Privacy Pool with Compliant Privacy Solutions

Transcript

My dream is privacy as a default. It's that everyone that is using crypto can decide if they want to be private. The privacy rights of people are eroded and you're forced to hand hand over to information to the um the government to access things which were previously available. I strongly believe that privacy is a human right. And I think if we had more privacy in crypto, it would make crypto safer and more secure if it's done in a responsible way. [Music] Privacy on blockchain is often misunderstood. Too often it gets linked to shady activities. But some people

believe privacy can be safe, legal and an essential part of blockchain ecosystem. Today we are diving into a project that shows how we can do that. Welcome back to ecosystem project demo, a podcast where we explore opensource project, public goods and funding initiatives that strengthen the Ethereum ecosystem. This is episode 24 brought to you by EC Institute. I'm your host Puja Ranjan joined by and Akash from the team. We recently came across this project enabling compliant onchain privacy. It promises to provide an infrastructure that exclude illicit actors while preserving privacy for legitimate users.

How is it possible? Well, to explain this, we are joined by Nathaniel Freed from Zero Expo, the team building privacy pool and tools designed to enable private transactions while keeping out illicit actors and ensuring compliance. Welcome, Nathaniel. >> Thank you very much. Very excited to be here today. >> Thank you for joining us. I understand today's topic is very interesting. I know I'm not alone in this and there are many other people in the blockchain space who are curious to learn more about your project and what it means for everyday users. But before we dive into that, I would love for our listeners to get to know you a little bit. So let's start with when and how did you first

learn about blockchain and what led you to get involved with the privacy in blockchain? >> That's a a very interesting question. My background is not necessarily conventional crypto background. I've got a long history building intelligence companies for the British government and funded by the GCHQ here in the in the UK and working in the US as well. And I've always had a a fascination with crypto space and I've known for a long time a great investor named Zack Cole. I've known him for 10 years. He now runs a venture studio called Number Group and he was the one that really got me interested. He is a former marine and was involved in cryptography for the US military but also had a lot of

experience working in the infosc space which is where I kind of began and as we went on I went more into the govve side and he went more into the the crypto side but we worked together on a couple of interesting projects my favorite being code for arena which was I was on the founding team of which was smart contract auditing worked there for a couple of weeks got got paid in tokens which are now worthless but hey ho that's the that's the game Um, and then when privacy pools came up as a project and an idea following the sanctions on tornado cache, it was something that I was very interested in because I very very strongly, partly because of my background. There's this weird kind of group of people that had built some pretty spooky surveillance tech, but I also very very strongly believe in, you

know, privacy for the good guys. And this was a project which I felt very strongly about. So, I jumped in, got involved, and worked with him and Amin as the all three of us as as co-founders to see if we could build a compliant version of privacy tech for crypto that's not going to end up funding Kim Jong-un's nuclear weapons program. >> Very interesting. I understand there are certain people in the ecosystem who can never stop at anything and they are always eager to help the ecosystem make it even grow, make it as compliant as possible. Thank you for sharing your story. It really helps set the stage why privacy matters and it's just not in theory but also in practice. With this background maybe we can get on to what is the project zero bow itself. I

understand you have got a presentation and a demo. So without further ado let's get into it. >> Thank you very much. So privacy pools came from an academic paper which was written by Vitalik the co-founder or the one of the founders of Ethereum and Amin Salami who was around Molakda which funded tornado cache and also chain analysis which is a a crypto intelligence company which helps find illicit actors and the idea of it was that users want privacy but so do thread actors there's no just getting away from that like if you look at the people that have historically used privacy tech.

