Is There Still a Bull Case for Privacy? - Joe and Jon from Aztec Network, Ep. 213 - Transcripts

September 20, 2022

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Most wouldn’t be comfortable with broadcasting their daily lives to the entire world - but that’s what happening with the transparent nature of blockchains   Founders of Aztec Network believe that privacy is a fundamental human right and that...


welcome to the Balkans podcast go to podcast for investors and builders group so and before we get started just a reminder for you guys out there the blockage podcast is intended for informational purposes only neither the host nor its guests or licensed financial advisors and nothing discussed should be construed as financial advice views held by blockages guess or their own and sponsorship messages do not constitute financial advice or endorsement with that out of the way let's jump right in now before we get started with today's episode I've got some great news for you know a lot of you have been asking for how I analyze projects that I bring on the show that's why I decided to create block grants V. I. P. to share with you all the heavy research that goes on behind the scenes now every week or so our team prepares it into every search memo with things like sector analysis technical concepts made simple in depth competitive breakdowns and even interactive models so you can learn about the most important projects before they become important in our team is putting in hours every week scouring discord Twitter forums and blogs to help you get an edge in crypto and understand the latest projects and teams at the deepest levels that goes way beyond just an interview now in addition we also host exclusive a amazed with myself to answer any of your questions so all of these are only available to blockage VIP subscribers the good news is that while interviews will always be free the V. I. P. tier cost less than one coffee a day so head on over to the Balkans dot com slash V. I. P. or click the link in the show notes below to sign up everybody welcome back to another episode of the blacklist podcasts now this is a really really interesting episode because with the recent vaccinations on tornado cash and subsequent discussion of privacy in crypto I thought it's a really important time that we bring on board one of the leading privacy projects on the show to unpack that entire can of worms so S. tech network for those of you who are not familiar is a privacy first zero knowledge rolled up another words their leader to build on top of Ethereum that allows dapps and its users access to private and cheaper transactions with opt in order to believe for compliance as well which would definitely touch on now since lunch aspect has helped seventy five thousand registered users transaction for eighty million dollars across two hundred thousand transactions all while being ninety seven ninety six percent cheaper than existing private transfer protocols at the same time with over regulations I'm curious how does that affect the business of projects like Aztec and our developers use province he probably took its like aspects safe and our users safer interacting with these projects and most importantly what is the future for privacy in crypto so to answer many of these very complicated questions I'm really excited to have Joe and John from the F. sixteen with us today so guys welcome to the show

thanks so much for having us it doesn't

definitely meant so just get it started can you both tell us a little bit about what your respective roles are at Aztec and how you guys have been working on a stick together

yeah I can go fast so how can I take the form of eight years now and has been it's been a couple of winters in that and and and my role is kind of mostly focused on product and strategy at the moment I'm contacting C. as well as tax taken structural break and that yeah we'll we'll kind of aspects of how we get to market and and build up for not seizing the school technology

and I came on as head of growth at Aztec so taking on all marketing comms community and helping people understand the power of privacy definitely and speaking of that I think just to kick us off I'd love to start with a question that you guys probably get asked ten thousand times every day so why is privacy important if you are not a criminal so either you feel free to take this yeah I can

I can take a step faster then handed that happens to John but I think it's important to look at kind of where we've come from if you look at kind of our financial lives in in the web to wild and there's levels of privacy that we enjoyed we kind of maybe take for granted some of them on sufficient and like this whole kind of like the Facebook and Cambridge analytica scandals which kind of mush the boundaries of like not having sufficient pride privacy but from a financial transaction standpoint I concede Jones ninety count accounts he what was his weekly shop and that's just kind of basic prerequisites that that we enjoy and all kind of web to off chain lives and as we think about it there in the public blockchains and we have to get those up in the current status quo and save our belief is that most individuals should not sit up and then you can have that middle ground where you can enjoy the benefits of kind of privacy in your everyday life without having to build costly activity to the wild at John I think you guys good knowledge is about sharing which was quite funny to show

yeah I I think I mean privacy just like a fundamental human right and I think people say that a lot but don't really understand like what that means so I think it was like a foundation for capitalism or competitive markets like imagine if someone could read your brain all the time like read every thought that you ever had you have no competitive as you have that there be no point in having capitalism right and if you think about crypto as this like very economic realist market it strips away some of the competitiveness and ability to protect I. P. and the competitive advantage if you give up privacy and there's like layers the privacy protection as well like I think as you alluded to there like the simple notion of like okay well privacy is not important and why don't you let people watch you shower or something just like deeply you know animalistic human uncomfortable about someone seeing everything that you do so they're just like on a basic level you know privacy is discretion is really important we also know like privacy or security is really important right everyone knows everything that you're doing then they can target you they can attack using you know fishing techniques and then there's this other notion of privacy is a creative force you know we don't really think about it every day but if you went through your everyday life and you log like how many of the things that I do I do financial or not where I expect privacy

