Decentralised Dialogues

Transcript

cool thanks for taking the time for this um so yeah hi everyone so this is the uh opening um opening I guess webinar for Asic 3 um and going through going through the protocol the architecture and um describing in depth what it is we're doing and so I guess so for this presentation um I want to take a slightly different approach which is to go through basically why asset three um what are we actually trying to achieve with this technology what does it unlock who who are the potential like how does it potentially change things in a profound way and how can we

get from the current um you know like landscape um in web 3 to where they want to go so to start with I just want to go through uh just a bit of a like a history of like like what it is we've been building because there's a reasonable asset free is because previously we've had something Scholastic and Asic too um when it comes to privacy uh on the blockchain there there is uh there are three major categories that that are relevant here um there's data privacy user privacy and code privacy and by that data privacy is um basically is the actual information that you're transmitting on chain is not encrypted user purposes are the identities of

these senders and the recipients and hidden and code privacy is um Can observers see the the the the the kind of the the transactional logic that you are executing uh and for one of the reasons why Aztec 3 is exciting is because it has all these three properties and I guess I'll try to explain why that's exciting in a bit um similar also when it comes to the actual um uh kind of permissionlessness um of the of the protocols Aztec 3 is going to be the first one that is both decentralized uh you know not essentially controlled and and also permission as well you know anybody can use it and of course spiritual level um

so what does rc3 enable at its core at a very very simple level um blockchains are extremely profound and revolutionary because they enable programmable digital money um you do have an immutable distributed Ledger um of um of records of transactions where um you where you as an individual you can program what does it even mean by money um as in the the rules around transmitting it the rules are increasing it destroying it um who can own it who can't own it and you can have eye and Care confidence that transactions that are going across this network follow your rules to the letter without having to trust third parties um this is revolutionary it's not something that we've been able to

achieve before as a society prior to bitcoin um and there's been a lot of hype and interest in blockchains because of what it could potentially enable things like you know just distributed organizations um you know things like you know being your own bank was one of the one of the original kind of running cries of ethereum um obviously none of this has really turned out the way that people the I the the the the the the the the the ideas of the idealists hoped um but we we think that we there are some reasons for that and I think that we can solve those reasons asset-free enables privacy preserving programmable digital money where you can hide with identities you can hide values you can

hide the rules that you're applying around what is a valid transaction um and all these three things combine um they do enable something which is profound and transformational um but I think the obvious question is why and I'm gonna and so um uh we I I'm gonna try and explain this by following the money um uh hopefully this is large enough for people to see this is a delightful um uh psychological horror masquerading as a infographic um produced by the bank British national settlements um called the money flower and this is basically how central banks view cryptocurrencies digital currencies and and digital money this is this is um

their attempt to kind of categorize uh like all of the various forms of money as they understand it um things like you know local like cash um uh things like you know your deposits in a bank which you know if your bank says you've got three thousand dollars that's not actually three thousand dollars printed by the US Treasury is something else um Central Bank um issued wholesale cryptocurrency is it's effectively it's it's um currency issued to private institutions like Banks hedge funds Etc that are used to do interbank settlements but what I want to try and get to here is um this is this is this is a bit of a mess um because all of these all of

these things all these words they're supposed to basically just do do the same thing in an effect they're a mechanism of Exchange um what is missing in this diagram is any concept of privacy um this is how central banks think the digital currency landscape is going to evolve and if they are correct then what we are doing is we are creating a technological dystopia because it means that every single thing that you do or um like with your money with your payments will be trackable on digital ledgers that are completely transparent and and for most of these cases will be centrally controlled by a bank or by the Central Bank um what we are doing the the kind of the industry that we operate in is reserve this tiny little space in this circle money flower

um uh and so yes this is um I'm not going to waste any more time on this because uh this is this is just um this is a very strange way of of of of viewing the cryptocurrency landscape but I wanted to show it to show you what the the current consensus is on how digital economies work how does the money works but we can do better than this we can do a lot better than this so this is um this is this is this is a dog and that I that I cooked up um which is basically the how I think the future a future Economy based around digital assets is going to look based around um distributed ledgers permissionless cryptocurrencies

