are the Hops which are the hopper addresses as we call them through which I want to Route this information but it also includes payment information and all that is encoded in a header format which is also privacy preserving and there's people luckily who thought about this for quite a while and published a paper on that in that format that we and a bunch of others are using is called Sphinx Sphinx is also used for example by Bitcoin lightning Network and it ensures that even in the packet header you're not leaking information about who is passing data to whom and yeah so then this data packet is

being sent to the first mix node the first mix node is receiving the package is you know hopefully receiving also a bunch of other packets transforming it so basically taking this first onion shell also in this Mixed Nut we're using onion encryption taking one layer of encryption off transforming the header and passing it on to the to the next party now specifically we talked about at Hopper is it's incentivized so what we do here is the incentivization scheme at Hopper is we want to prevent Free Rider problems so we want to make sure that mayher is a mixed node operator only gets paid when he actually forwarded the packet

so the mechanism that we that we came up with for that is a key sharing mechanism so mayher needs two keys in order to derive a payment the first half is something that he can obtain from the packet header himself and the second one he needs to pass this packet to the next Downstream node who will get back with the second keyhouse so let's say Maher is the first relay node and Frederick happens to be the second so Frederick will get back to Meijer send him back the second key half with which mayher can then determine if he you know just received the payment so yeah that is that is the first step um I can maybe later on come to a second

mechanism but that's that's the first mechanism of the of the payment so just for clarification so um let's say like the user is sending to infuri a packet and so inferior gets to select who these hops are that meher is a uh the sender the sender of the packet is gets to decide that so the center of the packet which in my case you know let's say I'm the user you know my wallet or me myself as the sender gets to decide through which path I want to root these this traffic right so in principle because most users won't won't be technical enough to make these settings it would be metamask

that's you know writing the code for it and that code will automatically select parts so um so because uh because in this payment scheme when there are let's say two hops and and I'm one of the Hops and I get one one key from the user and I get one key from the next node uh next hop then you're assuming that me and the next hop are kind of uncorrelated or unrelated to each other and so this is something that um the metamask code which is picking these routes will need to address by itself and they are incentivized to

address this because if if things are correlated then my packets could get stuck so metamask will end up designing such routes that have uncorrelated hops now we we make it sound kind of very complicated but we basically have this path selection strategy that just does that for you and the first one that we have implemented is just choose a random route like choose a random hop at each at each step along the path but yes so you can change a different strategy such as for example I want to avoid you know any nodes in North America because I find them inherently untrustful you can totally Implement a strategy like that right so

but that also means that um then the route that the packets are going to take is predetermined and you don't need to um generate Randomness on chain which is often a problem right Yeah so basically I as a sender um need to need to determine the path so I can have a local random number generator and we don't run into these issues now there is a second interesting issue though and that is a naive implementation of Hopper would basically pay each of you mix node operators immediately as you relay the packet now the downside of that is we would leak the routing

information on the payment layer right so let's say Maher is the first node that gets paid he receives a payment immediately and then Frederica is the second one receives the payment immediately that would leak a lot of information now in order to hide that information we're utilizing something that's called probabilistic micropayments um which was for example also used by by orcid the dvpn system so what happens here is that actually mehra is the first mix node operator he derives one key a half himself gets the second key half from the down next node which is and with these two keys together um he is uh he is basically

um generating a random number and this random number cannot be spoofed by him and cannot be spoofed by the sender and this random number determines if this we call it a ticket because it's a little bit like a lottery ticket it's a win or a draw and when it was a win he receives a payment and otherwise like nothing happens he cannot redeem a payment on chain so in that fashion we have effectively implemented something that works uh like payment channels so we have payment channels here which are probabilistic in nature and you need to do a lot of work so you need to forward a lot of packets in order to receive a payout

um for your service and helper it's a little bit similar if you want to say you know how mining works right and proof of work in systems like Bitcoin you need to mine a whole lot of blocks and only after you did the job you will find out well was this successful or not so it's something that is incentivizing the most Atomic operation of the network that provides utility in our case is not creating blocks but forwarding packets so on the internet um packets are sometimes dropped and I assume the same is true for Hapa and I I assume they will just be uh basically they they will just be reset eventually but um what happens if I am a malicious

