UX and Compliance of Privacy

Transcript

Okay. So, uh welcome to the second event of it. And uh here there is the po if someone of you want want to redeem it. And um and what is it? Uh it is the Ethereum community here in basically a mission and our mission is to make Ethereum event cyber punk again which was as means like um there is a lot of stuff which makes it very very important for

our society. uh and all of this stuff are related to decentralization to open source and to actually you know like solving real issues where this technology is important for and so uh it is born with the idea of giving voice to developers to projects by merit and not by money. So it's not like a play to win a yeah a play a pay to win sorry and uh and so that's pretty much this at about and what is the is the differentiate uh we do weekly event actually we are here

to make tizzy like ultra busy and uh so let's talk about like a small um surprise that there is today there is something that is called based randomness which basically is full on chain randomness without relying on uh offchain source or whatever which give you like full unpredictability and for the first time we are going to do the first raffle together to win this are you ready it can generate one from one to 100 numbers like per request it's totally free and openour tool. So there's no

like a company behind or everything just there works. uh you can do multiple recursive with transaction and it's pretty much easy how it works like how we solve this problem which is basically like you can have a custom entropy basics and the unpredictability is based on the hash of the next blocks and this give you like pretty much like especially layer one and also like on a stage one to stage two layer two is like pretty much like um impossible to have manipulation from uh nodes and also to not be able to predict what is happening and So games and everything now is finally possible and so that's why so let's do it very quickly.

Uh so how much number we >> 23 >> 23. So let's do it very quickly here. This is the smart console. Everyone can use it. There's no fees or this kind of stuff. It's just like real open source. Uh so it's very small from here. >> 24. >> Okay. So let's do we create we select one casual stuff from 24 numbers we have one winner uh this zero x we don't have it include zero false I don't know if you see probably it's better if I put it like this also from my eyes

owner is basi public wallet so I'm already doxed with Extra security zero uh base entropy 0x. So are you ready? Is the first ever made onchain raffle into like ever existed on Ethereum actually. So let's do it. We're doing on base. Okay. And it's a two steps. So this is the first where you ask and then there is the and then after I put like a basic uh

security of four blocks. So now we can get by the log the ID actually of the request which is this one. And then we go on generate random numbers. I think for blocks on base they already passed it out. So here let's add 0x and here we go. Let's see who is the winner. Yeah, scan base can actually. Okay, the winner is number 19.

November is a very important month for us because we are laser focused on privacy and uh we have today halal protocol. Uh then we have on the next event Lucin Samuel which is also like energy about Zade will be like a very interesting actually uh presentation and on November 26 we close the argument of privacy with the actual contrary. So the people who actually find out who are in the real world the person who hack different um smart contracts and protocol and so

to understanding like how is important privacy from the perspective of your anonymity online and and about your information. Uh so okay I think this small presentation is finished it you can take your poem and finally we have the real presentation here guys. [applause] >> So thank you so much to be here. >> No thank thank you so much for organizing. I don't think we ever had eth bissi before. So Ali was a great volunteer for this effort to happen especially with Ethereum becoming the home for privacy and I think that's the

right time to do something like this. Um I will do I mean now we see lots of interest in privacy and usually when we see such interest it cascades to lots of events such as you know adoption of the vector. So I think the uh sector had lots of problems right it started with compliance problems before then with usability problems because it was really hard and clunky to use privacy and the need for privacy was always growing such as you know like the user experience right so now we are in this overlap when these two lines basically intersect and finally forming the need and making private privacy

reality of course like there's always you know some government caveats right so how to make sure privacy is compliant but I think we finally reached the right place and home uh for your assets on chain um all right so HKO is a private home for your assets right and here I want to uh break down privacy in two different verticals right first is uh finance right like one big shift shift we see that finance is moving on chain right it's a huge industry uh lots of chains are focused on finance like Solanas uh you know and value proposition is inter internet capital

markets right what I like in Ethereum is that it actually thinks more than finance it thinks about you know like attention uh like how to prevent you know governments from intruding your privacy and you know it just more global vision than just capital markets, right? So, uh we have this like privacy actually has these two forms which is first is privacy prevents you from attention economy, right? So, if privacy works well in the future, it will finally kill attention economy. So, no one can sell your data. You know, Google, Facebook and other big platforms won't be able to own your data. So you won't become

victim and you finally will control your attention at scale. Um and the the other one is uh your digital finance your assets. So today we'll focus on this and hopefully in five years we'll speak about cyber punk and this attention economy uh killer as privacy on chain. Um so what we see now is that traditional finance is becoming obsolete. Right? So the biggest companies such as Stripe and Alibaba are launching their own chains and what it implies is that like Visa, Mastercard networks, you know, banks globally are becoming obsolete with their systems. We

have lots of branches in banks, lots of people working there. So I don't expect that we uh they will actually adjust to u like crypto generally. Uh so my expectation is that fintech will actually kill lots of banks if they're allowed to do it uh with um like the with the governments, right? But this is unavoidable because um banks won't be able to adjust. So ultimately new entities will be created and these entities will have licenses and these licenses will enable them to create crypto banks, right? And we see this with aribbor in the US now uh with

palmer palmer lucky and peter teal and you know lots of other efforts such as stripe right I'm sure that stripe tether will also acquire banking licenses and they will become banks right and um in this world when uh banks move to move to chains and new entities are created to completely replace traditional financial rails. One of the biggest problems uh that still is happening there is privacy, right? So whenever you move your assets onchain, you can immediately see how much you have, how much your friend has and everyone else, right?