uh what is this is this is a potential model um and I use the word here it's not money um um normally there's a clear distinction because there's another there's an except there's an expectation that money is very very liquid and can be used as a mechanism of value exchange and an asset is possibly is is usually you know illiquid not particularly fungible one of the reasons why people are so excited about blockchains is because blockchains can in theory break this Paradigm once you have tokenized and digitized assets and put them on chain um you know they um you are able to interact with them in Via programmable contracts in a in a very composable way

you know where for example you know if if somebody creates a imagine you have a like um some Financial instrument let's just say it's a mortgage and it's sitting in the bottom finding cabinet in row in in the basement of some you know some District bank that's not a liquid asset but if you tokenize that asset if you then all of the information that trades with that that asset is publicly visible and transparent and you have a digital representation of that asset that you can that is fungible with an enormous ecosystem of other digital assets um it changes things a little bit um I would argue I'm not Economist and most economists would likely laugh at me about for saying this but I would argue that in the future

um the distinction between assets and the money over it's going to be a little looser than it is today anyway let me describe what happened what I'm trying to describe describe here um I think that there are three very useful kind of buckets that you can put crypto crypto criticals into um uh there's whether it's universally accessible so like can any can anyone with an ethereum address access this this stuff um uh does it rely does does the protocol or asset rely on some concept of blockchain identity um or does it rely on privacy I'm going to use identity and privacy quite interchangeably in this presentation because meaningful launching identity

Solutions require privacy um and finally there's this the Oracle dependency by an oracle I mean are you reliant on some off-chain source of information um for your asset to make any sense or are you reliant on um external actors um that um are uh that you that you have to trust to some degree as in like for example if a um if a Dao um uh has has a treasury that is of chain and they appoint a financial director to manage that Treasury um then that would I would argue that that's some form of Oracle dependence if you have a non-chain representation of

that treasury because you have to basically trust those two um align with one another and the way you trust that is through trusting the um uh the treasury manager um the Oracle problem is it's quite um severe in in crypto where basically the goal is for everything to be completely decentralized and trustless but actually a lot of the more complicated criticals juvenile Oracles in some way even even if it's as simple as something like chain link but one of the reasons why um like right now I would argue that down here where where Oracle dependence and identity dependence um intersect this is where all the money is um as in um this is um maybe what I've refer to

you but I mean externally originated digital assets is I'm talking about um well yeah mortgages bonds loans basically the entire ecosystem of traditional Financial activity that doesn't happen on chain right now could in theory um b b be captured by this this section you know there is no nothing fundamentally stopping um Ernst young for example from from originating all of their loans um on a permission to blockchain um other than obviously um they're not going to do that but but if you had privacy in theory you could um uh you know that there was no fundamental reason why you couldn't and one of the valuable things that privacy does is it enables an enormous amount of composibility between multiple different

types of asset classes that rely on different trust assumptions in a way which I think has not really been captured by um like uh the the web free Community Development um and what I think the really interesting thing happens is when you intersect when you this this like Oracle dependence with universally accessible and it's better some privacy this is where I think um we are going to have a um uh like an enormous explosion of applications and products and services that are going to fundamentally disrupt how we as a as a society manage Finance um I'm going to try and explain for the rest of this because this talk why why

that is um and why I've labeled this category institutionally disruptive Define but the the the the the model is um if you have on-syn privacy you can meaningfully bring external assets on chain um you can create digital representations of um you know brick and Morty buildings of assets of liabilities because you conveniently tie those two identities without splashing an enormous amount of information um uh on the blockchain that that observers can see um and this is this is very very fundamental um and those assets once they're on chain they can then be interacted with by protocols that are

far more commissionless um uh um basically like the like um what I've kept called here um institutions I think value is going to accrue um you know um I probably I probably it's like I'd be throwing a lot of jargon at the moment um so why don't I stop the question is before moving on can't hear me right yep we can hear you okay great cool so yeah what what a couple of the applications I can that

that are happening this circle quasi-bank deposits they're not really Bank deposits they're D5 criticals that are basically pretending to be Banks they're taking inequity from users and then they're using it them and then there and then they're investing them in in other D5 protocols um um Financial Services like um Consumer Finance where you need some form of identity um uh to do kyc um basic payments and subscriptions things like downloads that perform funds management um and this is the this is the this is the category which is going to be absolutely game changing um which uh doesn't have a I don't think it has a proper name so so I gave it I I gave it one artisanal asset origination I'm going to explain what that means a little bit um but it's the idea of um uh