node operator and I grief the entire chain of people who've been sending packets on by dropping them consistently do you have any way of penalizing me yeah So eventually um like what we want in any of these kind of web 3 systems is that it shouldn't be attackable by exactly such attacks right so let's think about what would happen in a system like that where Frederick just consistently drops drops packets so first of all the sender which is free to choose any route they wish would determine that hey you know for some reason all the packets that go via Frederica somehow never never get anywhere and just choose a different route and secondly on a more granular level is the Upstream note from you

which I stick to the example where Sebastian is sending something through Maher who sent something to Frederica the Upstream node would realize hey okay this Downstream node never gets back to me with an acknowledgments of receiving the packet so I never get a payment so what would happen in such a system is Maher's machine would just close his payment channel to Frederica and his Edge in the network would effectively not exist anymore so it would no longer be possible to relay data from Maher to Frederica and ultimately all nodes would do that so that the one who is misbehaving and um not doing any work would not be able to relay traffic anymore and say I'm not I'm not malicious in the

way of dropping packets but um say I'm a three-letter agency and I kind of want to infiltrate the system and how many nodes would I know would I need in order to kind of glean information about who's sending what to whom yeah that that's a great question and it comes back to this to the trust assumptions that I mentioned initially right so again comparing this to a VPN you need to operate this one server if we look at Tor you need to compromise the entry at the first note and the last note the guard and the exit node and in a mixnet like Hopper you only need one honest mixed note along a path so if you have three Hops and there's one honest

mixed note in the path and you compromise even both others we're still fine so that is that is pretty strong and that's how um yeah Hopper can can provide quite strong privacy guarantees like eventually you know if the network gets too compromised like you know you will accidentally route your traffic through only compromised notes well there's nothing we can do there anymore but it makes it a lot stronger than in in other systems okay and how many different I mean I assume one party can operate more than one node right so how many different parties do you need

um to operate nodes or is it easy to to tell which nodes are operated by the same party because I mean basically if you if you send something along a path um that has three different nodes and all three of them are secretly me and that's not helping you at all right correct correct exactly now this is actually there it starts getting very interesting and kind of tricky right because you could say Hey you know we just kyc everyone right and there's like other systems that have proposed that like I'm I'm strongly against such approaches because it goes against my fundamental value perception of the web 3 space so the hopper network is open and permissionless at all times but the

default path selection strategy that we implemented is selecting a path proportional to the stake that you have in the various payment channels that you have open so what that means is if there's a party that is very strong they would need to basically get an increasing number of stake in order to relay a significant amount of traffic via you and even in that case right if it if it at some coin Point becomes for whatever reason obvious that you know Federica is like subverting the entire network and has all these nodes you know this path selection strategy can be very easily overridden and changed by something where you know we

just avoid the whale notes or whatever happens to be the metric that identifies the subverted entities in the network so I am actually curious um in terms of user experience it's it feels obvious that as a user I will need to pay to to send the traffic and these payments are additional to whatever I'm paying for my uh for my internet connection right so could you give us an idea of you know what is the Quantum of these extra payments if I if if I wanted to make all of my communications private like maybe

maybe we can assume a mobile connection first where I might exchange I might send 5gb of data in a month so now this is this is traditionally a very difficult question to answer and by analogy this is a little bit similar to asking somebody while you're coming up with this new blockchain you're saying it's all scalable and great well how much does it cost and you're now giving an answer to that historically seems to haunt people if we look at vitalik who says you know sending a transaction it costs more than five cents council is liveness failure well you know um that's that that's kind of rough in a very similar fashion in the hopper Network it is hard to estimate how much a packet is going to cost end of day