and like

how would my life change if what I was doing right now we're not private it's nearly everything that you do write everything from like you know having a side conversation like how would companies even function in a universe where every single conversation or expose like unless you're Bridgewater and you truly buy into radical transparency which is a very very rare organization right just the lack of privacy changes the nature of the games that we play with each other so I think it's just in far more fundamental than people think and I think privacy has this label is just like it's just obfuscation and you'll you'll need to obfuscate things that are bad and actually just runs much much deeper than that yes we know there's so much to unpack there as well and they're just obviously cultural elements as well like certain societies they're more used to surveillance and they enjoyed the best protection that comes with a surveillance on state but then there are cultures that are you know more anti that it it's so hard to kind of qualified I I think for even for users within crypto people always feel really strongly about whether there should be you know complete privacy for everything especially now that we've brought in a lot of mainstream people for clinical chemistry people from like the gaming world or like the art world too and if he's on there a lot of different ideologies I'm curious like how do you guys balance that one building aspect I guess is do you have to I guess ascribe to a certain structure certain ideology to really use asset which is seeing value in US tech

that's a great question I think it's it's a bit like being snapped

at at the

end of this sounds good how is my mental model not a perfect technology but I think having will network traffic and going across the internet is it is something that was kind of wealth Wilson awhile one by kind of technologists of the last decade but even within even within not that kind of that sand all over the web site at and the web two out how certain kind of a non private aspects to it but that's kind of a fundamental matter of kind of have a slanted that is private and is accepted to the web to mobile and the web three and all the years of the same thing needs to exist but at the application level I maybe our option and in this kind of analogy and that may be kind of conditional privacy act that the actor needs to kind of request from its users in order to kind of be compliant but it's that's a big distinction between bass clarinet and the capitation level privacy and at Aztec we kind of think about designing tools and SDKs to give developers that kind of choice states so users can give advocation can see okay to use this application I need to review this information or or I can kind of decide not to use applications I think its automatic cation level and the base that is private

yeah I think there's you're in for the rabbit holes we can go down here but I would love to get to one aspect is actually building first so that our listeners have the contacts so I've heard aspect being described in many different ways some people call it a scaling tool a layer two some people call it a developer tool kit to add privacy to existing dabs and some people think that it's a consumer facing mixer at like a tornado cash so what exactly is asked technique what do you guys building here

yeah I think it's important to maybe look at where we've come from and because of what what kind of fat a few of those things that we started life and doing something quite a bit different what we're trying to put at corporate that once was there in and given that a needs assessment letter in twenty seventeen we kind of realized do that's financial privacy will be a key proponent of that system and the contact tradespeople failure is visible to the public that's not how financial markets work and so we gonna set about waiting for their M. that's the kind of implant that's that's a privacy at the time I was kind of room is it Z. cash was gonna kind of be kind of deployed all or at least as a pre compiled on their end and end up not happening basically in twenty seventeen **** aka archive at C. L. as in if possible if possible but it's background and started looking into some of these protocols Adam and trying to look at it through the lens of what do we need to kind of exist for us to build this corporate that kind of a trading business so we we approached kind of problem from the kind of practical standpoint if one is to exist for these kind of fab destructive businesses to kind of take down entrenched what to what I say since I'm not going to stay with us through through the journey so we don't about him one of the parts call which kind of just had confidentiality and missed the mark because it kind of you could still see transaction across and you can still see what was happening but then in in twenty twenty one we kind of launched kind of the culmination of about two years of research which was the first pretty private the cable up when the Syrian and Russian was kind of a a proof of concept of what this technology could date and supported at private payments at between individuals on the how to and withdrawals to gonna be out one as kind of a good proof of concept of how you can kind of get that privacy that'll save significant cost savings for the rolled up instruction apple on my favorite and that we can take a year to kind of improve that model and then this is black and if that the kind of gateway to defy kind of analogy that you could start kind of comes and I with the launch of Aztec connect so we upgraded the system in in July of this year to not to support private payments but now uses you have funds inside Aztec you can call any small contract with Iran and from within sight as tech retain purposive and kind of your balances on US tech but also get gas savings when you interact with small contracts that's a process called batch so we can patch together and he and John into one batch will pass out of the cost of that one transaction it would be a useful trait as safe as they can and it's kind of this scalable plus private out to and the combination of all these tools is a kind of development toolkit request a contested case that's kind of the currency that system and well we're going that is a fully programmable private smart contracts system and this is where a programming language no offense into the mix but I'll post after second and fifth almost not something

but not a no go right ahead

yes it sounds like that kind of the the next step in the vision you can kind of think about techconnect is as he said adding privacy and scalability to existing particles existing public particles and what we've already done as we've made the use of private arms we've been given the user the ability to hide that balances height that kind of activity the end state of the system is we also kind of want to make the applications private make those not just limited to what some of them today and that's what this really into it very interesting intersection kind of comes about of at private state as we collect you can start to build their own games that could develop a defiant private programmable programs and executing against him so that's kind of the next stage of the journey but today they're in I was spoken of users accessing would've defy privately with about ten thirty to six