creating financial instruments from scratch I'm originating them assets um but doing them as uh without the um institutional weight and and um and and requirements of a of a large financial institution doing it is more of a boutique shop um here's what I think the end state of our digital economy is going to be if we succeed with aspect three um I think that if you have a private programmable distributed Ledger if it's sufficiently if when executed sufficiently well with enough transaction throughput with enough ease of use you can use that ledger to originate the majority of the planet's value okay I'm being slightly hyperbolic here but like in terms of scale I genuinely am

serious uh you know you can settle a majority of the class transactions and the majority of existing paper assets can become cryptocurrency assets with all of the liquidity that it brings and all the value that that brings if you have composability and programmability of crypto assets you you change the game in a dramatic way because I really cannot describe I think just how important it is to have like how much how much of a game changer it is to have a this distributed letter where you can program like like you can program what do you mean by valid transaction um for your own digital assets and then you can program in rules and logic around interacting with other digital assets it really is something which

hasn't existed before um in our society so for example the way one of the ways of thinking about it is imagine you have a deposit in a bank yeah mostly put a thousand pounds in HSBC what can HTTP do with that 1000 pounds their ability to generate yield on that on that fund is limited very very limited by the effectively peer-to-peer interactions that they can perform with other Banks and financial institutions um uh you know you have an enormous amount of communication complexity with the existing brick and mortar structure that we have for for handling money um that's completely goes away with with a with a blockchain because you suddenly have a completely open architecture

where every single kind of form of digital money can interact with every other form of digital money it it is anyway um that's a bit of attention but one of the effects of this is it makes exist assets illiquid at the moment it makes them extremely hyper fundable if you digitize them because because there is nothing because you have all the information required to to trade them all to package them up in derivative instruments and if you if you can make Electronics hyper fungible then you'll need for liquid currencies decreases right like why in in a like in a financial Market why do you need pounds why do you need dollars well you you need some kind of form like some liquid representation of value so that if you want to exchange asset a for asset B you know if I if I want to if I want to sell a million

dollars of of mortgages and buy a million dollars of government bonds um the person selling those government bonds isn't going to take my mortgages as payment right I have to exchange them into dollars and then I have to convert this and then I have to give those dollars to the guy to to my buyer um to my seller um if the assets themselves were gone professional then the actual need for that for for the for the for for ready liquid Capital decreases substantially and this is very important because this is the justification for so much leverage in our interesting financial markets so you know look what happens when you put some to put a deposit in the bank like if I've put a thousand pounds in HTTP what HSBC is going to do is they're going to leverage that right they're going to create about ten

thousand dollars of um of of of of of liabilities and ten thousand dollars of assets um and in doing so they are going to massively inflict the money supply and leverage whilst it's a it's an unpopular Boogeyman in it because of obviously because of the the the the the the the dramas around 2008 and the fact that they can get out of hand and you can over your economy like doing doing this kind of thing it's extremely important if you didn't have leverage you wouldn't have the liquidity required for our modern Financial system to work but if you can make your if you can make the assets themselves almost at like money then you you need less liquidity which means you less need less leverage which means you need less fractional Reserve banking which is describing and if you don't need that then the actual entire

reason for large financial institutions it makes existing in the first place starts to erode away and that's why this is extremely important um like what what looks like like a very weird Niche property of what we're trying to do here like I'm making liquid accessible why that is actually a monster monstrous Monumental game changer um and what the hell is it's artisanal acid origination this is when a small outfit specializes in a specific asset class um and and is generating them so I'm talking about like like the you know the common example is things like a mortgage or a corporate bond but it'll be far more like Niche than that like you like item like shipping Insurance loans or things like that um you know like you've got a small outfit with

um run by like a small number of experts in in a particular Niche and they are not working in a bank normally um somebody like that will be working within the conference of a large financial institution and they will be getting their Equity their money um for for for for for constructing the creating disasters to be getting them from from the bank and from consumer deposits and again the bank will be provided in the market right through their training desks but blockchains break that um instead this one if it doesn't need the institutional weight of a bank they get their Equity directly from consumers on chain via peer-to-peer defy and they get their market for their assets via defy against via online consumers um this is kind of what like why people