There's a lot of innocent people, but there's also, you know, North Korea, there's Lazarus group, there's, you know, people that have stolen funds and want to clean those funds or launder those funds for some pretty heinous real world crimes. And so the challenge of the privacy pool's paper was can we build a version of onchain privacy which doesn't allow criminals, hackers, terrorists to launder money through. And it's tricky like even the conventional finance system gets abused. You look at the fines that HSBC and Deutsche Bank and others have received for allowing the cartels to deposit money with them and turning the blind eye when they're making money. It's not a simple problem to solve, but this is hopefully a step in the right direction. And so we really set out to build privacy pools to give privacy to the good guys and just to the

good guys. And it's really important because there's a lot of privacy tech which you don't need other people involved. If you think about encryption, you can encrypt your hard drive and personally get the benefit from that yourself. You don't need anyone else involved to do that. But when it comes to privacy, if you're one person and you set up a crypto privacy protocol, it's obvious that all the money's coming in is you and all the money coming out is also you. It's not a privacy protocol without a large what we would call anonymity set. And so when you're using privacy protocol, you're essentially gifting privacy to the other people that are using that protocol. So, if you if me and a friend use a privacy protocol, then it's, you know, it's 50/50 on the money coming out, if we're following correct operational security when

depositing and with withdrawing, but you're gifting privacy to them. And, you know, there's not many people I know that want to be gifting privacy to North Korea or hackers. And so, that was really the motivation of the challenge because crypto privacy is quite a, you know, a novel um approach, privacy versus something like encryption. So a lot of people ask me about why you should care about privacy. There are some people which are very very bought into privacy but the vast majority of people don't really think about it and don't really care about it. And there's really two dynamics to this. There's you know if you're like me sitting very uh comfortably in in North London in a relatively you know good human rights record country you're going to have a different understanding of privacy versus if you're in another country. We

can all agree that there's definitely been a big trend of criminals targeting people that they see on chain have got a lot of money and literally walking up to them with wrenches or kidnapping them or trying to cut their fingers off in the case of Ledger and extort money out of them. And privacy tech can prevent that. At the moment, if you send me crypto, then I can see all of your historic transactions. I can see you money moving money around. And we're increasingly getting very powerful analytical tools although you know are very useful for investigations and are useful for understanding the blockchain also enable kind of less sophisticated thread actors to be able to quickly profile and understand people. There's you know the pseudo anonymous is becoming less and less. Then there's also if you're, you

know, operating under a hostile regime. People don't realize it, but a lot of the money that goes towards activist groups ends up or is donated via crypto just because it's slightly harder to trace. There's a lot of people that believe that it's an absolute human right to have privacy. And I'm one of those people, but I'm also aware that not everybody thinks that. But it kind of depends on the the country and the lived experience you've had about your views on privacy. But privacy is one of those things where everybody takes it for granted until it begins to get taken away. In the UK where I am, we just have the online safety act which just got passed by our current government. It was brought in by the previous conservatives but passed by the Labor government which means that you have to upload your ID if

you want to look at any website which might be deemed to have 18 plus content on it. And you know it's designed as a child safeguarding act which makes sense. I don't think anyone's going to argue against the mission of trying to protect children online. But it's already because of the, you know, incredibly high fines that you get if you um, you know, don't comply with this act, it's already meant that like a bunch of pretty politicized protests about immigration in the UK, about crime in the in London specifically have been censored on um, Twitter just cuz Twitter or X now didn't want to take the risk.

And so as kind of like the privacy rights of people are eroded and you're forced to hand hand over to information to the um the government to access things which were previously available. I think we see people caring about it more and more. But it's often you know with a lot of these things it's hard to care until you really really have to care. But anyway here is exactly how privacy pools works. So private pools is a relatively simple system. Users can anyone from anywhere in the world can deposit money into privacy pools. You can do ETH, you can do stable coins, whatever you want. Well, we're adding more. And when you deposit, there's vetting period. So, we're relying on, you know, chain analysis, elliptic, those type of intelligence providers to

do something called KYT, which is not KYC. It's know your transactions. So, it's looking at where those funds come from. If they come from somewhere where I would say is like known good, like you've been KYC by Coinbase or you've got a long track record, it's really easy to ID you, then it's very fast to get accepted. If you know you're essentially getting accepted by an automated system, if it's slightly more complex, then there's some manual vetting involved. If you're known bad like on the OFAC list or you know the money's laundered or something like this, then you'll get rejected. If you get accepted, you'll get added to what we call an association set, which is really just a white list. And then you can withdraw privately to another address and gain privacy. It's a non-custodial system. So whether you're

pending, you know, accepting, whether you're accepted, whether you're declined, you can always do what we call rage quit, which is withdraw the deposit back to your original depositing address. So obviously not getting privacy, but you know, we're not holding on to your funds. completely non-custodial non-custodial system. So with most things cool little graphic I've got on screen here but much better to show rather than tell. So I will now give you hopefully a a live demo which always work out. So this is privacyp.com and privacy.com is hopefully very very simple to use.