Especially when it hap when it's happening with peer-to-peer transactions. when you know your counterparty this creates one of the biggest problems because now it's not just pseudonymous addresses it just your friend and you know the history of transactions and and what what they have as well um in the US we have two regulatory clarity uh now acts is genius act and stable coin act stable coin act was already passed and now it's about uh genius act uh to get full permission uh to basically enable everyone to launch stable coins uh and to move assets on chain.

So with this bottleneck there are three ways you can solve for privacy right. So first is um you know which is quite popular now is a chain level privacy. The problem with chain level privacy is that uh you sacrifice scalability uh and you sacrifice lots of UX primitives such as public AMM pools and others right so if you so basically you end up launching very slow chain uh and that that's a big sacrifice in my opinion uh plus you don't have any network effects right so to bootstrap layer one chain it's incredibly hard right who was able to do probably three chains ever. The race chains, the rest

of the chains are called ghost chains. Uh so no one wants to become ghost chain. Second approach to privacy that was quite popular before with tornado was up layer privacy and it implies that you sacrifice capital efficiency of your liquidity and user experience. So your assets are stale onchain. So they are not active. you cannot do anything and then you have to do lots of clicks to access this user experience and we had this before. So our first product was actually uh the Dub and we had 250 million volumes for the Dub but then we realized that this is not scalable approach. So the most

scalable approach for privacy is wallet level privacy on public chains. So with all the advancements of uh technologies such as ZKS addresses TES as well as FI uh it it became possible now that you can actually almost don't feel privacy while accessing any type of transaction on public chain such as Ethereum and Sana. So HL is a gateway for full fully self-s sovereign and private money. You can move onchain directly to HKO private address and your assets are sitting in the shielded pool with UTX source and you have your own private address inside HKO. It implies

that you can make any transaction in full privacy. You can pay your friends in full privacy. You can do yield farming or trading in a full privacy. Proof generation um is client side proving so it's fully secure but you have the choice to do um proving in TE right and this way on weaker machines such as your phones you'll be able to generate zero knowledge proof and make the transaction instant right that's how we solve the problem of um instant transactions right that usually uh zk has what appears onchain for all transactions is HKL smart contract. Um

and and basically like you can have sender recipient both um having hle addresses and what appear for this type of transactions is sender HLE and then recipient is also HLE smart contract. So this way we avoid full like any traceability of your money onchain and you know think about also like current big trend which is cryptocards. So cryptocards are you know are going to actually take take the world because you they you can earn way more money with crypto accounts. I have 10% APY on my current account, 3% cash back with Etherfy card. But the problem is

whenever you send money, you have to KYC there and and then you basically show your face and link your ID with the history of your transactions, right? That's one of the biggest problems that Hinkles also solves, right? So, we're partnering with Etherfy there. So you can send any asset you know USDC ETH uh to Ether without revealing the history of your transactions and spend your money without any traceability uh with a proper hygiene. So the product suit that we have is first the most one the the most important one is HKO wallet right it's a fully consumer wallet it applies to

traders applies to people who want to own money privately who have you know shitty governments as well and don't want governments you know to have any exposure on their activities right and uh um and then just basic consumers who want to pay in crypto Our second uh product that we are developing right now is HKL multisc and this mostly for institutions organizations. So you can connect with your multisync or mpc accounts such as firelocks and others and then you basically activate hinko transactions with their signatures. This allows us to access uh kind of like bigger audience in terms of um TVO

because you know most of money in crypto is it's actually in the hands of few uh bigger whales and the last one is hinko for developers right so the problem we actually started with developer suit so SDKs and APIs for payment networks but the problem is that if people don't understand privacy or zk right they won't be integrating your API and SDK. That's actually what triggered our decision to build Hinko wallet. So with Hinkle wallet, we can actually show everyone how easy it is to access privacy and how huge is the problem.

So this is our next step where you know we actually now we released Hinkle wallet. It's fully public everyone can use. So now we can actually introduce SDK for developers. So any payment network or payment solution can integrate privacy uh within their system. Uh now we are getting to the you know heavy brain part. So prepare your [laughter] um like my co-ounder brother and CTO Nika will introduce.

>> Hi everyone. Uh we will go through technical details of our protocol. Uh my goal here is to explain you how we built HIKL. Uh at least give you some recipe how to build it. [clears throat] As Andre Karpati says, you do not understand something unless you build it. And this is my approach for you to understand something in our presentation from technical perspective. So uh when we build Hinkle, uh essentially we build information system which is based on some primitives. uh in our case it's cryptographic primitives because crypto cryptography is used for privacy and anonymity to achieve u to to achieve compliance even we use uh

cryptography. So I will explain some basic u functions by some basic primitives that we use in our protocol. If you think about Ethereum, Ethereum signing, Ethereum encryption or hashing, Ethereum uses some different kind of primitives like maybe if you think about Kchak or SH 256, it's a common hashing algorithm on Ethereum and uh ECDSA signature for signing transactions on Ethereum. So this is very common standard uh cryptographic primitives used not only on Ethereum but generally everywhere in the industry. But when it comes to ZK, it's not the same

essentially because uh ZK uses little bit different math in addition to normal computation and it doesn't like some kind of u operations. For example, it doesn't like if if conditions somehow it doesn't like and uh common primitives that is used generally in the industry such as sketch uh are not applicable for ZK because they are computationally heavy because you need to prove something in ZK to the chain and chain should verify you. So that's the reason we picked uh some non-standardant uh primitives and if we're talking about elliptic curves it's baby jump job curve uh it's baby because it's a little bit

reduced security of the system but allows you to prove efficiently statements in the zk uh here I give a description of the curve I will not go to every detail but I will cover the high part second one is pad and hash function allowing you to prove in ZK some hashing statements for example that uh offchain UTXOS have generate this commitment you prove in ZK by showing that this uh this UTXO gives you the specific hash uh and for uh generally for ZK we using G 16 grow 16 is the golden startant in

ZK it's one protocol that was introduced in 2016 by Jens Cross and still even now it's not written in all parameters. So it's kind of cool standard that many protocols use up to now. Uh we are using it uh and for growth 16 it's implemented in circum. So circum it's a library that allows you to generate provers where you prove offchain some statements and also circum allows to generate you verifiers.