what I Envision is it's going to be a dynamic pricing model and here we get actually into an interesting into an interesting domain we're saying you know when Sebastian wants to send something he just sets the price point similarly how an ethereum you can determine your gas price or in Bitcoin you determine what transaction fee you're willing to pay but here's the problem we want to establish privacy and we want the anonymity set to be as large as possible so you do not want Sebastian to set like a very unique price point of the data packets that he's sending in Frederica like one that is very specific to her because that would reveal who is currently using the network so everybody

needs to pay the same price at all times however and that part is forward-looking and not implemented yet we do Envision that there will be a dynamically upgradable price point of what these packets need to cost now whether it will be settled on a per kilobyte or per megabyte pricing I have literally no idea where this is going to be in this Dynamic Network so if you compare this with a tour or via VPN that's a very different business model right so basically I I um I use a VPN and I pay like 10 US dollars a month or something to use it so it's kind of a

flat fee whereas I use tour and it's free because it's operated by people who believe in the system right so do you think there is a subset of prospective uh users or applications that will kind of rely on this and um the bulk of our data that we send ends up um unscript of metadata yeah so I totally believe first of all that people will use that and I would uh disagree that the business model needs to be very different I can totally imagine that people has been a VPN like business model where you pay your 10 euro a month and for that you don't get

like unlimited bandwidth like just in the VPN but you can say you can use it like for you know maybe 100 megabyte or whatever that you sent through Hopper right so you come in and you know pay with your credit card you don't need to worry about any of um this token business under the hood that is being abstracted away for you when you download software uh you you download software that is not just normal VPN software but it is software that utilizes Hopper and that contains a configuration for you know how you get this corresponding Hopper tokens that you require to pay for the infrastructure so I can totally see that you could spin such business models or even inferior like business models where the first you know 200 000 requests or

some it get for free and afterwards you need to pay so I do think that for Hopper and more generally web 3 models we can spin existing business models that we're familiar with around them okay so maybe let's kind of segue into the hopper token right so basically there's a hopper token that is being used as a payment token yes so the Opera token basically has has these three functions of as we already discussed right so as a mixed node operator you need to stick that I mean when I say stake it's like a gross simplification what you're actually

doing is you're opening these probabilistic payment channels to other nodes by doing so you're signaling hey I'm willing to relay data packets via Frederica and secondly I signaled that I think Federica is a useful mix node that you should also relay your traffic uh by and so the second part is the users are using the token to pay for it right so users pay the mix node operators who are effectively infrastructure providers and ultimately the hopper Hopper token will also be used for governance decisions in a network and one that we already talked about is well how much should a single packet actually cost and

that is something that you know currently in the current version of Hopper we simply have that hard-coded but ultimately there will be a dynamic mechanism around that and that is why I'm pretty interested in decentralized governance because privacy networks should not be governed by one entity by a handful of people but by a more diverse set of people that have a say in this core infrastructure of what it does okay maybe kind of let's let's um I want to dig my years in here a bit um so I mean the the token function for governance and staking I think these are really well validated token use cases

whereas basically basically payment tokens so far I would struggle to actually think about a single one that's really taken off because usually it can be abstracted away right so basically it can be um people can be made to pay in a token that they already have and then maybe you have relay or under the hood or something that kind of creates demand for that token um but why did you choose to go that way rather than just having people pay and say die or eat yeah so I mean you could say well you you could spin such a model in like the traditional argument is why don't you just use Bitcoin for this right so that's the traditional argument that I

get there and well one thing that would be kind of tricky to do in such a way is how do you scale the network with for example cover traffic it is hard to do that if you do not control the inflationary supply of this of this token so what we do at Hopper is we have reserved a comparatively large amount of the total supply of 25 percent for incentivizing cover traffic that provides the utility of privacy even for the early users or you know users when there's generally low utilization of the network so I do see that as a as a mechanism controlling the inflationary supply of

the utility of the network is something that is important and has to be closely coupled with the network itself and yeah that's why I mean you could say okay if we don't want any of that or if you're anyway you know have enough cash to incentivize this entire network then you know maybe you don't need any of that I find it hard to argue how such a system would then remain credibly neutral though so maybe you could run such a system that's based off of Rye or die right um but you know keeping incredibly neutral would probably be hard so the argument here is that you want to bootstrap the early node

providers and the hopper token is a way of getting early node providers into the network I mean like other networks have succeeded in doing something like this a helium is a is a perfect example right where Distributing the early helium Rewards was the main reason why lots of people ended up installing the hardware in the first place so that kind of makes sense but still like is the reason for having Hopper a payment token more a regulatory reason that the Swiss regulators want kind of a payment like utility uh for for it not to be a security it's it's more the opposite actually for the