just just a synthesizer because there there was a lot to cover so it sounds like you guys are basically building a they are two on top of Ethereum that has privacy built into the very role of itself and the first use case you guys did was allow people to basically transact usually a with this completely private manner and if I recall correctly it was called C. K. dot money and then the second product did you guys have built is then extending his privacy to applications that already exists and if so people on this roll up and interact with applications on Ethereum but with the privacy of this roll up and that's canasta connect and it sounds like the third step is to create a fully programmable language called the mark so completely kind of building out this entire privacy stack is that kind of a correct a synthesis of what you guys are trying to achieve yes

that sentence read reactor

god and I'm I'm really here so I'm really because how it works so I think maybe we can focus on S. to connect because that sounds like a really ambitious thing and to my knowledge you guys have been agreed with existing applications like Ave light element and more like how does it work how is it possible that I am on a layer of tool but then I'm using application on their one

yeah I can I can take the kind of and kind of how to control the female maybe works and how you get the privacy and and then Hyundai this John how how do you find traction once but I'm at a high level to get privacy you need to run as your own personal browser said normally when you have an Ethereum transaction you're just signing a message an eight year old and a one that's all in the browser and the doctor you're sending this public transaction paid out action if their innards and that's wonderful C. kind of everything in a privacy preserving context instead of signing this kind of transaction is sending off to a to a marriage you actually need to create a zero knowledge proofs and says first step in this process


proving you have some funds in US tech and creating a proof at proving how you want to spend those funds and wrapping that up in a

in a

highly efficient at zero as proof and sending them off to a local provider that's kind of the base functionality of the rollup save twenty twenty one it just supported sending funds to other users and it took us gonna be it's apt this functionality to the to the smart contract on a one to effectively enable you to send files to another smart contract on Ethereum I'm sorry at that point you can have a user has this ability to not just ones that we use is a trend that was not contracts and don't make maybe it's worth chatting for a bit about the current integrations and how the grants program is kind of that bottoms up on some of these these bridges written

yeah for sure so the way the system works is because there's no actual smart contract logic on Aztec it really is like a VPN privacy layer for Ethereum and so the user sends a transaction to a client essentially we have a client kind of like gas for Ethereum and then the client communicates with the role of contract to say Hey look you deposit some funds an oral contract on L. one and as your proxy I'm going to do something with it and so if you look at the either scan of like an Aztec transaction that aggregated on on it looks like you know as the private roll up interacted with

you know

are they are elementary to sabar your honor or whatever and so that's kind of like how you get privacy where an interaction is happening on layer one and it is public but did you don't know who was in that transaction you don't know what percent of the total quantity was yours and it's not attributable to anyone and so the way that the contract on L. one work is in order to talk to you know other layer one protocol there just needs to be assembled bridge interface you know we call these as techconnect bridge contracts the bridge contracts are kind of these like simple two hundred line interfaces anyone can write them and they're not complex and they typically don't carry a whole bunch of logic there really just an interface that allows our role contract to talk to another layer one you know smart contract protocol and so that allows anyone to like pretty quickly integrate an existing layer one project and that means that there there's massive benefits you're number one you get to keep all of layer one liquidity so we talk a lot for a while we're talking about later to liquidity fragmentation and this is the idea of like okay if I'm urine and there's like a certain amount of TV L. you know in a in my vault and I want to redeploy to an L. too well then some of our my users are gonna move away from L. one in a bridge up to L. two and then now the liquidity is fragmented maybe for your and it's not like hyper important but for something like units off or liquidity depth is really important you know fragmentation really becomes a problem the great thing about as I connect is because we're not really taking any liquidity way from layer one because there's no smart contracting logic you Aztec itself in this case you get to interact with all their one liquidity and later one smart contracts that are battle tested right they've been around for years and the only kind of like smart contract risk you're taking is on this incremental bridge interface which is so simple and robust it's like incredibly easy to on it and you know they're just


you know in our opinion much much less risk and the benefits of staying on layer one liquidity and and security of kind of like far outweigh the the the risks there that's like roughly how it works and you know we've got a couple integrations live already with element fixed rates element is a pretty costly protocol to interact with on layer one and so the batching benefits about the connector really beneficial for for elements we've also got a an integration with curve that'll let you swap ether Esteve and we're mentally working on a curve LP and generalize curse what bridge and we just launched your earned yesterday actually so you get access to the leading the valuable Gator on Ethereum again with like full privacy in cost savings there transaction batching and I'm really like that analogy that you made John about how I asked his V. P. N. over th your network you can basically use the exact same after you you already use every day on their one but with this kind of privacy there so for privacy conscious user really doesn't make any sense to not do something like that stuck in my opinion not at the same time I think you guys mentioned that users have to compute these far post themselves in their own browsers so does it require certain technical competency for users to be using a second because it costs a lot of money to to to compute these proofs

no definitely not so bad it's not a full proof is just as your knowledge proof and I said yeah I think I see Kay and if this is highly optimized piece of software that October the team is kind of produced and I'm one of the main priorities when developing it is not my purpose in additional kind of U. axe button and a something you touched on maybe in the intro but if if privacy is kind of up to ten and a U. extraction then it kind of tends to the situation when I make my own criminals you set eyes affirmative privacy act has the same you access a public transaction most people as John said adding that they want to be kind of walked in the shower so they kind of end up opting for the private sector one of the key kind of requirements of the STK was to have no U. acts kind of differentiation for for these proofs and as such you can construct these proofs and about three to about five seconds on one ready new hardware and I'm kind of like one of two year old complex about five to ten seconds which if you used to give money the application you can kind of see the interface and we think it's at least on par with most normal at one applications which was kind of yeah what a big win for us