These are smart contracts that you deploy on chain and you verify statements. I will talk about what kind of statements you verify it in the next slides. First of all, uh if you think about uh privacy, you generally cannot consider only blockchain as information system. You need to move step up. You need to consider users who are using this blockchain because we are talking about privacy of transactions of these users right so they are off the system of the blockchain so we should consider little bit bigger system in this case and uh the key I mean the recipe here is that you should have some kind of

information some piece of information that is only known by you and it should be stored offchain in our case it is stored in our wallet and it's a shielded key. We call it shielded key. It's additional set of keys that is stored offchain. Nobody sees except you. And with this shielded key, you are allowed to do shielded transactions that I will explain later on. Uh just one second. Uh this shielded keys uh split essentially into viewing keys. Oh no, go back. viewing keys and uh spending keys.

Spending keys allow you to spend funds that belongs to you, shielded funds that belongs to you and viewing key allow you to essentially view all the funds that you have. You may ask why we separate it. In Ethereum, it's not separated. It's the same. But Ethereum is a public network. Here when we think about privacy, we should be able to differentiate ability to spend something privately and ability to show others these funds. For example, you want to prove the government that you don't own more than $10,000 in shielded assets.

You can do it with just giving viewing key. So when you give viewing key you don't give access to the funds but essentially you give access to view the assets. So that's important distinctions that allows you to differentiate these two functions. Uh let's talk about stealth addresses. Uh stealth addresses is not a completely new primitive. Uh essentially they originate from defy helman uh asymmetric uh cryptography. It's a generalization of the cryptography. I will remind you for defy helman we have one private key and one corresponding public key.

Uh and uh stealth addresses is generation of defy helman algorith protocol when for one private key you have multiple public key. So uh if you look on the left this is a canonical public key. It's just one point on elliptic curve. But for stealth addresses you can generate H0 and H1. This is second public key. So you can generate any number of this public key any finite number within the field. And this allows you to achieve uh privacy when the outcome of the transaction is uncertain. Think about uh when you want to swap one token for the another token.

You never know what will be the outcome exactly because there there may be some blocks before you sorry the transaction within the block before you that may change the prices and your outcome may be different. Stealth addresses allow you to capture this uncertainty in the outcome such that users who submit this transaction remains private. Very important concept here. Uh who is familiar with Zcash the protocol? Okay. Okay. Good. So Zcash was one of the original uh pioneer in privacy and it introduced this system called UTXO

system is unspent uh uh transactions and uh this term essentially comes from the bitcoin like every node every amount is UTXO and when you spend it it's nullified. So this is something familiar to you this UXO system and it comes out that this UXO system is really important for privacy. It allows you to essentially store your funds and then claim the ownership of these funds later in ZK without revealing who you really are.

Think about UTXOS nodes and on in on each nodes there is a owner of this node. For example, five USDC node belonging to Georgie, but nobody knows that it belongs to Georgie. What Georgie can do? He can prove in ZK that he has a private key that generates public key which is inside this note. Once he proves this statement to the smart contract, smart contract releases this 5 USDC and tells Georgie, you can spend this 5 USDC however you want. Essentially when this 5 USDC is released you can essentially call any protocol unis swap in our case and swap this 5 USDC to 5 USDT but when

you want to deposit back this 5 USDT to the shielded pool so you don't link your identity here when stealth addresses come to the play you provide stealth addresses so this is a one-time address which doesn't reveal your identity the beauty of stealth addresses is that you can generate billions of stealth addresses and all of them will be unlinkable for the outsider. So the same person can do any type of transaction and all these transaction for the outsider will be unlinkable with each other. That's a beauty of this uh def helman extension.

And the last part this is a new that's not new part but somehow we should account for all the balances in the system UTXOS and the common way is to do it with miracle trees. So essentially we should know the state of the system. It's a balances of all people in the smart contract and uh what is essentially actions they are doing and we need to capture it with just one number and uh this number if you think about cryptography is generally hash hash of some data data can be arbitrarily long but you still can hash it and prove integrity of this data later.

Uh you you may ask me like why don't you use generally one hash function and essentially hash all the data but the problem is that when you you when you do transactions you remove and add UTX source to the system and you need to do it efficiently because if you rehash everything you need whole previous data which is really inefficient. What you need to do is to do it in a very short time and if uh you have n data n number of data the shortest ways to do it is in log n operations and miracle tree allow you to do this.