Swiss regulator like uh something that's not a payment token would be way easier because we wouldn't fall under harsh like AML regulations so you know um payment tokens on that front only has downsides actually then why why not just accept I don't know usdc I mean usdc of course the risk is they will put kyc on that system one day but uh yeah why not the why not the US dollar or the so the question the question is in that case how would you launch cover traffic how would you launch kind of cover traffic that is not controlled by one party which is kind of the you know the donor to this whole exercise um and and actually able to uh to

distribute traffic in a network that is indistinguishable from real traffic right so I mean to me that is an important feature to be able to have a something that is a sustainable and be credibly neutral and I think token models um that have their own inflationary Supply have shown to be something that can be sustainable I mean you mentioned helium um but but I think there's a bunch of others um and uh you know not stay under the control of a small group of people so maybe let's talk about the cover um traffic then so um who who actually uh who makes sure there is cover traffic is it you and uh where are you sending

all the stuff um and wouldn't it be thinkable to kind of have a traffic mining uh program uh akin to a liquidity mining program um to kind of let the ecosystem do that for you yeah that's that's exactly that's exactly um actually on the on the roadmap so there's there's two uh there's two designs which we which we currently have the first one which is incredibly naive it's just you know we disperse a bunch of traffic to create some you know some some Buzz around there and we let you kind of you know um start up some notes fire up some notes and get the network going if you decentralize the problem as you I

like your analogy with this liquidity mining in in traffic mining program the problem there is um that you don't want to Sybil that right you don't want mayher to start his node and create a bunch of bogus traffic that is only relayed via his own notes right so that needs to be happening in a way that is is actually trustworthy now luckily there are some and there are some technologies going in that direction um of for example trusted execution environments and other multi-party compute schemes that allow us to decentralize that so in the same way how it's now possible to like decentralize

even like I just recently heard about it that decentralizing in a whole eth staking node you know you can decent certainly decentralize um the disbursement of cover traffic in the network the and the first one that we're going to try out is trusted execution environments which allow you to do exactly that very cool um as a maybe last topic um regarding Hopper before we kind of talk about the general um privacy um ecosystem um is the governance so you have a new type of Dao that you have launched right yeah so at Hopper where we we do believe

that you know decentralization and involvement of the community in decision making processes is important and to that end we did already early on a bunch of governance experiments they were very actively experimenting with so I like to say that you know when you go for a shared Corporation we have several hundred years of experimentation and blueprints that we can build on I would say in the dial space we do not have that we do not have any kind of or very few kind of indications of best practices to follow and that's why we did a bunch of experiments on actual decisions that we did in Hopper Dow and that is firstly we

experimented with like one account one vote we experimented with one token one vote and finally also with quadratic voting schemes and for the ones who are not familiar with quadratic voting just in a in a nutshell it means that the more tokens I have the more say I have but the more um tokens I want to buy it gets quadratically more expensive to buy myself votes and that is kind of a middle ground between kind of democracies which typically have one person one vote schemes and like share corporations which typically have one dollar one vote so all of that is something that we are

that we are actively experimenting with at hopper in order to launch this privacy Network um yeah in a in a maximally resilient fashion and what is the current state of Readiness of of the hopper software what yeah so we have currently we have currently a network of 100 nodes online um that is just about to launch in two weeks we will replace the notes that we run there with more Community notes so people can participate in running a note initially we have kind of artificially constricted the network size for two reasons the first one is well we want