it is such a fascinating point as well because it seems like the one of the main sells for you guys it's not just privacy but the fact that you can batch the transaction costs so it's not just private but it's also cheap so even for people who don't care about privacy it kind of makes sense to use this no I'm I'm here second dive deep into that because I know a common critique of U. K. based solutions is that you know it's expensive to compute proves and so on so how are you guys able to kind of work around this and and you know seemingly have no U. X. different differentiation between using aspect interest using their one applications

yes I think it is important to look at them the two parts one is kind of an expensive costs said as the the amount of time it takes to prove a program which is kind of one of one of these kind of you X. cost and we've managed to kind of get around that by and in house photography team inventing new cryptographic protocols so plank is is one of these widely used parts because of the Aztec teen inventors I guess that's kind of these hyper fast because not constructions the walk in the browser and then the other part of this is kind of actually validating that proof of the area if you look at kind of a normal privacy protocol on the Ethereum every user has to validate a zero knowledge proof if they're in exactly how the fast fashion plastic box and and kind of gas costs will close to a million gas for verifying these transactions and it was just a huge you extraction I'm sorry kind of what the violence was a ZK technology Xerox relatives have been able to be creative and kind of what not because ammo Tice the verification cost

of this

proof on a theory M. amongst thousands of uses satire in Austin's case we have a real o'clock which at the moment has space eight hundred ninety six transactions so and I said marriage takes user transactions which is another person's house application together into a block of eight nine six transactions and creates a proof that the whole block is correct and is anyone single proof this validates its at one thirty so you got dramatize this expensive now one verification cost of eight nine sixty six which kind of pretty much makes it twenty zero after the cost of kind of privacy and in the current system is around five hundred gas for the verification cost which compared to the base transaction costs and if they're in this is negligible

yeah and I guess just to wrap up on the part about the ester product itself before we dive into some of the more recent developments and implications of regulations you know I think it's definitely not the first privacy focused project out there there are projects like mineral you know Z. cash tornado cassia and your projects like manta that are all promising some form of privacy guaranteed usually some form of office vision through just mixing it with a lot of other users so what type of you know what what are there any differences in terms of privacy guarantees that users can get when they you know you see came many countries act versus using something like tornado cash in one of the main differences between these different approaches

yeah I think I'm so our privacy is kind of a cryptographic level is much closer to the sea cache purge pro Nash IG scientist Arial and was one of the only kind of as you can script over for this Saturday at the personalities that we we get for this you can excel based model I'm sorry you got stronger privacy guarantees because things don't have to be pocketed into fixed amounts like a like a mix that is seven aspect you can have you check service inside the system which just represent encrypted value and they can be one dollar a hundred eleven dollars and all the tree concise and I'm not crazy a stronger privacy set and then kind of just a fixed kind of mixing style system and then John maybe it's worth trying a little bit about kind of caustic connects kind of ads and internet privacy into the mix

yeah I I think the the notion of you know traditional you know tornado cast one point mixer is that you have to deposit these fixed quantities and then they kind of get office gated the beauty of having a network with like much greater utility than an on in addition to that so including you know and involves an earnings yield and trading is that it becomes very hard to track that you know there's no transaction graph so it's really hard to track that like a one eight the positives ever associated with like a one eighth withdrawal because anything could happen to it you know in the middle because you can always go down with you and you can do you live your life right there's the whole point of creating a privacy by default network is that there's like utility far beyond this annotation and I think that's probably the path to getting like widespread privacy option two right if like privacy is like has it extremely extremely narrow utility basically just obfuscation than you'd imagine that like they're only a small number of people who private opposition for opposition's sake but if it's just by default that you have privacy and you can pretty much live your life and get privacy for free both from like a U. X. perspective and a cost perspective well then like privacy should shed its bad name right every single person should elect privacy if it's essentially cheap and free and so that that's really the goal of our system is number one to like in force even more transaction graph complexity and and and honestly stronger privacy guarantees because of all of the

real life like useful things that you can do with the system beyond Hey guys I'm really excited to tell you more about one of my favorite products in crypto right now do you I. D. X. this is a team of known since twenty eighteen a difficult one of the best exchange venues out there that also happens to be decentralized and mobile friendly now listen until the end because there's an opportunity for savvy traders out there as well and here are just a few reasons why I like you a D. X. over other exchanges first is very liquid the process is two to three billion dollars every day in volume and has thirty five perpetual swaps as of this recording which means you can treat things like Ethereum bitcoin Dolch Selanne and most of the most popular assets with up to twenty X. leverage in the venue today a second it's also extremely cheap and if you're down bite from the bear market you don't have to worry about gas he's at all because there is no gas V. on start earlier too where do I get this build on that that brings me to my next point as well it's incredibly fast unlike other layer to a high speed Texas you don't actually have to wait to withdraw your assets anymore N. as an additional point by using stark where you I. D. X. also provides user with increased security and privacy and my personal favorite feature is to cross margin feature which means I can see one account of USTC and trade across multiple markets from there without needing to start some accounts because