sometimes refer to a theory like as a global settlement Slayer because this is this is what this is what they're referring you to um it's the act of it's not just the act of like of trading around money is he actually active of creating Financial assets and having the actual like like the the the record of what that asset is um the primary source of that being a blockchain this is existentially disruptive for stratified players for large institutions uh because it kind of erodes their entire reason for existing again just like the need to underline leverage um if you don't need the institutional weight the vertical integration of a large of a large fund institution instead of you can replace that with the network that like the network you get from from a blockchain

then um effectively what you can it could it can create an exodus from these com from these Banks where you know where where where the um the individuals within those institutions um decide to leave to band together create their own startups and effect like that performance asset origination and effectively slate their former Masters and this is what we want to try and Achieve with Aztec um so uh yes getting to Denmark so what I've just described here I've described an area where like you know the majority of the planet's value will be originated on a private program or distributed Ledger and I'm just going to replace that that phrase with Aztec 3 because we're gonna be the first going to be the best um

like this is this is this is some like pretty pretty wild stuff I'm talking about here I'm talking about you know like uh you know like removing the need for banks and for leverage and having everything being traded and settled on a on a on a blockchain layer that we're going to build um this is a long way away from where we are at the moment if you think about Aztec connect we can handle that one transaction a second and it's not programmable um so the way I take it um so something that sociologists um and like and political scientists often say is how do you get to Denmark um because Denmark is a country with an extraordinarily high standard of of living a strong social safety net and a very high trust Society where people trust their government institutions and um like Germany quality

life extremely high and so a lot of social lives like how do we how do we get to Denmark how do you turn like you know like some some like a developing country into Denmark um so basically how do we how do we how do we do the equivalent for web 3 How do we um how do we create this world where you know um you have like this frictionless amazing high quality financial services available on a private blockchain um compared to where we are today because the current ecosystem is underdeveloped it's not mainstream and it's missing key institutions to pull this off and so how do you how do you get from the like where do you start like you know um how is if we imagine we really statistics three so you've got you've got this network now where you can program smart contracts

and you have private States how do you get from there to to um you know to Executives in common sacks you know like waking up in the middle of the night you know in a cold sweat worried about Aztec um eating their business well the first thing we need to do is actually work on institution building um the actual like the help to incubate in uh the develop the institutions that are going to be driving this extreme um change how how important Finance um particularly like things like you know like these these small outfits that are originating assets um these these like the all of the individual components you need to basically recreate a transfer ecosystem um but on chain in a permissionless

manner where every single individual like um components is actually its own protocol operated by its own own team and it's not vertically integrated in into into a financial institution well I guess not with Dallas because right now there's I I don't know there's a word for it I just I'm like I I've noticed a like this this kind of this Oracle trap that a lot of doubts are falling into lately um where Adele will like I'm thinking things like make it down um they'll raise a treasury to do some Innovative DFI project um so for example make it down um you know they've got a dollar Peg stable coin uh that you know doesn't doesn't realize with off um with US dollars

very cool um but the demand for for die um is massive increases the need for um people to create these catheterized depth positions um in in the make it IQ system or classicalize ethereum and generate diet you can only generate diet if you're back in the early days if you collateralize ethereum um and the problem is the supply of ethereum is caps because the the overall like amount of ethereum available is relative to our financial ecosystem it's absolutely tiny um and it's intrinsically linked to the the value that people place on the consensus of the network and so in order to generate more dye um maker started collateralizing um

um off of other assets things like usdc which became very very unpopular because um then you're and they became they can offer those on assets that rely on oracles like chain link um and this became quite a lot um less popular because because it's undermines this ability of their of their of the price mechanism because now you have a lot of correlated risks um you know you have to trust that usdc when Blacklist die you have to trust that the chain of Chronicle isn't going to go down and anything's happening these things happen then diet is going to depeg um and the Downs that go down this route of having to rely on more oracle-based assets they start looking like a transfer shot eventually um you've even got I think was it was it RV or D5 political like that was like wanted to you know do some of what I'm just

talking about they wanted they wanted they want to bring more liquidity into the ethereum ecosystem by tokenizing off-chain assets but the way the only way they could do that is by creating an opting trust that held the assets and then just like created a a digital token where there was some kind of vague claim that the token represented a claim on the assets and the trust but there wasn't actually any legal backing to that um and you had to trust the fund manager um it's exceptionally weak and the reason why it's weak um is because you cannot put the required information that that fully defines these off-chain assets you can't put that on chain without strong privacy guarantees because um it's just far too much sensitive