So by insertion if miracle consists of let's say 16 you can do in four operation. So quite fast efficient way to prove integrity of your data and to record integrity of your data. Uh we have two types of miracle trees. Uh I want to stress it out. So if we think about Merkel trees uh the main questions that we have do we need to hold the whole Miracle tree or we can hold just one part of miracle tree and the answer to this question depends what do you want to achieve. If you want only appendable miracle tree when you only can add some leaves then the answer is that you can essentially store log n

elements is the most right leaves for every level and then update this components for every insertion. Insertion just adds another additional leaf to the miracle tree. And the second point is about uh the case when you want to remove miracle tree uh component. Think about the user who essentially deposited some asset in the hingle but later somehow we find out that this user is a hacker stole the funds and wants essentially send this funds to centralized exchange. In this case system should be able to heal itself and to block the access of this hacker to

the funds that he stole. How can we do this? We can do this with removable Merkel tree. So we should remove the access token the leaf of the hacker from the Merkel tree. But to do this just the right leaves right elements are not enough. You need to have the whole Merkel tree. And by removing just one component you need to update the upper hash of Merkel tree. So that's a distinction between uh incremental Merkel tree and full Merkel tree. So in case of access tokens for access gated hingle we use full miracle tree and for commitments and UTX sauce we just keep incremental miracle tree

>> things to remember for nontechnical people based on what Nikas said is baby jab jab z case addresses at ber trees um and now we can move to compliance and security so we started actually I think right after the cash sanctions and one of the biggest problems we had is to persuade um law firms and to to to make a you know legal memorandum that we actually have can have compliance with privacy right. It was quite tough to do but you know ultimately the system that we built around privacy is fully compliant with governments. So we never try to avoid any governments or do

something against them. Um and at the same time it protects people right so we don't have any special keys that allows to reveal transactions right so it's a full privacy of your data and the way we achieve this is twofolded so first is when people interact with um the wallet uh we actually check if the wallet you know that they're depositing from is um compliant like and for this we run uh the compliance check with chain analysis, right? So if it is red flag wallet um it's actually not allowed to interact with smart contract. So the

transaction is reverted. Right? So that's a first kind of checkbox u to make sure that we are not allowing illicit wallets to interact with our core smart contract and you know core privacy primitive and then if you know it's and this is an entry point right what happens after the entry so for example you uh you were not red flagged suddenly you became red flagged right and you're already inside HKO and for this type of use case uh we actually allow users to revert transactions. So basically to lose privacy uh and to send back only to the main address uh he deposited this asset from. Right? So

this allows us to prevent uh the user from actually using privacy primitives with us uh and at the same time you know making sure that he he is getting the asset back if uh he you know if he has nothing to do against the law right so lots of actually chain analytics tools miss and you know just misinterpret the data and so they you know they can red flag you because uh like the centralized exchange that you're depositing from um got some contamination from some illicit other illicit users, right? So, you should not be uh reliable for and in charge for someone else mistakes, right? Um and the

second primitive that we run for large deposits is uh um like this kind of primitive that is called um reusable attestations, right? So reusable stationations is um basically allowing you to prove that you did KYC somewhere before you know sometime before somewhere in internet such as you know it can be bank of Georgia in it can be you know revolute for Europe or Venmo account for the US right so what you do is you generate zero knowledge proof of ownership of your account and then we accept this proof but you don't share any data with

So it's a fully private way to prove that you actually have information. Yeah, you actually did KYC sometime before without revealing uh this to us. Um in addition to this we have you know bunch of other soulbone tokens from you know Binance, Galaxy, ZK if you did KYC with them you are immediately whitelisted. So you can access um the protocol with any deposit. So this rule triggers actually for deposits over 1k of each asset. So if you have 10k of different assets, you don't have to KYC or provide uh any reusable attestation to us. Yeah, we have a team of uh 18

people actually now. Um you know my background I start as professional wrestler. I was wrestling Sambbo for 10 years. I was twice a worldwide champion actually in Sambbo. Then I uh spent five years investment banking. Uh have went to Stanford did two degrees MBA and masters there and during um my second degree actually we started HKO. I'm al also the founder of Silicon Valley icons. It's it's the biggest Stanford founder community. Uh Nika has CTO his PhD from University of Warwick and also built few apps. We we built few apps before actually both in blockchains and web two.

Uh we always hiring so we have everything uh for great people to join. So uh we are entry point to blockchains right to the new home for finance. Um there is also the vision beyond finance where Hinkle is also entry point right where that kills attention economy and allows public blockchains right to be the new ledgers for this economy with the ownership of you know your assets. We have all the great technologies. So on boarding is a bit longer for nontechnical people because it's pretty complicated tech right and you have to understand it but it's possible. Um and then we pay great salaries every six months promotion and bonuses.

Uh we raised over 6 million in SID round. We are planning to raise series A soon. And yes, own your money with HKO ho.pro. Here's my telegram and email. Feel free to reach out if you have any questions and feel free to ask questions if you have any right now. >> Okay, cool. Well, I will review my questions just so I don't get lost. But um uh basically again like I said, we'd be starting with the idea that I have a MetaMask Ethereum wallet, you know, um I could have received money to that wallet from clients, crypto trading, etc. And now I'm going to be interacting with Hinkle, right? So um so like my first question kind of starts basic. So when

you talk about self-custody, I think trustless. So my first question would be what kind of risk exists for me as a user of Hingle? >> Mhm. Yeah, the only risk that exist is the smart contract risk, right? And to cover smart contract risk, you know, smart contract is already three years old. Uh it was five times audited by top um cyber security firm, we use hexagate as I mentioned which analysis uh to prevent any interventions right to uh into smart contract. Uh so basically everything that is possible we we are doing this uh to make sure that smart contract risk is minimized.

>> Okay. Excellent. Um, my next question is regarding the viewing key. I just want to make sure I understood that right. Is this viewing key customizable? So, let's say I have a 100 ETH, but I'm trying to verify to someone that I have just 10 E. Can I just show them that knowledge only? >> Yes. So, uh, with Unity, you are able to prove uh any sort of statement about your assets. Uh this is partial regulation and second is a full regulation when you give green key to the to the essentially government or some entity for full access. Of course the first option is much preferred.