You can create an account pretty easily. You just click on load an account or create an account. Click on create an account and then you can download and copy your recovery phrase and then verify and go through the process of creating an account. It takes you know a couple of minutes. I won't run through that process for you but you can also load in accounts which I will do now because I have previously set up one. So once you have your account you can deposit into it a massive range of assets. We're adding more. If you've got assets that you want us to add just let us know. We're more than uh happy to do that. But today we're going to be working with USDT. And so it's very easy deposit. You just click on deposit.

There is some minimums and maximums and we charge a relatively small vetting fee to deposit in. But I'm going to put 1,000 USDT out of my 3.2 in. And I'm going to deposit. No fee charged on this. And we will see if this process works. We tend to wave the fee for assets when we've added them relatively recently. And we added USDT relatively recently. So once you deposit your funds, they'll come up as status pending. And so if I click on the dashboard here, you can see this is my fourth deposit into the pool. And the status is pending. It says estimated period up to 7 days. Normally it's like 30 minutes or an hour or something like that. Depends on how often the Merkel route gets republished, but you know,

times may vary depending on how many deposits you've done and um your kind of risk profile. But normally once they're approved, you can then click on the three dots next or you can click on withdraw and you can then relay these funds to a new and separate address. For those that remember tornado cash, you had to deposit uh 1 10 100 Ethan, you can deposit any amount in and you can withdraw any amount. So if you're, for example, running payroll for a business and you don't want employees to know the amounts their individuals are are getting paid, you can maybe put like 100 ETH into their pool and then slowly withdraw like 1.2 two or whatever every month, but I'm going to send these funds to this address. I'm going to withdraw.

One also issue you potentially have is if you're withdrawing something that's not um ETH, then you're going to need gas. And so you can also send withdraw the say a,000 um USDT and we'll also send a little bit of gas with it so that you can do, you know, a swap and a a transfer in that new wallet if it's a completely new wallet setup. there is a small relay fee in this case um like $1 for a th00and um and the way the system works it will generate the proof it will handle all of this stuff for you and then it will relay the funds and so we'll try and follow this transaction and see how long it takes. Um, if you have deposited and then been rejected or you've deposited and been accepted but don't want to relay the funds to another

address or you've been declined, you can always rage quit, which I will also demo the functionality, but you can see this withdrawal has um gone ahead. It's been relayed. I didn't send any gas with it, so that money is now stuck there. But hey ho. Um, so for example, this previous deposit here, which was yesterday, um, has been declined by the ASP. So that doesn't mean that the funds are stuck in limbo. You can always rage quit at whatever stage. You just click on exit. You have to pay the gas yourself, but you'll withdraw to the original depositing address. So it's a completely non-custodial system. And we've designed it in a way where hopefully it's relatively simple and relatively intuitive and we'll

definitely add more assets and more chains as we go on. But we're working on kind of increasing the anonymity set size. So, we added Tether pretty recently and you can see there's only like a couple of thousand USDT in the pool. Whereas, if you look at ETH, you know, it's been around for a little bit longer and there's, you know, deposits every day and 300 E sitting in the the pool because obviously if you deposited, you know, a,000 ETH into the pool and then withdrew a,000 ETH, it would be fairly obvious who was who. And so, building up that anonymity set is very important as far as building an actually privacy enabling tool. I hope that all makes sense.

>> It definitely does. Thank you so much for this great presentation. I can see a lot of uh hint of malak re quit is there definitely some effect of amin by the way we are personally thankful to amin when we started was one of those good guys who helped out with malak and helped us sustain as a ken cat heard us so thank you and kudos to all the team members >> yeah mean is a very nice guy although he's had a big kind of ideological shift from being a privacy maximalist to maybe something more aligned with me now.