information in in that data um you can't do it without linking linking the asset to an identity um and so we can we can help this um we we can I think one of the learning fruits for Aztec 3 is basically enabling Dows to work with off-chain actors to tokenize off-chain assets we know this existing demand for us that companies aren't trying to do this today like Downs are trying to do this and failing and going under because they can't put them off um but we we can create a world where the primary record of the assets credentials can be on chain um uh the idea is you know you could have uh you could have some tokenized I don't know like you could you could take some filament bonds and you could tokenize them and all the information

that describes what those like those bonds are and how they're trading Etc that would be on chain the holders that will be on chain like their identities but encrypted and you could create all the proofs um uh to to to prove aspects about your about these um like the links between on and off-chain assets to prove that they're like them that they're related to one another you can instead of having to blindly trust a fund manager to act in the interests of the Dow you could actually any kind of movements of those assets you could could come a company with the non-chain proof going you like I I have the credentials to perform as action because I've been authorized by the Dow um and you could do all that without and do all the required credentials checking

um without leaking sensitive information by making it all in our contract and this is um what I would consider to be low hanging fruit um I mean I suspect if we execute one Aztec three we as a company will have to do anything to get phase one doing finished because it just solves an existing problem that that organizations have um and phase two um is of this of this um uh loose plan I have in my mind is uh moves to asset origination so what I was talking about before was taking the existing off-chain assets and creating tokens forms of the one chain so that you can you know you can you can use it as collateral um with phase two um I'm talking about actually genuine

like creating financial instruments Financial assets from scratch um and having the primary record be be a blockchain um this is what we were trying to do originally back in the early days with creditments we were trying to like Syndicate um corporate loans and put them on a like and using ethereum a long time ago uh this is um if you have a doubt that already has tokenized option assets it's managed to Summit the first phase and this is a very this is a big no-brainer thing to do because um the download they have existing Capital to originate this to division is assets if they wanted to if they want to create some loans um off chain um they have existing capitalism users in the token and that using such assets as things like collateral and for

something like Mikado um there's a much lower trust threshold um than tokenizing an existing asset because the the Dow is an institution has complete control over the over the origination process and it reduces you still need to trust top 10 actors but there's often all of those off-chain actors are now actually acting uh uh um uh um effectively employed by the Dow um so there's the trust barriers are much lower phase three for this is Consumer Finance because imagine now you have an ecosystem where you have dowels existing on chain that are creating um financial instruments um you know they're creating they're creating loans um that that exist off chain

um but like they're using that they're using the Unchained Equity to create off-chain loans and they're tokenizing those loans and using those as collateral um at least the liability uh one of the the asset um the I would I would argue that like this is going to happen um if someone pulls off a private a private privacy present blockchain this will happen and this ecosystem growth is going to drive demand for Equity right because of a Dow's good at doing this um then that means that you're starting to get like on 10 yields right if you if you're if you have a down that's creating that's like that's creating off-chain loans without launching funds um then the the assets that represent those loans they're going to be generating yields and that's going to drive um demand for uh and so so there's going

to be demanded to do that um but then there's that's going to then drag them on for Equity basically like more more consumer deposits to to original loans to generate more yields and this is going to drive the need to produce value added Services because now these jobs are going to have to actually attract you like really like work to attract user deposits and this provides an opportunity a golden opportunity for wallets to level up and actually and Supply evaluated Financial Services to Consumers via Aztec 3. um basically attracting deposits from users because those deposits are going to be going to a dow they're going to be then used to origin assets and assessment and yield that we're going back to the wall that match the user um effectively what I'm describing it's banking I'm describing banking

um but I'm doing it in a stupid engineering way um but like does this make sense to folks like like like basically what what Aztec 3 enables it enables you to bootstrap from scratch um like like a like meaningful banking services in the financial ecosystem that exists on chain like and and the fundamental missing Keystone for this all is privacy because you've been out privacy you don't have identity with an identity you don't have um like the required capability to actually like originate off-chain assets um but make you but make the the primary source of recorder live on chain um and then once you once you have this like once we like once you have a little