I really hate managing so many different accounts and their iOS mobile app is also live right now and it's amazing because it's compatible with metamask Coinbase wallet clean ninety eight for the wallet and a lot of the most popular mobile wallets out there and it's available for people outside of the U. S. or sanctioned countries today and one last thing when exciting opportunity is competitions the most recent tear in the ten thousand dollar equity tier have won over ninety five thousand dollars in rewards and you can get started with the slow S. five hundred dollars in equity to compete for prizes so if you already trading might as well get paid to do it so if any of that sounds interesting to you I highly recommend that you head on over to T. Y. E. X. dot exchange to learn more and I thank them for sponsoring this episode yeah that's a great point as well it's kind of like messaging protocols today I guess some people might think that why do you need end to end encryption on your messages like are you messaging like things that you shouldn't be messaging but now pretty much every single messaging app maybe except for telegram is end to end encrypted now and that's almost the norm so it makes sense that you're too to create privacy once we create privacy is the norm you know it won't be as frowned upon and I think that's a great segue to the huge elephant in the privacy room right now which is this whole also affecting that just happened so to give listeners a little context but I'm sure most people already know this so recently FAQ issued a section on tornado cash and I I guess when it comes to Aztec I think some users reported that F. T. X. was like blocking addresses or accounts that have sent coins do C. K.

dot money which is your transaction app built on top of Aztec so to my knowledge so far there's no official response from F. T. X. but I think SPF boost it CEO of FTX tweeted that they are constantly monitoring transactions for AML compliance which I assume will hold true for most applications or companies out there as well so how are you guys thinking about this is there a risk that you know all the applications just banned users who ever interacted with aspect

I think it's definitely a risk of kind of over compliance and I think recent kind of transportation from Osaka's kind of shown that that this is kind of constantly changing space at the kind of in the respective exchanges it's it's about kind of looking at kind of an allergies and eczema cash lab have been examples of privacy services that can show withdrawing to that kind of exchange and it being a compliant activity because the use of vanish some sort of transaction proof I think it's it's kind of a changing for the whole industry those sites a lot of kind of the effects of the sanctions is still not known and effects of kind of a little sensible system nine Abidjan and wonder if you can I think that around kind of and okay we need to approach

yeah I think N. F. T. exes case it's like

you know

that they have some requirements to like risk mitigation and they actually have oftentimes you know all the exchanges outsource their risk assessment often to third parties you know scripted people call the second arc where whatever and actually I just aside I think it's like I actually think like this is a call out for a group of people I think because of the ideals in the space like you know crypto natives don't want to build an ark where and so than an arc where gets built by Knox right and then we complain about it that like he's over compliance and that you know it's not democratic and it's like you know not according to like the social critic consensus but it's also because like you know we don't like to build those tools to restrict our own freedoms and so I think this is one of those things where you know fairly or not as tech gets labeled like oh this is a privacy thing and it gets pocketed with all the privacy other privacy protocols and it's not really if you think about it on the chief compliance officer a centralized exchange right these are not protocols like these are basically like regulated banks are you know what in in whatever jurisdiction there and like they have a risk scene that's just there not to like stand up for your rights like not to stand up for like speaker you know not to have an opinion on factor like how this affects like you know immutable contract that they're really just there to be like


definitely want to make sure nobody knocks on our door at any given point at any given point right you just don't want a regulator or you know spent summer intelligence agency like like fact to be like Hey we suspect like some some bad stuff went through and for whatever reason you know I think it's because tornado you know for better or worse had a significant amount of illicit activity going through it and select a credibly neutral technology can still carry a lot of harm on its rails and like I think that's a difficult conversation that we need to have and that's it that's why we're aiming for privacy with utility because privacy provides the sick may just attract like kind of like unsavory users and so I think like to put a bow on this you know all objects is doing is like trying to cover their **** right and so you know we can billing eyes them for that but like that's what centralize exchanges incentives are it's up to us is decentralized protocols like build like robust systems that are friendly neutral now some of the things that we've taken that frankly you know for our audience have been deeply unpopular for user base have been deeply unpopular is try to implement what we think are credibly neutral restrictions on use and by restrictions I mean like not targeting specific users or geographies or anything like that but just saying like we're going to make sure that if somebody hacks thirty million dollars it's gonna be like a real pain for them to like move through the system now is that like a features section absolutely like if you're away all that wants to move a hundred million dollars to Aztecan like deposit on your in one go but you can't really do that it's gonna take you a load of time but that's why we think it's a credibly neutral deterrent like it doesn't stop anyone from doing anything it just takes people longer it's just a little bit of friction now we recognize this unpopular and it's something that we're working on and we believe that once we get to a fully decentralized fully programmable network it will have full transaction graph privacy while also having flexible compliance well you'll be able to prove K. Y. C. without you know revealing your identity and and that'll be fully often and so we hope to get to that point but for now you know I think our perspective being one of the only alive privacy applications with you know utility with smart contract utility is we want to keep the system live it's obviously usable there over a hundred thousand registered users and we're we're now past a hundred twenty five million dollars volume there are clearly people around the world who found this valuable and we're keeping alive and making sure that to the degree we can we're deterring bad behavior without restricting any individual's ability to use it