>> Yeah, that is great. Like he is always doing some good work around the ecosystem. So I'm always happy to follow him. Cool. You have probably answered a few questions that I had on my list. So I will go there one by one. But this was simply great. When we say enabling compliant onchain provising and we are excluding elicit actors that is a bold statement but by following the demo it seems it is very much possible. I have a quick question with respect to validation of wallet. You mentioned about uh vetting the wallet right be doing KYT which analysis maybe going through a fake list to remove the elicit party going through good whitelisted

list to select the parties. Do we do it for both the wallet like sender and receiver or is it for just the sender? >> Yeah, good question. So it is just the depositing um wallet. So the idea is when you deposit into privacy pools, we look at not really the wallet, but like where the funds came from because arguably that's more important because you just, you know, spin up infinite wallets. Um, and in terms of categorization, it's fairly easy to categorize known good. Like this wallet is, you know, Vitalics wallet. That's easy to identify. It's also relatively easy to identify known bad. And together known good and known bad make up kind of 80% of all of their flows of funds that are being used today. It's like this kind of middle area which is a bit more

complex and we tend to lean on the side of caution. I think it's like not worth you know taking the risk of being like hey maybe this person maybe this is not stolen funds but it's kind of following a pattern of behavior that might be stolen funds and so we tend to be cautious and you know if then someone tweets us we're like hey go deposit in Coinbase and then you'll be able to send it to us and that will be um fine but we're only doing it on the depositing address you know similar to like a bank or like you giving cash to someone. you don't have any responsibility for you know once the money's left your ecosystem what's what it's done with what people do with it. Um a differentiator between us and some of the other privacy protocols which have tried to implement the privacy pools

paper is you can update the ASP. So if you know someone withdraws funds and then you know 6 months later they donate it to Hezbollah or something you can you know that wallet will then get flagged as you know illicit for you know future people coming in and you can regener you can go back and regenerate proof and say hey you know my funds do not come from those tainted tainted funds which managed to to get through and then everybody going forwards can also like prove that you know against this updated ASP which is a differentiator from us to say like rail gun or some of the privacy protocols where they potentially have this issue that once the pool is tainted it's tainted forever.

>> That is good to know but I was just thinking if we can validate both wallets sometimes there are some bad parties they try to cheat people even if these funds are pro like transferred using privacy pool and the receiving party is bad party and we can perhaps stop that that would be a great achievement. it would there is like limitations to the technical capabilities like if you look at traditional finance obviously they're collecting KYC at almost every stage crypto doesn't do that we're not collecting KYC and so we have to rely on you know other intelligence solutions to be able to successfully vet but there is like you want to push you like you want you want to develop a system which is you know at least as good as the

intelligence capabilities of law enforcement and law enforcement uses ch analysis and elliptic and those other um intelligence providers and I think going beyond that is something we would love to do but potentially impossible at the moment. >> That is great. Well, my next question is with respect to ASP that you mentioned. So, ASP is something that we are using here to kind of create trust. How does ASP conduct real time monitoring and vetting without compromising users privacy? >> Yeah, good question. So, the ASP really is Oxbow like we're providing the ASP um list of privacy pools which is an open-source project. You can go check it out on GitHub and see all the the code.

And essentially all we're doing is we're generating a a white list. And we're not collecting any PII. We're just vetting wallets into essentially three categories like known good, known bad, and unknown. And unknown ones we then manually try and identify if those are illicit funds. But there's no kind of personal information involved in that vetting process. You know, we're not asking people to upload passports. We're literally just looking at like hey here's everything on chain that is accessible to anyone you deposit into our smart contract. So you've given you know us consent to look on eth scan or like use whatever solution and we're not trying to ID the person behind it. We're trying to ID the source of the source of the funds.

>> That's great to know. Yeah, of course we would like to know the source because we want to make sure that they are good and clean. You mentioned about wallet. I want to understand from a normal user point of view how easy it is to use this tool. Would it be possible to just make use of simple wallet MetaMask or any other wallet and we go ahead and create an account that account very much looks like a wallet on the tool itself. So what does a normal transaction look like acting with a normal wallet or any specific one?