about this little bubble where you've got these nails that are kind of tokenizing and originating Financial assets and you've got these wallets that are providing like they're providing value-added services to users to attract deposits because then they can be used to generate yields then you're going to see a diversification of the industry um because the the main barriers to Once once something like aspects three exists in the world the main barriers to political software execution-oriented is this hard to to do right like there's a lot of text that needs to be built there's a lot of you need to coordinate between this the technical layer of the Dow and that down armies now needs like real world actors um to to to um uh to to make this one operate but once once this has been done then it's going to be a lot easier for a

second wave to come in because the fundamental barriers to entry for doing this is going to be very very low compared to traffic um and so you're then going to see a very rapid diversification of all the asset classes that are being supported and created and the services that have been provided um as organizations are seeking a competitive advantage to to attract um to attract more Capital to get a better yield uh so in a way which is far more competitive than our existing financial industry because because there's more because the barriers to entry is so much lower and the friction is less and if and the efficiencies here are so much greater because of this the composibility between protocols and assets it means that small outfits can

actually make a meaningful impact on providing useful services without having to rely on the institutional head to the bank um so this is um would be quite a like this world um already we're at the point where this if this gets pulled off um like this will be happening on Aztec um if if we execute well because quite frankly it can't happen to anyone else no other proposed privacy network has The has the kind of the the the the the the technical capabilities to code up complex smart contracts that can actually handle this kind of complicated logic um and you know we have unique

advantages by being by being linked to ethereum because we already have a steady source of capital liquidity to bootstrap these kinds of protocols because because liquidity like ethereum is the most has the most value of any blockchain that's kicking around so where do we go from here um so phase five of this is what cool political because I'm being very idealistic here I'm ultimately right now if you try and create a like a financial instrument where the primary source of record is information on a blockchain and then let's say that you know so let's say you you've created a loan right like you're doing peer to pay Finance so you know so you've got some website where people are taking out loans and you're putting them on chain originally they're on chain and you're creating some some some some token on chain which is generating yields based

off of these loan payments then um if user default on that loan I I'm not lawyer disappointed for Andre but I doubt you can go to say the high court in the UK or and go oh you know like according to the terms in this in this in on in this blockchain smart contract um this user is defaulting and therefore we need um we're going to claim the collateral and I doubt that's like there is there is an enormous amount of precedure that needs to be established before that can happen and a lot of lobbying that needs to happen a lot of men potentially even Law changes um uh and that's all that happens then you then you're going to have to um even if you want to use the blockchain as a private source of record you're going to have to have an on-chain

source and some trust in an oracle to make sure that the on-chain record and the other and the off chain record are um match one another which isn't ideal uh so we'll need to Lobby to change laws and certainly precedence but on but if we reach the stage then um I don't suspect this will be difficult because we'll have a large number of allies in this endeavor because the ecosystem of the industry you're working it will be much larger than it is now and there's going to be a lot of money at stake and a big first movement Advantage for any country that adopts more crypto-friendly regulations that you can do things like asset origination on chain um and then what's the last step of this the last step is not like if you thought I was talking about completely wild stuff before now I'm talking about complete

space station because I'm talking about what you really need for this whole system to like to wrap a bow on this whole financial ecosystem that's being bootstrapped you need a reliable source of unchain liquid currency for Value transverse I was talking before the very start about how hyperfunchibility like reduces the need for liquid currency liquidity but it still exists um and you know things like usdc they're pretty inefficient and they're centralized uh you know you have to like you ultimately it's like the actual store of value is um um it's casualized dollars um die you have value trust because of price volatility you're not going to be doing like million dollar trades with with die or billion dollar trades the ultimate solution

um is to basically have what banks have today which is a direct line to a central bank where a central bank will directly print currency and give it to it um to financial institutions um I'm talking about a central bank digital currency but not a crazy techno dystopian one where central bank is running around and create little blockchain fight them but one where central bank has the stones to actually print their currency correctly on a permissionless like ethereum this is not going to happen anytime soon but I would argue that in one day if we execute well if we succeeded we reach if we create this this this vibrant Dynamic ecosystem of financial assets insurance and service on a blockchain IW that this will happen because the first

mover on this genuinely communicated become part of a global Reserve currency uh like genuinely right now imagine right now if you had Swiss Francs on chain imagine like the the central bank was printing Frank's on its own um one thing that would immediately happen is that um make it out would um use Swiss Francs to collateralize um to create a large number of classified positions to increase the supply of dye um and effectively now what you've got is you've got a dollar stable coin which is backed by Swiss Francs um and that's just one example but basically like having base money from a central bank on the Christmas blockchain would