this to launch in a in a stable fashion and the second one is it doesn't like the bandwidth requirements of the network is not so large that would would require like a huge Network out there it's kind of similar to the discussion around the security budget of L1 blockchains where you know in in proof of work for example how much hash power do you actually require well it just requires so much that it's secure enough and in our sense is we want to scale the network with the demand of applications that are being run on it and that is the second side to it that we're very actively working on that is working on apps that actually use Hopper so I talked about some of the quirky ones

that we have ongoing already right now and we're specifically focusing on wallets and we want we think that you know wallets is our gateway to all of web3 and they need to be significantly more private than they are today so that is something we're working on and this developer experience is ready to go so if you want to build some apps check out what's already been built and check out the Hopper's bounties program so you find that at bounties.hoppernet.org and you know if you want to build something that's not on there just let us know and we're happy to you know support you in building something that utilizes Hopper

to build private applications when you say you think your gateway to all of web 3 is wallets um let's maybe be a little bit more specific here because um basically when we talk about privacy and wallets people immediately think about shielded balances and kind of sending um tokens um in a privacy protected way to someone else but that's not what Harper does right so basically you you you would strip them the metadata but how much better would I be off if I use a wallet that strip metadata yeah so you're

absolutely right right ultimately what I'm always saying is we need full stack privacy even the most perfect on-chain private L1 or L2 right and many great projects are working on that right so it's like uh Monero and Z cash there's like dusk the secret Network and there's ad stack and a bunch of others so all of them even if you have perfect on-chain privacy it's that's not all right because again if you are interacting with any of these chains you're sending a transaction from my wallet I'm sending a transaction from my wallet which can be observed at least by my internet service provider which will know that I am you know just accessing

let's say Ad stack for example and in that case eventually there will be some observables so I know there's some people working on privacy preserving dexes right so you know if you think about it ultimately there will be something that you can observe of the decks for example the price right you always want to observe the price of a pool on a decks even if it's privacy respecting now I see that Frederica came online she made some transaction I don't see anything that she did there because it's a private L1 or L2 afterwards I see that the price was moving way up right then Frederick is offline I don't see anything of her now she's coming online again the price goes way down so what I'm saying is even

in a privacy respecting on a privacy L1 or L2 I can correlate the underlying transport information on the IP address level with what happens on chain so even a perfectly private L1 needs this transport level privacy that we're building at Hopper and if we're thinking about the today you know because you asked how much better off would I be well do I want inferior to know all my accounts and Link them together I don't right and this is really tricky to solve today um I don't want any of the RPC providers that we have out there to identify all my accounts some of which may or may not

be add-ons right so we we want to keep that stuff private okay but you you could in principle keep that private by um connecting to your own dap node to our friends that node or something similar right so ideally that is indeed the case right I have a depth note but like you know on my mobile wallet I'm not always carrying my depth note on my back so then it already gets that's a little bit tricky right and in that case you know your your mobiles or Internet service provider can can link all that can link all that data um kind of going forward uh the second layer where I see privacy issues is not

just you know on the wallet side but also between the notes itself so one project we recently um kind of were digging into is the privacy of um like proof of stake Beacon chains so uh you know ethereum Beacon chain on also speak and chain and you know also on that side we don't have privacy so I find it kind of funny how even the most Anon people on Twitter are you know posting who is there uh which one is their validator note because like we have for example right now on the noses Beacon chain like kind of a data harvesting node running which is collecting all attestations and I can find out your IP address from that right and if you run that on a depth node in your out of your own home then I can

find out where you run that and you know I can I can launch a highly targeted attack against you which is kind of problematic so also on that side I argue we need to talk about privacy much more seriously than we do today if we do not uh want to see some really weird level of attacks against the infrastructure yeah that is a that is a a very valid point um maybe I mean so basically Harper runs on um nurses chain slash ethereum um I mean seeing that you're kind of stripping the metadata and we already talked about how like on um uh there are privacy preserving layer

ones already why didn't you launch Harper I mean not that I don't like having your noses chain don't get me wrong but um why didn't you launch on um an inherently privacy preserving chain like Z cash or Monero where basically um stripping metadata um would be a a a much larger value at seeing that all of the data is already protected yeah yeah that's a that's a great question well the simple answer is if there would be a private like ultimately private L1 or L2 like very happy to go there but there is no such thing around today