>> Yeah. Yeah. So you you can connect, you know, any wallet you want and deposit from it. You know, MetaMask, whatever you want. And then our website is really like just the interface to the smart contract. So if you're feeling uh techsavvy, you can go mess around and deposit direct to the smart contracts. But also in the user interface, you can just, you know, it's relatively intuitive. You just deposit funds and then you can withdraw partial amounts of that deposit or you can just, you know, withdraw it all. I would advise there's some kind of privacy best practices which people don't necessarily always realize. So depositing really unique amounts is and then withdrawing those exact same unique amounts is going to break your privacy if you deposit like something very specific and then withdraw. So you know that was the reason why tornado cash allowed one 10

100. Um but you can deposit say like 20 ETH and then pull out like two ETH at a time. No one's going to um figure that out. It's also worthwhile leaving funds in the pool for a diff like a decent amount of time. People can see when the Merkel route was updated. So if you deposit, wait an hour for the Merkel route to be be updated and then withdraw, you might be the only person that withdraws in that time. And so you know, someone that was trying to track it back to you might be able to. So there is like some privacy best practices to follow. But I think like the platform's relatively intuitive and it's, you know, you can connect with anything and most of the mainstream assets are on there, but we're adding more. Do let me know if anyone wants additional assets or additional chains

for us to launch on. are always keen to to collaborate. >> Of course, I hope that people listen to this conversation and reach out to you. Well, my next question is uh with respect to fees. It seems like a premium service. Of course, it is because it is trying to keep your privacy in place. You mentioned about a few fees, vetting fees, relay fees. Are there any other service fees that people should be aware of? And part two of this question is all these fees are there for every transaction or it is for only specific kind of transactions.

Yeah. So when you deposit you will pay a vetting fee which is 50 basis points. It's waved for most of the new assets that we've added. So if you go today and deposit tether or USDT or USD1 or whatever you want then you won't pay that vetting fee. If you do that do it in like a week's time then maybe you will. But at the moment it's not progressive. So, you pay the vetting fee whatever amount you deposit, but we will eventually make it progressive. Um, because obviously if you're, you know, depositing a 100 times from the same address, like we don't have to vet you vet that, uh, those funds every single time. And so, it cost us less and so we will make it a progressive system, but that's something that will require some smart contract shenanigans, which we will eventually work out. Um, and then

when you deposit, when you withdraw, if you rage quit, then you just pay the the gas fee. If you want to use a relayer, if you're relayering ETH, then you pay a pretty low, I think, like 0.25% relayer fee. Don't quote me on these numbers. It might be higher. Um, if you relay with say like you're relaying Tether to a new address and you want to send ETH, then the fee might seem high. It might be like, depends on the amounts you send, but it might be like 3%, but like 2.8% of that is the ETH that they're sending along with. So the relay fees are are relatively low and most of those fees go towards funding the KYT. So making sure you're not giving privacy to illicit actors and making sure that the only people that you associated with you're

associating your transactions with in the association set are clean and good and so we're not making you know no one's driving a Lambo around here. >> That is good to know. And this gas fees that we are talking about is just the transaction fees which is normally charged. Okay, perfect. Sounds good. It's quite high because it's on ETH, but we will eventually launch on launch on other chains. >> Yeah, I understand there could be an improvement feature. I'm just sharing if you guys find it interesting. Right now, you are suggesting that only ETH has to be added. But with EIP702 in place there are different options. You don't necessarily have to pay it from ETH. You can make it enable that any asset. Say for example, you're using USDT should be able to be gas chain.

Yeah, that would be I'm excited for this because that will make things a lot easier because it's a real pain for the the relayers to like build out this system that dynamically sends the right amounts, >> right? Well, as much as compliant onchain privacy sounds complex, the programmable compliance sounds so powerful. I would love to hear from you an example of how enterprise or institution in different jurisdiction might configure their own compliance level. Yeah, so this is a very interesting question and there's some very strong arguments for why enterprise players might want privacy and also there's some complexity in it. So if you are a hedge fund or an institutional investor for a family office or

something like this, one thing you really don't want is your alpha leaking. You don't want people knowing where you're investing. You don't want people knowing what startups you're funding, that type of stuff. And so privacy solutions can be very useful for that. If you are in pretty much any western country, you're going to run into an irregulated entity. You're going to run into some really tricky compliance issues. And so, I don't think the privacy ecosystem is quite there for most institutional players, especially regulated institutional players, which are the ones with with the serious bucks. A lot of it comes down to counterparty risk. And even if you know you have a long list of known good people that you're associating with, regulators often times won't understand that nuance and will just want to know, you know, who are you trading with or who are you associating with? And so I