it would be revolutionary um and uh and I would I'm given given the amount of value that will be generated from that I would I do genuinely think this is a question of when and not if but it will take a long time so I guess to summarize what I'm talking about here I know this has been quite like um you know being very off-peace um I've not been talking about technology I've not been talking about you know things like the existing web free industry I'm hoping saying you could use asset three four four games for nfts um and and for for for private version things like that and you absolutely can and we will be using them for that but this I wanted to describe I think why Asic 3 is not just cool it's not just like valuable but actually

utterly revolutionary we execute on this and pull this off because if you have privacy you have identity on chain and if you have on chain identity then you can then you have a way of getting off-chain assets on chain um and this and once you do that you get a you get a you get this insane cycle where the the ability to do that and generate yield generates a demo for Capital and then the demographic and then the demand for Capital Generations are not the yield and the demand for yield generates the demand for putting more assets on chain and you just and you just and you just cycle around and around around until basically asset becomes the global what's Global settlements let like literally um that's uh that's what ends so yeah um uh this this is why this is why I am excited for Aztec three this is why I've

been involved with this like this um uh in in this in this industry um for for five years uh and um yeah this is this is just um this is having a um having private program on money it changes it changes everything um and it's going to be an absolutely we start to execute on this uh like exceeding on aspect three shipping aspect three that's not the main shots but then actually aligning things so that the network is functional enough to execute on these on these on these ideas um and being able to attract the the um like the like the creating the

ecosystem of developers and users that make these that make this happen it's going to be very hard but I do think genuinely hand on my heart this is possible um and and so yeah this is uh my answer to why why Aztec 3. um so yes um uh questions um yeah yeah so uh um hopefully that wasn't that wasn't too um Off the Wall then and and hard to follow it but did you defects have um any thoughts or questions about anything

I've said okay I'll ask a question of mine then does does this just just just just do folks here have a clear understanding of why this like why we're building Aztec 3 like does this did what I've described make sense or did it sound like the ramblings of a deranged lunatic I think it makes a lot of sense Zach and I like the emphasis you put on the social pieces that follow the tech and I've seen this a lot which is like ethereum of like there's a lot of really smart people building really cool Tech and the tech moves really quickly but we have to move

at these like social I mean social skills as well and like just winning hearts and Minds takes a lot longer than like building brand new tech in some ways um and that's a substantial part of realizing the vision is like this social layer um so yeah just like keeping that in perspective is helpful because like I've been talking about aztec3 a lot and basically saying oh in the next 18 months where you like make substantial progress um towards getting to mainnet but like really that's like one step on yeah much larger Journey so uh um yeah I've got a a big big project ahead of us yep um

absolutely uh I think uh you know I was talking about in that slideshow you know phases of execution what I didn't say is Phase zero launch Aztec three um so yeah we have a lot of work to do yeah Kirby what's up hey uh and I think the question that's probably been asked around a couple of times but I wonder about um Quantum Computing resistance you're going to be relying on yes very good point so Quantum resistance are we does it matter are we afraid what are we doing about it so there's two parts of um uh the um like Quantum resistance there's if you have a cryptography

protocol um then uh can you treat fake proofs if you'll have consequencer and can you break zero knowledge if you're Quantic readers so basically can a quantum computer imagine you have you know the Asic letter um and it's you know transactions are going through it and obviously the historical state of what's Happening Aztec will be will be will be available so once a contributed turns up can it then just decrypt everything in the chain and go Tada look at what everyone's doing and the answer that is no um even though our our Tech is not Quantum proof um I think it's sometimes called Quantum resistant which means that you cannot um according to concrete fake asset proofs that will pass that will satisfy

verify but what a contributor can't do is decrypt old data and so this is useful because it means that um so I make so I I do make several assumptions around Quantic videos one of them is that we will have a lot of warning time um to switch to Quantum proof cryptography before a quantity becomes comes online um I think that this is a fair assumption to make basically both basically even like the pace of developments in in Quantum Computing and also the fact that uh if you do have a quantum computer like today if you've had a community today that could break that could that could break elliptical crypto um you don't have to worry about ethereum you have to worry about the entire