>> Got it. Perfect. Um also if you could do some general comparisons to tornado cache because that's where like I first was really learning about privacy. I think of basically you shoot a hundred Ethereum into a cloud, right? And it rains down all this Ethereum in different places later and they don't know which wallet it went into, right? Um what my question would be is let's say there was just one user of your wallet, right? And I sent like $10,000 worth of ETH to it and then I withdrew it. Obviously, it'd be very obvious, you know, where it came from at that point. So is your your privacy dependent on the number of users or is there some other kind of factors involved when you people see the on and off ramping and how many users do you have I guess.

>> Yes. So um for comparison with Cornet cache uh I wouldn't directly compare with cache. I would rather compare it with with cache. Not because I scared of comparing with cashache but the structure is different. Uh cache use it used offchain u nodes for every deposit and uh it didn't have this UTXO system behind it. Uh it's more rather than Zcash which has this UTXO system. We try to generalize SPO system with respect to Ethereum with any sort of transaction and uh yes uh in terms of um anonymity is the level of anonymity it depends on the anonymity set of the system which

depend not only on the volume but also on total value locked in the system. So both parameters are important >> and what is your TVL right now? So uh after we redeployed the contracts uh around 3 months ago um our deal is 1 million200. >> Yeah it's 1,200k. >> Oh cool. Excellent. Um I'll use a local example here GE crypto. So that's a local exchange that um they do USDT withdrawals or you can trade fiat to USDT. Um, so basically like an example, if I have this wallet, like I said in the example, and I'm trying to withdraw money, I could be an American citizen, I

could be a Georgian citizen, right? I can go to them and I can withdraw funds as USDT. My question would be if this wallet I use as an intermediary um HKL for example um would it basically um it would basically make private that particular wallet and then I could withdraw to them and at that point I could claim it as crypto gains I could claim it as business income but it would be private and I'd be able to basically trust that it would be secure. >> Yeah. So uh for centralized exchange to enable withdrawal directly to smart contract it it should have some you know connection there right to build some custom connection such as it's not just

regular transfer right it's a deposit function uh so if centralized exchange has this function you can directly withdraw to your private address inside hinko yes >> perfect uh my last question and this is very much about like your ethos like how do you define a hacker because I if I understood the Merkel tree example, you know, as well as I can. Um, it sounds like if someone were to, for example, during DeFi summer, we had a lot of people like hacking smart contracts, right? I know the pickle finance hack. They literally swapped a pickle jar and took like millions of dollars, you know?

So, like my question is obviously we want to stop bad actors like that. I'm not against that at all. But what do you define as a hacker if like the US government were to come and say, "Oh, we don't like Fry. We don't like the cut of his jib. we don't think he's paying his taxes or something like that. Would you cut off my example, me from my Merkel tree, my access to my wallet or something? At what point do you do this? No, we cannot cut out anyone actually you know it's a it's a privacy that is uninterruptible by us right and for this right as I described here uh so we implemented few mechanics such as first you prove with DKTLS right that you are the you have centralized exchange

account and then the problem is okay like if uh the centralized exchange belongs to you right the government can actually checks okay like this guy logged in centralized exchange to prove to Hinkle. I mean we don't have this data but like this potentially is accessible by you know someone who is you know going after in case you know Coinbase or Binance or you know any other centralized exchanges are actively willing to uh cooperate though right this ZK proof is fully private right we don't know who uh who proved that uh you know this transaction belongs to them right or like that they have 1 million of assets inside so That's uh one and

second we have also on chain analytics here right so with again with chain analysis we are able like if this swap happened in a moment right and uh it became red flagged it immediately triggers our analytics right so you're not able to deposit this assets into hingo and of course right none of the systems I believe is uh perfect right so you can still have the same type of transaction from the regular bank and then you know Like of course banks also co try to coordinate with uh you know with the governments requesting the access right but what can they do if money is not there anymore >> right

>> probably nothing right >> makes sense okay no that that was all my questions thank you so much >> right thank you great questions >> uh when I was looking into this amazing technology it was not like for me I see a great opportunities to to see not only own your money as you say own your assets and one of the biggest assets I think is this new wave of biomarket and health data that is inside of us and I think it's coming in the future or or it's coming right now that DNA data genomic data biomarker data it's going to be really valuable in the future for train AI models to even to protect my personal integrity so I see this

technology ology as a way that I don't know if you are thinking about integrating this kind of seck protocols to maintain the integrity of the data to other different kind of assets not only money I don't know what how do you see it in the future for hal >> yeah I think you know it's definitely possible to focus on you know DNA data for some for health records right that's another use case and you know when when this you know blockchain waves uh started you know in the past season in 21 we actually saw like bunch of very different use cases right we saw people like actually a very close friend of

ours was pitching for maybe two years privacy of like medical records but then you know no one actually bought this because of course you have these conglomerates which is like you know medical health care systems right super powerful right and going against them and actually pitching this and making them do this. It's um >> it's like one bottle of at time. >> Yeah. So, it's super [clears throat] complicated right? >> Yeah. But but but it like also I think that's the biggest opportunity that we have right now. It's as blockchain open these doors to finance to everyone and I think also it will open to other different kind of of industries that

they were big and slow and I mean it's one bottle at a time. I understand that uh but also I think this just the full protocol how is created with the authentication with the data duplication pro like all how is created 100% it can manage or create a new way to manage that uh data that it's you know it has this uh limitations right now into all these regulations but with this protocol you can jump into that regulations I I think it's amazing.

