Enabling Institutional Adoption - Privacy, Auditability and Verification

Transcript

Uh, thanks for being here. So, Bermuda is built with this belief that like as a user you want to use your MetaMask wallet and Uniswap, but privately. But also you want to maybe as an institution use Fireblocks, Safe, or any of the other institutional wallets and deposit into Morpho, but also privately, right? And as a developer, you might want to add privacy to your protocol application and without going to jail.

So we have been building privacy tools for ages, like So, the problem is that with every transaction that is broadcasted to a blockchain, counterparties, amounts, asset types, and also the DeFi execution is fully exposed and there are tools out there that can basically reverse engineer um, your balance sheet if you're a frequent user of a blockchain application. And the thing [snorts] that we do at Bermuda is like we allow for privacy while also enabling risk screening.

So, why is that? The answer's here. Um, privacy tools in the past have basically been built without issuers and institutions in mind. And institutions are ready to enforce and also to enforce with tools that are inconvenient, um, and basically freeze everybody. So, like for this is a perfect example, um, Circle froze the whole Zama USDC contract and that affected also basically legal funds and legal users because they didn't have an option to enforce their policies that they can

enforce on the public side in the private side. So, privacy tools in the past have been built in a way that they take away the capabilities that the issue has. We took a different approach. With us, before every transaction, um regulator or issuer-specific checks can be run. Identity-specific policy is also supported. Those can be implemented via self-onboarding with the issuer. On top of that, we have like baseline risk screening to avoid any kind of OFAC or sanctions um sanctioned addresses.

But, um really the main point here is that the issuer can select a set of tools that they need and they are used to to enforce their policies on chain. So, why is that so important? Well, for example, there's CASPs and VASPs and other service providers out there that might um link back to the fiat system. And that also means that uh if you want to off-ramp uh the the off-ramping institution basically has to know where these funds come from. That is like international

regulation right? And this might be very, very complex and national policy that you have to implement. And we allow for that with like zero-knowledge analytics. And that way it's possible to do also private off-ramping. So, how does that work, right? So, Bermuda is basically a set of smart contracts. And um these smart contracts live on any kind of blockchain. So, you can deploy them on EVM mainnet, but also you can deploy them on your private chain as a bank, if you run a Hyperledger Besu chain, um they could live there.

And then these smart contracts do zero knowledge proofs to basically allow the issuer to enforce the policy. So, um the outside world doesn't even need to know what exactly happens. It's all happening in the private. And one of the our most important principles is that the issuer set the terms. We don't set the terms. Like Bermuda is permissionless. We can never look inside. Um our operations shouldn't increase counterparty risk. That is like that's the main benefit of a solution like ours.

And um yeah, then then there's like a lot of other things that institutions need. So, for example, at the moment we are working very hard on a quantum secure implementation, which is ready to be used. It's obviously a little bit uh more slow than the uh baseline solution. We enable account recovery. For example, many wallets, institutional wallets, like the safe wallet, have a uh recovery option. Um also have blind signing protection. We can do private repo and a lot of things like OTC swaps in the private set.

And I think this is really the main advantage. If you think of institutions and if we want to enable institutions coming on chain, then they will bring on all different kinds of assets. So, for example, a tokenized deposit from one bank or a real world asset such as a bond. And I think what we've also done as a mistake for a long time is like we offer privacy for all these specific assets, but then we we end up with totally fragmentation.

You have your one wrapped asset and you have the other wrapped asset. And obviously those assets are then not very liquid. And the assets are not um interchangeable in the private set. So, therefore we chose that Bermuda to have this omni asset design which basically has a policy registry in it. And then once you are within Bermuda, uh you exchange one asset against the other or can also temporarily go out, uh interact with other, and come back in.

All the policy policies are enforced. Yeah, and this is really um a very very important slide for me because um I think there is there's several solutions out there um that attack privacy, but they don't get that basically the issuer always has to evaluate the counterparty risk. And um like with solutions like Canton, um you don't get a fully permissionless uh blockchain, um but basically a server-based system.

Then you have systems like Zama where like you don't have issuer policies. And um the whole Bermuda tech stack on top of the EVM is fully permissionless. And then the issuer and the recipient have control. But they only get the control that they already have with their permission token. And this self-onboarding is uh also permissionless and you don't need to call us to get the permissions. You just need to ZK prove that you you are the controller of the asset and um you get the permissions that you need.

So, the the proving happens all on the client side. That means that your local device manufactures the proof and then the verifier on chain checks if the proof is actually valid. This means also you don't have like infrastructure risk as you have in some FHE-based systems. Yeah. So, this this talk is all about institutional adoption and I think there's one thing that really the the industry has completely gotten wrong and is like not listening to your users. And we have to acknowledge that now we are

entering a time where institutions want to become our users. And institutions are basically embracing blockchain technology. And that means we need to listen to institution, we need to listen to issuers, and also we need to um listen to regulators because in the end like the regulators might enforce things that we might not be happy with if we haven't listened to them in the first place. Um so, this means we can build better tech, but we have to listen.