so at Hopper we need some uh on-chain cryptographic Primitives that allow us to implement this proof of relay mechanisms so that's the key sharing mechanism that I explained before which is not possible to be built with these simplistic privacy L ones like privacy coins like you know Monero or zcash um but ultimately you know that is that is where a seed is going you know that there's a private L1 that uses that one thing that's important to highlight though is Hopper runs on some chain and currently its noses chain but you could use Hopper to connect your wallet to an RPC provider on any chain you could use that for private Bitcoin

transactions and this is something that that people are sometimes confused by you know Hopper on the one hand uses a chain for the incentives of the mix node operators but using Hopper you can use for anything any chain out there including you know Bitcoin if you so choose yeah that that makes tons of sense um maybe zooming out a little um if you look at privacy systems in crypto and actually in the larger World um there are quite a number of them um and somehow they don't end up very successful uh you know nowhere near

as successful as really they should be why do you think um there is this apathy towards um privacy preservation yeah so first of all I agree there right and why there might be some specific reasons why some of these systems were were not so successful you know ultimately it's it's hard to to have a startup that executes well I would say the more overarching larger reason is that in crypto generally people have for too long been too high on making too much money too quickly and you know why would you need privacy right if I can like just just you know D5 summer has been great to many people

here and that's been great right but we only start seeing that the underpinning value of all of crypto at least in my mind is not just to make more money quicker than we can today but to have this ultimately resilient foundations on which we can build everything else because and there's something that the past weeks have in a very dramatic way shown right the tornado cash sanctions have shown for the first time that we are headed for this inevitable battle between today's power structure of the established world and all of this crypto craziness and I don't even mean The Regulators I mean really the people who have a lot to lose if we're changing the

entire system on which Commerce in the world is being run and I am really absolutely convinced that if and when like not if but when that happens we need strong privacy to protect the um yeah the values that we're running for it's just that so far we we you know have been making incremental steps and had all great parties making money but you know this looming Showdown between the power structures of today's world in crypto has only you know barely begun um like when that does happen we better do have privacy infrastructure in place that is strong enough yeah but like I think friedrich's

question is it's so in in my experience right like so the nature of crypto is that the crowd can speculate on anything and raise the value of anything it so chooses and make money like that uh with it right like Iota is the perfect example right like I mean when the crowd wants to do it the crowd can do it and and you know that there are like lots of different examples like that in crypto but it's also concurrently with that it's it's like in the eight or nine years I've been in this field I have seen like generations of privacy projects count right like a

Monero and then I've seen like Monero slowly and slowly getting eroded in the market right like falling falling falling and now it's like something like number 30 Z cash I think a lot like like a similar story um and to me what feels really odd is on the one side if you see like the crypto rhetoric it's all about oh privacy conscious infrastructure privacy conference but the market action is not like that and and in reality it's like uh in in crypto speculators can make or break a coin any day independent of fundamentals right so it still feels like

privacy doesn't take off as a as a bigger theme or like struggles as a bigger team in comparison to something else like you know smart contract chains or L2 chains now if you see the L2 chain World well it's it's it's taking off very naturally even without a lot of fundamentals you launch a new LP chain it's gonna have a huge market cap so that theme that team succeeds massively but the Privacy theme doesn't sort of succeed a lot whereas like the crypto rhetoric is about privacy do you feel this the same way or is it me just that feels like this so I I see that obviously you know there's no point in denying that

but I'm obviously willing to to you know take the different bet here so I would say um now and that is different to a few years ago shots have been fired right and there's currently like you know a brilliant coder who is currently in jail for writing privacy software that helps the betterment of the entire space so you know we had what I would call regulatory overstepping that is the first out of what I think is going to be many shots that will be fired against all of crypto and all of web 3 because what this is all about is about challenging the power structures