still think there's a little ways to go towards building privacy tech that will make the enterprises feel comfortable. And one interesting thing to thing to think about is building privacy pools or privacy protocols which only allow institutional investors in. And so I think it's relatively okay if you had like a list of 50 different institutional um players which were all depositing nodable amounts into one privacy protocol that only they could access. Then you're you know reducing their counterparty risk stuff and that might potentially work from a compliance standpoint. But a lot of this stuff has to be like you know taken to regulators and you have to get pretty big institutional buyin from consultancies to help you know advocate on your behalf to banks and everybody knows banks are

famously slow. So I think it is coming and I think it will unlock a lot of capital for DeFi but I think it's a slow process to get there. >> So we are not there yet but it would be a good position to be there one day. A follow up on this one. Is the team currently in conversation with the regulatory bodies or some groups which are actively talking to regulators and help in framing some kind of laws around privacy pools or help these tools those are responsible for finance especially in blockchain domain. Well, as my cousin Sam Bank Mafrey, now he's not my cousin, but as he found out, working with governments and regulators is a double-edged sword. And so, although previously we used to hold MSB licenses

in the US, we had lots of chats with regulators whilst Biden was in charge because we were very concerned and wanted to make sure that we were on building stuff that was genuinely compliant and was genuinely going to not draw the eye of regulators. And we currently do talk to investigators. We're very interested in, you know, making the vetting process stronger, better, more accessible to law enforcement and other agencies, but we don't directly talk to kind of the financial regulators, although did meet them at some uh conferences around privacy tech that we were invited to in the UK. And they seemed open and and keen to engage in conversations around this just because there is, you know, already large amounts of capital flowing into the privacy ecosystem. I think like rail gun does billions every year.

tornado cash still does a pretty sizable amount and so people are using it and regulators essentially have the choice whether they can engage with people that trying to make it compliant or ban it and I really hope they engage with people that are trying to make it compliant. >> Yeah, I recently came across a set of people who are helping make a regulatory bodies some kind of recommendations with respect to blockchain ecosystem. It's basically a nonprofit organization in the United States. So perhaps getting in touch could be useful in future. >> Absolutely. I think there's some great kind of advocacy organizations. One that I know is web 3 privacy.

>> Do some great advocacy work around privacy specifically whilst you know trying to they're like the the palatable face of the cyberpunk movement that is web 3 privacy which can be very useful for engaging with regulators. >> Surely well I understand that enterprise are self- sustained. they can take care of these kind of reg regulatory bodies and may be able to deal with auditors but that cannot be the case for everyday user. So for an everyday user what happens if they use this privacy pool but regulators later say that the tools are now restricted are their past transactions still be safe and compliant and how can they prove it?

>> Yeah, this is a good question. So, we're actually working on an interesting project which maybe I should talk about, maybe I shouldn't, but there's a lot of funds caught in tornado cash currently which people are willing to essentially dox themselves to law enforcement to be able to withdraw from. They can prove they're not, you know, Lazarus or they're not hackers or anything like this. And those funds are are trapped in tornado cash for a variety of reasons. A lot of them is like, okay, it's like five grand. Can I be bothered to go through this process of trying to talk to Fininsen and um get my funds out? Is it going to cause issues for my future banking? And I think there is a solution to this around which involves generating association proofs um and generating proofs using the existing tornado cash infrastructure. But we'll see what

happens there. The regulators in my mind I think have like a hit list of damage that organizations are potentially doing to society. And with Tornado Cash being unsanctioned recently, I think it's relatively unlikely that they would come after the privacy protocol which is trying its hardest out of all of the privacy protocols to be compliant. I think there's easier and softer targets to go after before anyone would come after us. But of course, it is always a risk. So we're essentially not collecting any information or storing any information beyond the intelligence that is gathered during the KYT process, which is just what's onchain and no PII.