world's Financial ecosystem falling apart overnight because everything like every form of digital electronics transfer relies on cryptically broken like by quantum computers like you know when you when you when you sign a transaction with your debit card like you do contact these payments like that's an RSA signature you know like when like the like when you're logging on to your banking app like that's all this digital signatures they can all be cracked back onto computer so um I do think that we will have warning um before quantity could come become a real threat uh we'll be able to see every single major Bank in financial institution stamp eating for the door updating their crypto um and so we will do the same uh you know like in in like right now Quantum proof crypto is not see fast enough um a

performance enough to pull off what we want to do that will change in about five to ten years so um yeah we'll just switch over the old States won't be able to be decrypted and um you know so I think it'll be secure is there a property of the encryption that enables that or yeah like how does uh how does that work or is anything okay so so the the thing is about um so if you think about elliptical commitments it has a properties it has two properties it's hiding and it's binding um by hiding it we mean that uh you cannot um recover the original information with that description key and binding means

that that original information um could only produce that that commitment that the specific Community had so if you want to encrypt you know hello world you'll get a specific Phillips curve points it um depending on equipment scheme and you can can't get a different one so um the The Hiding property stays and contributed to the burning property breaks basically what happens is that you can um uh sorry I missed I sorry I messed up the definition of binding binding is basically if you have two different plain texts um they can't produce the same ciphertext um that's um and and hiding is given a

ciphertext can you find the plain text and so what quote to computers do is it basically means you can break the discrete logarithm which means that um you can uh you can make um like elliptical cryptography relies on on being able to like um not be able to create um uh like the way it works sorry I'm yeah it's seriously properly so like so um a simple commitment like a Pettis equipment is basically you have 200 care points you have two things your your um your multiplies points by a secret and the information you want to encrypt um and you combine the two uh if you know this is a screen logarithm then you

just have a very simple um equation basically you have um you have a x naught plus bx1 um where export and X1 are basically like Secrets encoding skill to curve points that nobody knows unless you have a quantum computer um but if you have a consequences you know what a and you know what x naught and X1 are and therefore you can mess around with the values A and B to be whatever the hell you want um which basically means that you can make anything any input data can can you can make look like any encryption so you break the bonding property quite dramatically but because of that um it also means you don't break the hiding property because you can't you still can't map backwards what it means is you can you can take any like an arbitrary number of different input

plain texts to produce the same type of text but because because of that right you can't take a single ciphertext and then and that map that back to a single plain text because it could have come from any same text um so uh it's um I I think um I think that was only a partial explanation I think I might have got a couple of things wrong there but um and something else like uh with a quantum computer they'd all look like the same thing so basically the you can say that like yeah you can make them look yeah just binding or hiding and then you can have this additional property where it's

perfectly binding or perfectly hiding or computationally binding or computationally hiding it can't be both perfectly hiding and perfectly binding um if you if you've perfectly bind it to something then you can't hide it because you've perfectly bind it to one specific thing um and quantum computers can break this computational binding property so credits and commitments are perfectly hiding but they're not perfectly binding got it yeah so it's like if I had some like some secret that I didn't want the world to know like in the quantum computer was like okay this is just secret I could

also be like no this is my secret no this is my secret and it's kind of like uh you'd have like 10 versions of the secret so you wouldn't know which one was the secret yeah but it's also that if you clip something with that secret it's a company Community cannot just can't figure out what you encrypted um because it yeah cool yeah anything else um on fixed mind um I know we've running way over sorry about sorry about this Joe um I'm bleeding into your time yeah what do folks want to do do we want to schedule like kind of 45 minutes slots or do

people have time and imagine we reschedule the decentralization one uh what What's people's calendars like so I know we only have the engineering Workshop time slot I think maybe oh well the answer is maybe we reschedule um until next week and maybe we um we can just chat with presenters and see whether they want to produce more content in 15 minutes because I think zax was was really good and it was good to have 45 minutes so um I'll I'll catch it with Bruno maybe we'll make future sessions slightly more flexible um I've got about probably 20 20 minutes I reckon if we go deep on on some areas so

um and then questions so I think yeah getting at least there'll probably be more questions than than content I think which will be good to have so people learn cool let's uh let's try and reschedule it for earlier next week awesome sorry sorry for being a Time hog that's all right it was great um and yeah if anyone has any questions just um message on slack yep um and yeah cool thanks thanks for uh thanks for listening