The stand-alone blockchain project aims to bring privacy & interoperability to Ethereuem decentralized finance platforms
There have been some innovative solutions lately to address the so-called trilemma of Cryptos — privacy, scalability & interoperability. The most recent one that I talked about is Rootstock (RSK), an open-source smart contract solution that provides an interoperability bridge between Bitcoin and Ethereum blockchains.
Decentralized finance has seen a rapid rise in popularity over the past year or so. Although different blockchain platforms offer varying forms of privacy, the novel project Incognito intends to anonymize the tokens of every other blockchain. As part of this endeavor, Incognito plans to launch private versions of leading Ethereum decentralized finance (DeFi) platforms.
It promises robust features as the ones offered by privacy-centric coins like Monero — employing techniques like ring signatures, stealth addresses & confidential transactions. In fact, the project goes one step beyond by offering interoperability with other blockchains and supports private tokens. Basically the project team envisions a universal sidechain for public blockchains, where the latter can benefit from the former’s privacy features.
Although the platform does not support full-fledged smart contracts, it does enable the creation of tokens within a limited set of scripting instructions, which in turn creates trustless bridges with other smart contract platforms. The first such platform would be pKyber — using Incognito’s shielding smart contract to interact with the Kyber decentralized exchange (top-tier DEX).
pKyber is Incognito’s first anonymous DeFi product which combines with the privacy layer of Incognito chain (pictured above) with the durability of Ethereum Virtual Machine (EVM), offering DApp developers the ability to use ETH platform while having the ability to go incognito. Apart from this, pKyber not only be able to access the aggregated liquidity of Kyber DEX, but also of 0x, Mesh, and Uniswap, among other of the best Ethereum DEXes, in incognito mode.
So why this privacy feature such a big deal in DeFi transactions? Every day and institutional investors are unwilling to reveal how much they invest, trade, lend, or borrow. In the traditional DeFi model, all the transactions would be completely exposed to the Ethereum ledger, but with the incognito privacy layer, they will have complete control of their personal wealth information.
Most of the privacy features are accessible via a mobile-centric Incognito wallet, available for both iOS and Android — including access to a decentralized exchange, staking services & token shielding. The incognito layer uses its own proprietary token called PRV, which is primarily used for transaction fees.
Since the Incognito blockchain runs on a Proof of Stake (PoS) mechanism, the PRV token is also used as a block reward for validators. Incognito has also proposed an innovative solution to the problem of the trustless bridge in Bitcoin. The decentralized custodians proposed by the project would use a system based on economic incentives and collateral slashing, to decentralized custody similar to what MakerDAO does.
This small but useful project has achieved a lot ever since it launched its main net last October. Currently, it provides a way to shield Ethereum, Bitcoin USDT, DAI, BAT, ZIL, and several other tokens. Incognito’s project roadmap includes integrations with 0x, Uniswap & the Compound lending platform before July 2020.
Originally Published on Medium