And so I don't think there's any chance that if there was issues with regulators, it would come back to bite you. It also doesn't really tend to be the regulators which come after privacy protocols. It tends to be law enforcement and the DOJ that goes after these type of protocols and they go after the people behind them versus the people that use them. So I'm screwed, not the users. >> I hope you are not as well trying to help the community. So you should be protected as well. Well, I understand integration is key for ecosystem growth and I'm trying to also understand here how can other privacy protocol or layer 1, layer 2 network adopt and implement ESP in their own environment.

>> Yeah, I mean the dream for me is like privacy by default. I think there's so many people which would like privacy if it was one click. They don't want privacy if it's three clicks. And so the dream for us is if you are running a DeFi protocol, you just give people the option to if they're, you know, you're doing something that's yield bearing, when they deposit, they can deposit via privacy pools and then when they withdraw, they're privately withdrawing. That's the absolute dream for me is that everybody, every ecosystem has privacy as hopefully a default option, but you know, it costs, so it should probably be an opt-in option. Um, that would be the, you know, the absolute dream for me to be honest. Yeah, privacy by default would be great to have. It could be like a seat belt that people are wearing and

going ahead in their daily life. >> Yeah, absolutely. >> Well, looking ahead, are there any particular partnership or enterprise pilot projects or ecosystem integration that you are more excited about in the near future? >> Yeah, good question. Um, so I think the exchanges are the most interesting people to work with also because a lot of them have I don't know if you know the Ethereum attestation service. Um, and then you have like additional ones built by other exchanges where you can have an NFT that basically says I've been KYC. Um, that type of stuff could make building privacy pools just for say users of Coinbase or users of Kraken or users of another exchange really cheap and the exchanges could run the relayers

themselves. So there's no need to involve a third party and they they've got the PII so they could they're like already have the liability of relaying funds when you withdraw. And so I don't see any reason why you wouldn't want to have, you know, privacy pools that were built for just Coinbase users or just Kraken users or if they're happy with each other's standards, combining them together using the attestation services. I think that would be really cool cuz that's where a lot of like the, you know, beginner users come. And I think if you were drawing from Coinbase, you could see two options, you know, withdraw and withdraw privately. I definitely click withdraw privately. And I think that many other people would as well. I think it will be a good introduction to the idea or education around how not private crypto is.

>> That is good to hear. And uh being on the same place, I would like you to invite to maybe share a few words from the ecosystem. How do you see this privacy thing going on with the ecosystem and what are your big dreams? >> Yeah, good question. So, I strongly believe that privacy is a human right. I think if we had more privacy in crypto, it would make crypto safer and more secure if it's done in a responsible way. I know there's dangers to it. We've seen those dangers. There's developers in in jail for maybe the right reasons, maybe the wrong reasons, but definitely for not realizing how serious crypto is, and I think crypto is serious and deserves privacy. And so my dream is

privacy as a default. It's that everyone that is using crypto can decide if they want to be private. And I think there's big appetite in the ecosystem. There's amazing developers at loads of privacy protocols. There's loads of exchanges and loads of DeFi projects and different crypto projects that believe in this and are willing to both put time, effort, and funds behind this mission. And so I think the ecosystem is incredible and the privacy space is cool and cyber punk, but also like has grown up and matured since the days of tornado cash. Indeed, it has grown up a lot and I think this is really good parting words privacy by default.

>> Big thank you to you Nathaniel for walking us through how privacy pools and ASP are helping to make onchain privacy both safe and compliant. >> Thank you very much. I really appreciate it. And one final thing I would also note is in traditional finance you have privacy. You've got the banking secrecy act. In crypto we don't have that. And so I would say at the very least we should get crypto up to a level of privacy that you know centralized banking has. >> That should be the goal. We are trying to build an ecosystem. Finance is one of the important part of it.

>> Absolutely. Having me. >> Well, thank you so much again. For me the key takeaway is that privacy isn't about hiding. It's about empowering everyday users, institutions, and every regulators. It builds a trust in Ethereum as a real financial infrastructure that could be compliant. Dear listeners, if you like this episode and you would want to learn more about the project and their work, check out the links in the show notes. Thank you so much for listening and we will see you in the next episode as we continue exploring the project shaping the future of Ethereum ecosystem. Have a great rest of the day. TFS.