yeah I think I'd I'd like a delivery kind of way the sanctions and


kind of made a cash the zero network is fine like that that does that as an example of a network that which the world is judged advocacy has apps that you need to log in and kind of like huge stable coins which are paying kind of even the lessons on the way out and that network has not been blacklisted because it's overwhelmingly has utility I'm sorry I guess our our approach here is it going to be new to the talents but also at every stage building kind of showcasing utility three integrations that we're adding so I think it's about as a collapse kind of oversee projects to kind of show real world utility I'm kind of moves this kind of into the adoption faced robin kind of think they're at school and say they are pro chairs keep launching bridges yeah went out this weekend we have a dollar cost averaging bridge which I think it's like a huge win for uses coming out next week or the week after and say if we can keep showing the Tennessee I think we can protect everyone's individual rights to privacy app by kind of making a choice affect that regulators

yeah I haven't touched me a lot of respect for for you guys for building this especially because it's such a difficult line to tread on in terms of how to rebuild something that's critically neutral by the same time I'm sure everyone working at aspect you know if someone who does some sort of terrorist financing through the network you guys who want to be at least somehow able today to at least make that very difficult to do without compromising on I guess about proposition on the network


on that I love to touch on that because I mean John you mentioned that right now if someone wants to move a vast amount of capital to the network it's it's harder

so how

why is it harder are you guys like rate limiting limiting the amount of capital can move in a day or are there other types of like compliance built into the network today

yes we have limits on US tech and kind of since since we started that they serve a few purposes one this is kind of brand new technology that is still being going to prove an album we don't want that to be a bargain the cryptography so we've always had these elements to kind of help safeguard how much music but in in any given transaction for those limits also serve and kind of this gating function to stop large amounts of funds being deposited kind of in one guy and most users don't need to deposit a thousand deaths and that's the system what ten thousand if the system in a kind of twenty four hour period so most of our kind of deterrence kind of to protect users but also they have this kind of my side effects at the rate limiting the total amount of kind of capital that anyone can put in all the C. that's ways people can walk around them and then a perfect but it's kind of a middle ground with with training at the moment to try and keep system life and showcase intercity

do you think it's possible to build a vision of aspect in the long term that fits both the needs of regulators maybe some sort of a backdoor for them only for regulators


at the same time preserve privacy to like ninety nine point nine percent of the population of there is is that a vision that you know it's worth pursuing or there's a compromise on some of the core values you guys have like how do you think about that

yeah I don't think that's worth pursuing but there is a kind of alternative vision that kind of I think would achieve the same goals and requires programmable privacy satire the moment the the kind of the program so you're creating these these per se but to get privacy have been created by awesome then all programmable and that kind of very limited enough functionality once you get to the end state of aspect and you have no all you can do it in compliance with the second level was an application as a developer not well that doesn't need to be a back door and when you can actually do in the program this proves that by definition you are compliant and safe a popular example I think is that the travel in the U. S. you have to prove some sort of kind of accuracy and I'll check if the transaction is above a certain level so do not come along building on this kind of neutral based laugh and if if that application is transacting money now kind of that and if he's also some take a bit of extra conducting your stylist it could prove that the two counts parties in the transaction all have done some sort of like KYC check and the amount of supply or the blessings of the fresh out let's say ten thousand dollars and you can do all of that was maintaining like fine fine sender recipient privacy I'm so by definition if the transaction happened its compliance which is kind of flipping the whole compliance model on its head because right now compliance is a retroactive and is down by transaction when a train and people kind of cooling for data but I think something we're excited about and is engaging with these regulators once the technology is in this kind of slightly more mature stating you can have programmable privacy to kind of talk about

these kind of

best of both worlds scenarios but it's not far back doors it's five kind of medical diversity and kind of stronger privacy guarantees that

okay and John anything to at there as well yeah I think I think I would just add that like you know I think one of the we we have to we have to think about what the goals are here like it if you look at users Ontarian right use of the the you know ninety nine point nine percent of I don't know the exact number of how many people are on borders and if you're in network through regulated on offense I would guess it's something like ninety nine point nine percent like unless you like actually mind your own east or unless you did it for cash which like already makes you question kind of like okay these are like mega mega hard core like you're not you're you're you're


