ZKPodcast: The Why & How of Privacy for DAOs with John Light & Samuel JJ Gosling

Transcript

[Music] welcome to xero knowledge i'm your host anna rose in this podcast we will be exploring the latest in zero knowledge research and the decentralized web as well as new paradigms that promise to change the way we interact and transact online in this week's episode i chat with john light and samuel j.j gosling we talk about dows privacy at different levels of a dao macy and how new zk and privacy tools can be used within a dao context this episode was born out of a recent zk sessions event we did where we covered

this topic still it's an underdeveloped space and something i think would be very cool for teams and communities maybe even the zk community to be exploring but before we start in i want to let you know about the upcoming zk jobs fair it's happening on july 29th and we will be hosting some of the top zk projects who are looking to build their teams and hire most jobs will be technical software engineering and cryptography focused so if you are looking to work in blockchain and the zk space this will be a great way to meet some of the teams and get to know them as you apply we host this on gather.town an awesome video game style interactive online space i've added the link to apply in the show notes hope to see you there you can also always check out the zk

jobs board on our website where we have an amazing list of open positions at any given time i now want to thank the sponsor of this episode mina quick disclosure i'm an advisor to this project and the zk validator runs a block producer on the network this is a project that i've been following for many years and we've actually covered on the show before when they were working under the name coda now mina is the world's lightest blockchain powered by participants mina is a layer 1 protocol creating a private gateway between the real world and crypto the entire chain is about 22 kilobytes even as it scales thanks to zk snarks the layer one protocol replaces the traditional blockchain with a zero knowledge proof ensuring a super light and constant sized chain that allows participants to

quickly sync and verify the network and snark powered apps called snaps allow access to verified real-world data from any website for on-chain use the ecosystem is growing fast and mina's mainnet is live if you want to jump in visit minaprotocol.com to find out more so thank you again mina now here is our episode about privacy and dows [Music] so for this episode what i want to explore with this week's episode is the topic of dowse and privacy and this topic kind of came up in an earlier zk sessions event that i hosted where we actually were looking at privacy and nfts and privacy endows and i felt like the conversation

around privacy and doubts was really rich and so i wanted to put together an episode which allowed us to like dig deeper into this i have two guests this week who i think are going to be great to help explore this intersection so i want to first welcome john light who was previously head of governance at aragon and is now working on community governance for sovereign hi john welcome to the show and uh thanks for having me and the second guest is samuel j.j gosling a tornado cash contributor and recent addition to the macy dev team welcome samuel thanks for having me anna and good to be here with you john i think we should probably learn a

little bit about both of you before we dig into this intersection topic the topic of privacy endows so john you worked at aragon and actually you and i worked together a little bit earlier this year on some zk events so why don't we dig in a little bit to your journey into the space of governance endows yeah sure so governance has been something of just a kind of personal interest of mine pretty much for as long as i've been interested in politics really i never really got involved in like party politics but i was always interested in governance and kind of the deeper like underlying issues of a lot of the political

problems and so i started looking into governance research economics to see how these subjects interplay to create the political dynamics that that i was seeing where i lived in the united states and researching to see like are there any like good alternatives to the you know governance systems that i saw as being like deeply dysfunctional dow's in particular were one of the interesting use cases that i saw for like more expressive smart contract systems such as those enabled by

ethereum and so in 2017 somebody that i knew was working at aragon doing legal research for them and she had mentioned to me that they were hiring for somebody to work on community governance and i was excited to see that like okay you know this this technology that i've been interested in for a while uh daos there's a team who's actually making like a a good solid effort to like make dows happen in a way that you know is secure and easy to use and it's kind of like the dream that you know we had in like the early days of

the ethereum project of like you know having like a point and click just like spin up a dow and and it just works and aragon was kind of i think the first out the gate to really like make that happen for people were you kind of dog fooding it like you there was the tool of aragon but there's also like you yourself were running dow like you were running these votes i guess and like trying to use them exactly so like actually using the tools that we were building to do community governance for aragon and these experiments started very simple just like the very first experiment we ever did was just polling so there was there was really no

you call it no binding effects of of this vote in any way it was really just sentiment gathering or polling on the blockchain and then the next step was to actually you know commit to doing what it was that the community was voting for like the on-chain governance idea where you're like you're you're committing to something and then it automatically happens not uh not not exactly so it's like it's it's like on-chain voting with off-chain execution yeah off-chain execution um okay where where like basically we set up this process the aragon governance pro proposal process

where community members could write up proposals within a few different categories that we set up and then those proposals would get put to a vote and the proposals that passed uh the aragon association which was like the non-profit that um was the steward of the or really still is the steward of the the arizona project would you know commit some resources to fulfilling the proposals that were passed and then the next stage uh that we were kind of like working up to was kind of fully on chain governance where you would have unchanged votes and and on chain execution so actually

putting funds and smart contracts and other aspects of the the protocol under the direct control of the token holders a point of contention in certain communities whether or not on-chain governance to that level is good or bad i know that there's very different philosophies in different groups about you know how much power should you give in a way like the crowd over what the protocol actually does um without certain levels that's cool did aragon actually do that did it get to that point i don't think it's gotten to that point yet we were pretty close and then most of the team left due to disagreements