>> Mhm. Yeah. Yeah. So I mean we are open to this use case unfortunately right we have to not unfortunately actually fortunately that we have to focus on use cases that are you know closer to reality for us. So finance is the most obvious use case right for blockchains. Then you know you mentioned intentionality of your data and you know this is also ownership of your data for you know Google ads Facebook and you know everyone who basically sells your data right so this attention economy I think the next big big target for blockchains and you know if there's a pool from healthcare and we see that you know that's where basically the invisible hand of demand leads us we

will definitely go there right I mean there are lots of examples where people like didn't expect that there's a huge demand such as you know Twitter Twitter like was whatever they launched this tool and then suddenly they saw people you know going crazy and of course it made them intentional for this use case right whenever this um you know happens it will make us intentional about this data >> maybe I can comment here about tech so there is the KML ZI as you know and this This is uh this is just starting essentially because um previously previous systems were ineffective in essentally improving some properties of

this data. In our case it's a property of some computation AI computation that you do let's say back propagation but they are improving because there are tradeoffs between uh let's say proving proving time and verification time and you can explore it. So I think uh there is a great potential in that direction and uh new tech for example stark stark is better in terms of wins and starks allow you to do some >> manipulation privately >> I mean that's a good start that you have the SDK for developers [laughter] >> exactly >> you know thank you guys that that's that's it >> thank you for everything >> uh so first of all can you hear me?

Yeah, thank you for organizing this event and thank you for the great lecture. Hello to you all. My name is David and I have couple of questions. Uh let's they will be mostly on KYC. So you mentioned as I understood correctly reusable KYC, right? So, um, as I understood, if you hold a single asset of more than $1,000, you're subjected to KYC [snorts] >> and we can request KYC from previous places >> to verify the hingali KYC, right? So, how does it work? Like the method itself, how do you get information, my information that I am verified somewhere else?

>> That's what I'm interested in. >> Yeah. Let's make TLS data. Yes. So uh for this we're using uh ZKTLS uh with um uh with reclaim in our case reclaim using uh this tech. So essentially uh imagine you go to Coinbase. It's the first time for you. Uh in order to deposit some assets, you need to prove Coinbase that you're legit person. Uh you prove it u and uh Coinbase records it somewhere in database otherwise you do it again and again. And um like big platforms like Revolute, Coinbase, Binance has uh some APIs for the users

because uh how can you trade in a fast way without this API, right? You you need it and uh based on this API solutions like Reclaim designed some kind of wrappers. So it's a API wrappers that allow you to request information from the let's say Coinbase. And in our case when user walks in with his wallet uh he's able to with this rubber UI connect to this API let's say coinbased API and essentially get this information and essentially this rapper allows you to prove some statements for example you did KYC and only this not your KYC data.

It essentially proves this information to us using reclaim zero knowledge proof and uh we verify this proof and we accept you as user if your deposit is more than 10k. >> Understood. Thank you. So in cases where these exchangers centralized exchangers verify a person's KYC however they still reject them as a user for various reasons. Some might be some political dissident here journalists here and there. It has happened before. What happens with fingard? We have you have our KYC but it has been still the access has been denied for me to use Binance so to say. Will you accept me?

>> No. You you won't be able to use their API thus you won't be able to login in Binance account and you know the outcome of this is you won't be able to generate this proof. >> Well, what I'm asking is that KYC has been passed. They verified my identity but they just refused my service. >> It's still the same. I cannot use Hali. >> How can this be possible >> to be refused of service? >> Yeah, I mean if you pass KYC, it implies that you they already agreed that you're legit user.

>> Well, this has happened before many times, right? They verified your ID, your proof of address, so to say. However, there might have been some other issues that they didn't like after you used their uh account, their services, right? There have been many people in Europe especially where their accounts have been shut down from crack and Coinbase Binance because of their activities. They're journalists or politicians or something. So in that case, I just want to know what happens with >> Okay, I mean this is definitely an edge case, right? And you know I will clarify we are not perfect. So we still have to work on better primitives, better compliance everything. But this use case

actually reminds me about um you know the exchanges kind of tier 2 exchanges that we have now such as MXC you know and for them you know you can actually do uh have an account with them without KYC right so what we implemented is that you have to prove that uh you have uh assets there more than 1K and if you don't have assets you you you are not able to generate this ZK so I think same applies to Binance and other accounts right I We still have to work on this use case and you know each case for this to happen but we can require users to actually prove that they have let's say at least two bucks or like whatever 10 bucks on their active account you can

even ask to prove the volumes right so there are a lot like you can basically ask to prove any arbitrary data >> understood thank you for the answer and one final question it's a bit of a rough one you mentioned that you you use chain analysis services for verifications kind of stuff. So I have a problem with chain analysis, right? Because over the years it has been accused of being a CIA front organization. They've been accused of of the well they started as they got their money from CIA, they started as that and over the years it's been told that they go after people that find that CIA finds troublesome. Right? So again with the question there might be some political dissident anyone fighting against

government or some tyranny that might be in interest of the CIA and well chain analysis just tells you that yo we flagged that that's just a bad person and you just automatically refuse their service right so >> my question mostly is that chain analysis is far from perfect and is there an idea to move past that and use some other services instead of chain analysis Yeah. So we are not married on chain analysis, right? So there are a few other services. There's crystal, there's tremlops and of course, you know, in our it's in our best interest to use all of them, right? And if it, you know, if it's green light in even on one of them, it should be green light

with us, right? I think that's a system that I would envision for Hinko. But you know, we we don't have thousand people in the team yet, right? I think in the next stages we should we will definitely think about it. >> Yeah. First of all, uh thank you for organization. Thank you for the presentation. So yeah, my questions are a bit rookie. The first one is what is the tech stack for developing your system just like the programming languages. I mean >> yes. So uh we have different components.

