As the word itself says, Decentralized Finance is decentralized, therefore potentially fully public; it goes without saying that the Dapps that manage the Smart-contracts with which access to the various financial products are also decentralized.
In this case, since most of the DApps operate on the Ethereum blockchain, the various transactions are available to any member of the network.
For any user this means that transcribing a transaction on the blockchain would be a bit like publishing your bank statement on twitter ...
Mind you, anonymity remains such for all token handling as long as we remain in a crypto environment, as soon as we abandon it to be able to withdraw profits and convert them into fiat currency, at that moment our address has a direct connection with ours identity.
Another very important aspect, although we are operating under a pseudonym (public key if we want to be more technical) is that all sensitive data (such as volumes handled and terms of transactions) are recorded on Smart-Contracts and in this way, being public, someone could rebuild our identity.
In this case, he doesn't care who we are and what color our eyes are, but he could launch a cyber-attack on us.
This is why privacy at the DeFi level is becoming increasingly important; in this regard, some platforms are working to be able to increase the anonymity of transactions, while maintaining the publicity of them.
Let's see together what they are.
This project uses dedicated algorithms to preserve transparency and privacy at the same time in all types of assets it supports: Fiat, cryptocurrencies, debts, derivatives and shares.
More precisely, to maintain privacy FINDORA uses multi-party computing (mpc); this algorithm works, in principle, like the Thereshold signature (TSS) except that instead of each having a signature part to be able to validate a transaction, each processor performs a calculation part so that certain data can remain hidden.
In this way, certain information contained in the Smart-contract manages to maintain a certain privacy, which can be proof of solvency.
For users who make use of this platform, the necessary transparency is maintained as the transaction is still transcribed on the blockchain, but certain sensitive data are stored in the smart-contract and are confidential: in this way they maintain control of their privacy.
Thanks to the possibility of producing encrypted output data from Smart-Contracts, this platform has won the appointment of "bridge" for the conversion of Ethereum ERC20 tokens into Privacy tokens.
In this case, the functioning of the platform becomes a little more complex, in fact the whole network is encrypted and consequently it is also hidden from the nodes that execute the Smart-contract, everything is possible as there are programmable contracts in an area of the encryption known as secure computer.
The "secret" tokens of Ethereum are born from the merger of ERC-20 tokens which are extremely flexible in the programming and privacy of Monero currencies, thanks to the Secret Ethereum Bridge according to the SNIP-20 specification.
As it is logical to assume, the data decryption key is only available to the parties involved in the smart-contract.
Incognito is an independent sidechain focused on privacy. The on-chain transactions of this platform offer a privacy comparable to that of monero (based on a homomorphic compromise scheme), and also exploits a cross-chain and supports Privacy tokens.
With this type of privacy, Incognito makes the addresses (shipping and receiving) as well as the transaction amounts confidential.
Through the cross-chain, the Incognito side chain can safely communicate with the ethereum blockchain through an "incognito" mode and transfer cryptographic assets.
With this platform, you can protect your balances and assets using the vast majority of DeFi platforms without going through Ethereum.
The existence of these platforms (plus those that will gradually emerge) gives us confirmation that this technology is in constant ferment and can increasingly reconcile transparency with privacy.
Once again the blockchain has confirmed that it is a cultural movement that will significantly change the way people think.