of today's world and it will only get worse from here and the only thing that can really sustainable sustainably improve the whole thing is strong privacy it's not going to be it's not going to be regulations like the web 3 is anarchy and Anarchy goes both ways there is no regulations that can protect the people or you know any of the bigger structures so the only thing that can help us here is strong privacy across the full stack and that's why I think now maybe more than five years ago is the right time for privacy and you know I wish there were more of these projects that successfully

um are bringing that privacy to the whole stack and and and I had another question uh have have you or has Hopper ever been contacted by a three-letter agency we have not I would say Hopper is so far doing well flying under the radar um you know uh so far we're out of there but maybe that that changes with the level of production Readiness like one thing that I'm kind of happy about is to not work on a on a on-chain privacy so Hopper does not do any coin mixing right to so to some of the three letter agencies who do listen to epicenter like we have seen evidence of that right so

Hopper is not a mixer uh Hopper is only for private data which I think is important for everyone in the space and ultimately maybe just to to uh you know um you know put put that also out there Regulators have the task to protect the people that is the mission of Hopper and a lot of web 3 also right empowerment of the people is I would say the overarching theme of all of uh web the web 3 movement that's what we want to achieve so I don't think we're fundamentally at odds with Regulators we're fundamentally at odds with power structures that want to retain power you you know um this is kind of a little bit of a segue

but but bear with me so in balaji's book um he talks about how um Twitter bios uh the um perfect way of kind of um analyzing the perceived identity of people so basically how people describe themselves in their Twitter bios is actually really interesting I've paid a lot of attention to this hence um and Ed snowden's Twitter bio says I used to work for the state now I work for the people so do you think Sebastian so basically you kind of um conflated the two a second ago right so basically you assume that the state

works for the people also well I mean there's certainly some power structures within the state that do not work for the people but I was talking about the regulator itself which has a specific mandate which at least in Europe has been many times shown to protect the people from for example powerful structures in North America that are data harvesting and going against the people um but that being said you know uh ultimately I believe in the good in people right so ultimately I do believe in people wanting to do Innovation for good I do believe that people want to build great things we have to just let them more and unleashing that power in a

safe way is is what I'm after and again I don't think that's fundamentally at odds with any good States or Regulators out there I would hope so um so Hapa relies on the fact that many people run nodes right even if the if um the requirements on any particular node um is not particularly High you need to have more than say five nodes in order to kind of run a mixing Network right so um how uh how can people become a part of Hopper yeah so there is at least two or three sites to it so first of all is

um you can build on top of Hopper so check out what's been built and apply for bounties we're also busy at hackathons where you can build stuff um because it's not just the people running the infrastructures also people you know building stuff with that infrastructure and using it so using it is the second part check out what other people have already been built um you don't need to install complicated stuff just check out the hopper playground and the third thing is indeed as you say to run a note if you want to run a note initially as I mentioned before we have restricted the size of the number of mixed nodes to currently a hundred um if you want to run a note check out um our website so we will have the next

Network launch in two weeks from now so at that point you can run a note and find all the instructions on our website and yeah contribute to data privacy for others thank you Sebastian for coming on that was a super elucidating um if um somewhat apocalyptic in his Outlook so um you I I like you fear that there might be more regulatory action coming and I fear we're also making it too easy it's too easy for for um three data agencies to shut down um certain functions of web3 because

um uh we're not committed enough to decentralization and credible neutrality which kind of go hand in hand right so basically if you have like um five big node operators there's like five people you have to call exactly exactly yeah like the last thing I would want to add to that one is just a just a thought that you know I I find sometimes people being surprised by and that is if we don't take privacy seriously this whole web 3 vision is gonna bring us to a world that is worse than today's Web 2.0 and that is because the data harvesting Crooks of the Web 2.0 they're not just gonna go away

they will see our world and they will say anarchy well Anarchy is great because the rules and regulations that constrain me in today's Web 2.0 they don't apply here anymore I can use that I can use that against people you know with what you call today Mev I'm fine calling in that way I'm a professional data Harvester so again to prevent that from happening and have the web 3 be a safe place we do need privacy across the stack absolutely thanks Federica for for having my own thanks Maher for this for this great show