Um we have onchain contracts written in solidity. uh we have um proving so we need zk to for proving uh and we use circum circum is the main specific language uh for zk proofs it's quite well known in blockchain industry in ethereum but less known jam in broader industry um we use um like we use te so if you're a user and you want faster verification you can delegate this verification to some clients and uh these clients are currently written in C and Python. Um this is a separate stack uh and also quite often updated. Uh and

also we have standard stack for front end. It's a type three and we have some back end for caching uh written in nodes. Yeah, this is >> great. Thank you very much for answer. So the second question is uh so have you ever heard about like the drop accounts that kind of use bought passports for KYC verification? Uh the the question the main question is do you have the defense against that or you kind of consider that this area is not under your control? Yeah, I think I I've heard about drop accounts though I'm not super familiar with with this u you know as as I understood drop accounts are accounts basically acquired uh by users that belong to different

people initially right >> yeah yeah >> yeah so for drop accounts the system that we built is actually uh requiring to do you know another proof for after like after specific time right let's say 6 months passed right you have to proof And you know you I I would assume that these drop accounts are very limited in time right at some at some point they trigger uh the they become red flag >> kind of yeah they can also just stay inactive. Hi guys, thank you for such a cool tech also both product wise and technical wise and so we've talked about how cool the tech is uh how cool the privacy is but what are the biggest uh

pitfalls how you want to fight it uh shortterm and long term both product wise legal wise adoption wise and so on like uh from the point of user experience legal uh and maybe even more. >> Mhm. Yes. So I think one of the biggest um kind of thing that we should overcome is uh bringing more users right because now let's say it's consumer right I talk to Ali telling Ali hey it's time to deposit he shows metam mask account before right why it's not hle if he is a privacy max and >> because he's already doxed that account

that's why [laughter] like I use in cal for one reason >> and then you know there is this The problem here is switching cost is still quite higher. So people don't really switch wallets as frequently as we wish them to switch and priv like we expect privacy to be powerful enough uh feature and then you know it that it creates some formal effect so people actually you know earn points for the airdrop right so they have great user experience and they finally feel that there's special user experience for privacy right so whenever Ali joins right if I provide experience that allows Ali to feel special right

his private and whenever he moves to Metam Mask there is no more this of this experience that's a success for me right but first we should bring him to Hinkle as well as all other people so that's I think the biggest problem that we are seeing right now how we make how can we make sure we build awareness about the product and uh you know like justify switching cost for for users to And do you think retail cares that much to switch?

>> I think so. You know, I think actually I think retail is very broad category, right? So retail yield farmers are they retail? Yes. Right. So yield farmers like it's a perfect tool for them. Right. So I mean we don't advertise and don't support this use case but you know there's they can create endless number of public accounts with HKO because it's dual account structure. you know, shield, unshield in your account, shield, unshield, right? So that's, you know, it's retail. Um, do retail people pay for goods, right? In crypto in Dubai and some other countries now in the US with cryptocards, they pay, right? So the whole cryptocard space is also

emerging and growing and it's retail. So I think retail is very broad audience uh that we should definitely focus on and retail is actually like everything else I believe that everything else is downstream from retail right if it's easy for retail to use a product right so then uh it will be easier for any B2B customer to actually try the product and then adopt our SDK right because you know it's kind of twofolded you can go like product first and then product if product sells and ultimate and the outcome for the company is great right we have uh you know the whole last three years of tech growth was like product le right so notion slack all the on the

latest tools started with consumer and then went up with the bigger market okay and the last one do you think privacy as net positive I guess net positive or more net negative and if I mean obviously there are net not net negative but just negative aspect of that and do you think that positive moments outweigh the negative moments? >> Of course, >> uh hacker groups from you know web and so on. Yeah, I think you know ultimately if you compare number of list activities to you know global uh markets right and how much value they create it's just you you cannot even compare there is always

a sleeve of the market right that is elicit you know you cannot avoid negative externalities for any technology right so it's about like can you say that Facebook uh created net negative outcome for uh users like of course many people would Okay. Uh but ultimately it connected everyone in the world like especially in the first five years, right? Same applies to Google with better search and you know like they all created negative outcomes for lots of people. Uh but I think you know this negative outcomes is like has been always the very small leaf right of 5% of the value they created.

>> Yeah. I will add here uh if you read Satoshi's original paper he has a note there he acknowledged that system is not private essentially it allows you to seal the privacy but not real privacy for real anonymity and uh so he acknowled total independence and total independent money unstoppable money you need second component which was not achievable by the tech of set time and it's a privacy. Uh yeah and we are okay for this.

So first of all uh [clears throat] how how modular are your secret? Can developer compose or extend them for new asset types or custom types logic? You mean extend in terms of uh extending uh software or plugging them into larger circuit? What is the question? Needs to be specified. >> Oh, reply for both. Let's make it easier.

Yes. So um our circuit code can be easily extendable. It's written in modular style. So it consists of sub modules each circuit. So it's uh I would say it's not written in a bad way. It's quite expensive uh in terms of plugging this circuit to the larger circuit. Um it's uh so the circuits you cannot plug any circuit into the system. Uh you need you need different type of dimensions different so circuit should have some shape >> in [clears throat] terms of parameters in terms of parameters of the circuit.

that uh it's extendable up to some point uh but not fully customizable for every every dimension space. This basically in in between between an API and a hook exact yeah makes sense. So second question I have four so it will require some time. Uh what uh what measures are in place in mitigating metadata leaks? Example, timing analysis, transaction correlation or identifiable patterns improve submission.