Um yeah, this is a pragmatic uh scheme of how like one one transaction between two banks could work uh with while using Bermuda. So, you have your token and then that token gets basically shielded within Bermuda and um then one bank wants to send it to another bank. This all happens in the private set and nobody can see what's happening here. And while while the transfer is being executed, um several proof verifications happen.

So, for example, um we can do signature verification, private sanction list, public sanction list, just as an example. And we are currently working with the Monetary Authority of Singapore and will be presenting a solution next week at Point Zero Forum um to basically see that in action. And yesterday, we had a really great announcement as well. So, now we are uh collaborating with the Linea and enable that thing basically cross-chain.

So, this this means that you can go from one private chain to a public chain like Linea and um the transaction proof is also posted to a uh third chain, for example, Ethereum mainnet to really verify that the transaction has happened. So, you get privacy by Bermuda, interoperability by Linea, and then the full security by Ethereum. Um and like now, I think we're moving to a world where we will see a whole range of new business models. For example, like tokenized deposits were like for a long time just a joke,

right? Because you like banks would tokenize a deposit, and then it would sit on their local chain. So, what can you do about it? Not a lot. But now, if you can create a virtual copy of that tokenized deposit on a public chain, and then mint a stablecoin with that, you also get the possibility to basically instantly redeem a stablecoin 24/7. And that's a huge step forward because with that, then you can go, for example, on another chain like you see in our mainnet, and deposit your stablecoin into a vault.

Um and that basically does a That enables a full connection from the banking system to permissionless DeFi. And yeah, I believe that's really a breakthrough. Um if you want to try it, Bermuda is super easy to use, so you can uh basically try today with no contract changes. You don't need to do anything on your side. We have an NPM package that you can use to um engineer front end and uh do all the calls, but also you can just uh do the smart contract calls all on chain. And yeah, uh I'm here. Hit me up.

Um thanks for the opportunity to speak. Looking forward to your questions. >> [applause] >> Thank Thank you, Julian. Uh anybody has questions, we have I think time for two questions. >> I have a question. I'm a >> Yeah. We'll We'll have the microphone so we can record this. Thank you. >> So, first of all, thank you. I'm totally new in the space. Um kind of lost, consider skeptical.

Give me the like a plain English that I can pass to my network who's also skeptical. Your product and overall what you want to achieved like the easiest way. So, I'm with Solana super team Ireland, did some project for Colosseum, help from the product um UX UI perspective. And what I'm facing as a newcomer is that the jargon push people away.

Especially females newcomers it's still like you know, ocean of unknown. So, it's more like a thought than question. >> So, every So, my thought is I totally agree with you and I guess that's because um first of all, I'm a central banker, former central banker. So, I I speak banking for but also this is a very institutional use case. Um I think the non-institutional use case is just you you have a credit card, you go for example, with Ignis Pay card to the point of sale, you tap, you pay and then um the

the person that is sitting next to you saw that, they look up who just paid in that coffee shop and they can exactly trace your balance of that payment card on chain. And they just they really can use any blockchain explorer to um to see [clears throat and snorts] all your activities and we uh enable that is possible that they cannot see that anymore. That's the plain English version. >> How?

>> Um >> Because because many protocols talk about privacy and then they come and they request everything. >> Is that the second question? >> Yeah, for the time being, yes. >> Um So, yeah, this is the this is the technical innovation there. So, the and that's something that, you know, we have have to dig in collectively. Like the technology is called zero knowledge and zero knowledge enables to verify that something has happened without actually showing the exact thing that has happened. And that's like that's crazy. Like it's really hard to imagine that. It's a It's a mathematical

system where you can prove that something happened without showing the the full detail of it. And uh I can't go into the mathematical details, but that's the keyword that you would need to look up to get your head around this. >> Thank you. Thank you, Jan. Uh sorry, we don't have more more time for questions, but I actually uh I think it's pretty interesting that part part of it cuz it's also stopping the the industry to advance into the banking on chain. I think something cool that at least from Gnosis Pay in our next upgrade of the of the smart contracts, there will be bundled payments. So, it will be a bit harder to trace back to the to the wallet, but still like to be fully private, there's a few protocols. And

I'm for sure these things of the part of the stack of the developer to to include privacy uh compliantly in the blockchain. >> Yeah, the good news is that we will be integrating into Gnosis app. So, that's not In the future, that's not longer a problem. >> Okay, awesome. Thank you very much. Thank you everybody here for staying for today. This is the end of the day one at DappCon. We'll be welcoming you back tomorrow. Starts at 9:00 a.m. So, everybody's welcome to come back. There's going to be plenty of more calls and more projects to to know. Thanks a lot. Have a nice