really efficient really on scalable ways of getting in and out of the network the vast majority of people are going in and out of regulated exchanges and so kind of like begs the question a little bit like there's there's a lot of outrage right now about it you know implementation of some of these flexible and privacy preserving check so you can imagine like a K. Y. C. tree right where you do third party KYC you attach to the membership and that tree and nobody knows who you are they just know that like you're you're okay right and then you get into a system and your full transaction graph privacy nobody knows what you do nobody knows who you are nobody cares like we're interact with and when you come out you come out and do a test again to like Hey I'm like one of the good guys that's a functionally what Z. cash does now right it's like you you functionally get into an exchange of full transaction right privacy in between and you get out but in exchange and so I think like we need to be a little bit intellectually honest about what the goal is here like are we really trying to serve the type of person who like wants to do cash for eve or we try to serve the type of person who's like okay with that identifying themselves as a good guy again without giving up any other privacy just like I can attest that I'm a member of like this K. Y. C. three on the ins and outs and then in between I get all the benefits of privacy right I would I would gather that like the vast majority people see that as a viable solution and then for the small number of like mega mega hardcore like cash for you people I want I want to hold you to that right I you're if you're really the type of person who's like absolutely okay was he ever then I want to know like are you doing it for cash reasonably speaking I don't think there's a protocol that could gain you know significant impact for like humanity right like benefit people on a vast scale with transaction graph privacy who's willing to undertake like adoption of these like unregulated on offense I think that might be like a little bit controversial to say in my life because often the more hardcore people but like we need to be intellectually honest about like who are buildings for

I'm just gonna be for a minute if you frame it like that thanks the given kind of the nation states in the wild having these doctors was something was considered in kind of the only exception was and eventually governments realized because more on the good side of you need to leave like if there's a back door then the kind of access to the back door is is is is only is kind of strong was why you locked the key to the bottle and which we've got elections that they make is that also the things that happened and that kind of a lost kind of ten ten fifteen years so I think if you frame how drawn framed it like having these kind of apps of the bill on top of the credibility to base that means that you can achieve the best of both worlds you just need the technology to Mitchell maybe one year we're at the cutting edge right now and and water is kind of getting ready for the prime time but it's this is kind of cutting edge stuff say that yeah I think it's gonna be exciting yeah but it's it's still needs to kind of come out of the Aztec lab and into the real world

yeah and before I move on to that I showed I did want to touch on that at the end but I want to double click on that point about the types of users as well so if we assume say like ninety percent of the people would want to use privacy our software are okay with that type of privacy that they already got right now from exchanges so for instance I I actually think centralized exchanges are probably the most convenient type of mixer right now whenever I send funds you know on on to exchange and send them on to say adapter it just this is just listed on either status coming from binance are coming from F. T. X. you don't know the public doesn't really know who it is I can do whatever I want and I sent it back to exchange but the exchanges know who it is so if no I ever do anything illicit they can still report me to the regulators but it also serves the privacy that I need which is you know I I don't care if the private exchanges no what I'm doing I just don't want to know all the random public people are there to know what I'm doing so do you think that is serviceable but those that already fit the requirement that the need for privacy that most people half and it kind of you know what in addition to that is missing right now

yeah I think it fits a pattern that pretty cleanly I think you can go one important step father which is kind of conditional access to that data so that any point in the web to you while you change your mind you don't have a kind of recourse mechanism other than maybe three GDPR in it in the ear of getting updated deleted all all access kind of been revoked the great thing about one three is that if I decide I don't like cyber sex anymore I can kind of stop them from seeing my day several future data because I control it say I think that that control of access is is another important thing that kind of act needs to be thought about intellectually from kind of a user standpoint and at the moment we're obviously very far away from that because every time we go transactional at their end know that pharmacy is a whack


you can see my current and future transaction history sorry this medication to be done but I I think that once once that's made kind of common knowledge the model you suggest will be sufficient for the ninety percent of the population

there's also you know transaction graph privacy transaction graph privacy is really useful that's one thing that I would say and then the second thing I'd say is like you know under on our system where you have a fully programmable smart contracting language you get private state and private state is really necessary for really really basic games and I've been in games in the literal sense but also kind of like games in the sense of like you know these are all mechanisms for coordination so like if I wanted to play cards with you on changes and like will be really fun game if we could only play the game with our cards face up and so there is this notion of like privacy for discretion and privacy for individual protection but there's also privacy as a feature right and like there are no networks or that allow you to do like flexible private state like that and the amount of games that you can build as a result is really fast and so yes centralized changes are never gonna allow you to build a base layer with that type of program ability in their I think the final point I want to touch on but this whole faxed up before I move on to more exciting developments in an aspect no I think with the recent sanctions a lot of companies are very concerned and it's not clear what companies are considered to be potentially in violation so even staking providers or even flash by two screening MTV boost relay all of them are certainly thinking are are you know are we responsible for censoring certain transactions now in this case because an aspect it seems like the users are generating the proved himself in the browsers doesn't mean the users are potentially responsible for you know if if if you know FAQ sections extend to us they cannot just forget to cash them in users might be violating sections as well

I think it is a very nuanced question I think that the one difference between an aspect node and and and that kind of Ethereum steak roll Mina is that and it's an important distinction is that aspect notes don't attest to correct state they just they receive as you say approve of of what the correct it should be and the compressor so in that model it looks a bit like an I. S. P. I. S. piece received a cryptic packets of data and they can process and kind of the world okay with that office legal fights for me user standpoint then the analogy would be well and if I'm on a web page and I'm sending an encrypted packet data I am I liable if not I could have dangerous kind of doing something which in your country is illegal then the chances are you probably are liable but also just generally interacting with the tool if it comes down to kind of I think what the user is actually doing and what the intention is Robert than just a blanket restriction and that's what we need as an industry kind of moral rectitude clarity because at the moment hi folks confused a bit of a blunt instrument which is hot kind of several consequences for these lawsuits feed for users in the U. S. you've got fun stock unlucky affects kind of but isn't classification of not providing a weight that is to kind of get the funds back but I think it's it's a changing space and it it needs better communication between projects and regulators to make sure this doesn't happen in the future and causes much confusion