Okay, thanks for this question. really happy that it was asked now because recently we added to u everybody knows store right source essentially it's like hle but browser way of hle it uh it uses um nodes to send your requests so for outsiders your requests are not sent from your IP but sent from the sub ID of the nodes within the system uh and we have integration of it.

Uh unfortunately we should have paid some price because door to add some time overhead and when you use it with ho it will be a little bit slower but for uh real privacy maxis it's a necessary tool and it's in our hingo and it allows to uh shield metadata as well. Uh next step is u private membles. So in order to send not only to public manual but to prevent front running and directly send to some private meles. So next question you ready uh how does the architecture maintain or grow uh the anonymity set is it global

per asset or scoped per pool deployment? >> Yeah. So now we have more of ETH right of the asset. implies that you know anyone depositing ES anonymity set right can you know swap or withdraw or do any trans make any transaction right and uh this person will be inheriting the anonymity set of Ethereum which is like over a million right and for like more longtail assets of course there is not enough anonymity set now but you can actually deposit like longtail asset let's say you know you you deposit pendul token If you swap swap pendle token to ETH

then no one knows like who is withdrawing right or sending or doing transaction but I think the way I think about HKLE and anonymity set right as long as we enable users to keep Hinkle as the main wallet uh you don't have to overthink too much about anonymity set because at some point it will become close to impossible to to really trace what you do because you're constantly moving from private wallet to public wallet to private wallet to public wallet, right? So the trace is uh decreasing with every year incremental transactions, right? And this allows us to actually scale HKLE very well, right? Because we don't

depend on people to just depositing or withdrawing or just doing swaps, right? It's like fully uh enabled private wallet. That's also very important. Sorry if I like from one question to the other. I give like because if we really want to think about it as money privacy is fundamental basically if you want to consider like concretely this case. Um >> yeah I think like one one extra addition here that we already added this on public account and we'll be ending on private you know Ethereum chain and you know the biggest chains uh can actually also provide privacy to other chains

right so the way you do it right you you let's let's imagine you move from ETH to base chain u but there is no anonymity set on base chain there's you know zero assets right in the shielded pool whenever you move assets for like your ETH from Ethereum to base you inherit anonymity set of Ethereum >> right so that's another big uh feature that we have >> actually makes sense >> mhm let's go to the the last one how do you abstract secret complexity and proof generation from the user is there any visible delay or uh do you apply a synchronous proof generation/batch actually it's not

Um yeah so uh for um I mean u the complexity is abstracted within wallet interface uh user shouldn't think about servant obviously like uh he should do transactions like he's used to with normal wallets and uh we don't use a synchronous proing because you need to capture some information before you prove cannot run in parallel u and as I mentioned previously we had two modes like proving globally for privacy access or proving remotely. If you prove remotely, it's within 200 milliseconds normal for HTTP requests. Uh if you proving locally, depends on your computer. But if it's M1, let's say M1,

then it's within two 3 seconds or okay. Uh last question. Um [clears throat] are there any plans for open sourcing or exposing APIs so developer can be directly on top of in cloud architecture? >> Yeah, so we just open sourced our smart contracts core smart contracts like everything else um will will come gradually right so we have to do more audits we have to you know like polish the code before we actually go uh broader. Makes sense [laughter] because you have attackers if you don't do it.

You do it before. >> Yes. [laughter] Actually uh something that I want to underline before uh ending this uh conversation and very thank to be here actually is that um it was like actually like the same stuff that I told you like first time we met and also sec second time we met um to because now a lot of people see like this trend about privacy pop up some point but it's also important to say that uh most of the users especially like they want to use they want to use like other application most user as me because I was the biggest user of cash

>> like all of my wallet I re on Twitter so it's like they basic cash for example before like all of the cows that happen in 22 and that's like a fundamental use case for most of the people especially if you are for example like CEO of project or you know you don't want like it's not about like only like oh let's uh be to the government the police just about okay I want to do my stuff but I don't want like other people let's do my stuff but I mean I don't want that people like connecting stuff with me or whatever other like use case and I think it's important to underline actually uh that um which was the first question I

asked you uh that there is way to have uh protocol who preserve you anonymity but at the same time doesn't have a compliance issue. That's what one of the thing that I >> Mhm. >> I think I want to if you want to add something or we can close with this but this like very important actually. >> Yeah. Yeah. I think you know you this is super important for us because we also focus on institutions right and so like every institutional or like liquid fund which is like more or less grown liquid fund asks us well how like how do you make sure that your smart contract is not contaminated right and for this contamination we use

like now chain analysis later you know other tools as well such as CRM and you know crystal but this is you know extremely important for us and >> yeah compliance uh case is important uh but sometimes it reached extreme in depth of attention to our protocol even uh one curious case one of our investor still thinks that we are KYC protocol [laughter] and so we can say that uh like for everyone to especially like to simplify for a D5 person like me which I'm studying ZK and privacy but I'm very very like a knowledge person that uh

incal and also like a lot of new uh this new parag this new trend of uh privacy protocol I can use without be scared to be blocked in the future because I use it. >> Mhm. >> Do you tell me yes you can use it? >> I cannot guarantee on behalf of other protocols that are out [laughter] but I can say that Hinkle yes you can use it. You can you know most of actually like lots of our current users are sending money from HKO directly to centralized exchange. That's correct.

>> Right. And you know like we never received any feedback from them that uh they they rejected the deposit. >> That's very important. We should have privacy and uh so uh I think we can close the event and obviously we invited Hikal and so back to you there is a lot of hiking. >> Yes. So thank you uh to be here to everyone. Uh thank you also for the participation which is like is always more than we expect like each event and uh

yeah. Awesome. Thank you. [applause]