I think is worth double clicking on this point of like the the proof is generated client side in browser like there's no on cricket data leaving your machine and that means like actually network level censorship is way harder so like your role a provider or like block print proposer right you're just getting a bunch of like essentially sealed envelopes and like you don't know what the envelopes containing interactions there are like what users interacting with whom and so like even if you went to the block proposer and you're like Hey I need you to like sensor everyone who's like doing a certain activity that you like I can't like there's just like there's truly just like encrypted packets coming my way I'm just like passing on impacting them on and improving them on at their end and like I think that's the point that's like not sufficiently discussed and why like wire mixers like so eminently sensible but like base level you know privacy like the way we design is not it's like well because in a mixer you can kind of see everyone coming in and out in like in a fully programmable private network you know the the actual network participants themselves it makes it very very challenging them for doing that for doing things like extracting any tea or you know reordering transactions or censoring individual transactions because they just can't is there's no visibility that makes a lot of sense and I think this is a good way to kind of forced to wrap up with a final question here which is focusing on the grand vision for aspects so it sounds like one of the biggest things that you guys working on his new R. which will transform aspect basically into its own infrastructure stack with its own privacy based aerospace privacy programming language not with the claim that there were in right now with you know general regulators being extremely sensitive to a to privacy and I think a lot of founders out there pretty spooked how were you guys kind of scale is like how do you bring this to the world in a way that can you know excite developers again

yeah I think it as something that generated to Allah so no one specifically but gaming is something which kind of can be a bit more light touch than some of conduct that that kind of current kind of news headlines so one of the things we're excited about and in the coming weeks is T. at def con act on will have but I stay connected label for people to attack we have in there what I'm kind of clear cases which are which is the only for kind of a private defy will say for the first time half a conversion law which runs in the browser and you can start to build fun games without like waddle and kind of battles it switches a previous kind of happened when a blind man and and if you kind of look at those applications there's no way you can win the money playing hangman so thank you it's like something that like cath I think can help at least bring the developers back in and show other sides to this technology for that kind of not just financial status that's our approach I think and I'm not yeah I think you just keep building or this will sort itself out eventually

yeah I I maybe add that like you know what when it when it comes to back in being spoon I think there there also needs to be education verifications like facts and intelligence agencies like the CIA except instead of like weapons and you know the department of defense and seal team six like they have these like economic weapons and so I I think people are looking at this like bono regulators a privacy thank OPEC not a regulator well you got the definition wrong back as an intelligence agency and so that doesn't mean that it's not a challenge we have to get through but I think like universally the regulators have been pretty amenable privacy the fact that Z. catch exist the fact that the cache is integrated on exchanges the fact that you know Biden's executive order mention consumer privacy ten times like we're still extremely bullish privacy we wouldn't be working here you know we didn't believe in the importance and universality of privacy and so back is it needs to be treated the way it is which is you know an intelligence agencies direct attack on another sovereign that threatens the United States you know foreign policy goals but it shouldn't be seen as more than that and so you know we're really excited to continue to build new technology of course though like expand utility and you know we want to get to a point where privacy is the default and and we know as a society that one privacy is the default we are actually able to tolerate like crime going through private rails prisons like email right and like we were tolerating like crime going there you know we're tolerating crime doing going to signal why because we think the benefit to society as a whole far out weighs like that tiny minuscule proportion of activity that goes through the same systems so that's our goal like and I I think some of these advances with nor in the twenty thousand dollars we're giving away ebook taught is hopefully a step to proving that where people are gonna be able to build things with extreme amount of utility that are far beyond just obfuscation

and that's a Mike drop I love that that is amazing and I really excited to keep up to date with what you guys working on and I'm sure a lot of users and and listeners want to check out what applications maybe they play around with and when you got your building as well so one of the best channels for them to reach out or follow you guys

yeah our Twitter is Twitter dot com slash as technical work and our discord discord dot G. G. slash aspect and the the two best places to find us and as a reminder we are going to eat Bogota and we're the presenting sponsor for that hackathon and will bring twenty thousand dollars in prizes for people to build on top of asset connect the VPN for their M. and a market that's it for this week's episode of a blog podcast thank you so much for tuning in if you enjoyed this summer so now I'll be clear is in the final two Brattle once again as usual John this is also available as video on you much needed after federal tax reform George what is this one tell us why don't let me let me check it out and I'll be sure to respond to you with this and now if you like to go even deeper we have a V. I. so wearing every week or so we write an indefinite research for you four investment memo on a project we have exclusive image of myself where I answer all your questions as well now we already have analysts from some of the top funds and companies in crypto asset scrubbers so if you're serious about getting an engine crypto head on over to the blockage dot com slash the I. P. to learn more once again thanks for supporting the show and I see you next week