uh with with the leadership at the aragon association that's i think the most succinct way that i could put that but i think that is ostensibly still the the ultimate goal what what are you working on now so currently i am working on community governance uh for the sovereign which is a d5 protocol on the rsk blockchain i'm working on a few different projects uh over there but like one of the things i'm doing for them is i'm an editor of their governance proposals so every time someone has a governance proposal i will help them review it format it make sure that it's clear and make sure that

it's internally consistent and you know just kind of help shepherd these proposals through the governance process i try to do my best to like answer questions and keep token holders informed about what's going on and how to participate in the process uh as voters or if they have proposals of their own and i'm working on a few internal development projects related to governance uh and the the administration of the government system all right samuel i want to hear a little bit about you let's do a little background this is the first time that we meet so i'd love to hear kind of where you started and how you got to be working

with tornado governance and macy so it's kind of a long story but i'll shorten it down uh it started in around 2017 when i got a fascination for cryptocurrencies mostly through it being a let's say an investment opportunity that quickly evolved into kind of a curiosity behind the technology uh mostly with ethereum and i started let's say experimenting with some open source repositories on github around one was with the tipbot for bitcoin and i ported it for an altcoin it started very small but eventually evolved into smart contract development on front end using react and i was freelancing from the years of 2017 up to 2019 and then earlier last year was part of

the founding team of a small d5 protocol called index finance and after that i was kind of looking for my next i suppose passion and i forgot about how you know privacy is one of these things that's very underappreciated or underscoped not enough people care about it i don't think yet and uh i kind of taught deep in my brain what is the one thing that has provided a fundamental let's say right to privacy on ethereum and of course it was tornado cash the same guys i saw back in 8th berlin back in 2018 surviving off grants and uh they recently launched their governance token torn and so i made it my initiative

to get involved and that was just contributing through the forums and it was actually true there where the ethereum foundation saw me the zk applied branch of the ethereum foundation then that led me to the opportunity of working with macy with yj which has been an incredible experience so far and it's only the beginning yeah and actually we so weigh was on the show and he introduced us just you know before this episode but he was on the show i think a year and a half ago where we did do a deep dive into macy macy coming out of the ef's applied zkp group working group i think is what they called themselves and i i mean what we went into we kind of went into depth of like how it was built where the like what the

zk does and i think we had one use case that we talked about which was like the clr fund at the time but i know that like one of the reasons that i wanted to have both of you on the show was that that combination of like a lot of dao experience and these privacy tools like i want to start to explore through this conversation like how all of these things can actually work together i was thinking maybe before we jump into the privacy dow it might make sense to actually give a little bit of a recap of dowse in general because i i'm 100 sure i've covered the term tao at least like three times over the last three years on the show

but i do think like for any listeners who aren't super familiar with the format with what it is i think it would be good for us to define it so i'm gonna throw this to you john given your long-standing experience with daos what is a dao yeah talk about terms that are contested um that that's a great question well the acronym itself stands for decentralized autonomous organization and you can kind of i think break each of those terms down and maybe debate exactly what they they each individually mean and then what it means when you put all those terms together but i think in practice

what people are referring to when they when they talk about dows is basically a smart contract system that's living on a blockchain that is able to take in the signals or or votes that are cast by stakeholders in the smart contract system and then output some decision i i've heard somebody describe this as like a glorified multi-sig basically where where you have you know multiple people or you know users entities whatever could be robots i guess but but multiple

token holders in this smart contract system and they want to be able to make a a decision together about a state change related to that smart contract system it could be the movement of funds that are held by the smart contract it could be adding or removing token holders or increasing or decreasing the the weighted stakes of the existing token holders uh it could be actually updating the smart contracts that are underlying the smart contract itself there are a bunch of decisions that these token holders could make about this smart contract system but in any case the smart contract

system basically exposes a set of permissions and says you know hey these uh specific ethereum accounts have these specific capabilities to make these specific changes on this smart contract system and maybe we also have some rules about how the rules themselves can actually change um and so it's you can kind of think of this as a way of encoding rules that before blockchains would have to be executed by like a human bureaucracy yes lawyers administrators like some sort of yeah org yeah exactly an organizational institutional entity

with policies that are either in people's heads or written down on paper and then they're enforced by either like just social norms or maybe even the the actual legal system in most cases and maybe at the most extreme the military is extreme yes by just raw physical force yeah um and whereas with smart contracts and with blockchains we're now able to write these rules in code and have them enforced like automatically by the blockchain so basically as long as you're able to get a transaction

confirmed on the blockchain and you have the right capabilities according to the smart contracts you're able to affect whatever change you're you're trying to make uh within within the organization provided you have the the right number of votes and so on and so forth one thought i have about like also kind of going back to your story drawn about the sort of working before at aragon and like one question i have for you is like has the has the vision for dao's actually evolved a lot because back then by by the way interesting point fun fact it seems like we all got into it in 2017 i'm also a 2017 adoptee to the blockchain community

but back then it was much more like broad or orgs would be replaced with these like very generalized dowels but i feel like what we see now the most i think i might have mentioned this on a previous episode too it's like the most popular dowels are the most like famous dowels the ones that are being used the most with the most value tend to be in quite a narrow field it'll be like a d5 dow making decisions about like the percentage coming back to the liquidity providers like very like numeric narrow decision space and there you have a very powerful very active dao would you say that's true from where you're sitting like do you feel like it's gone from more of like a

generalized dao space to narrow focused popular daos i i don't know if i would characterize it entirely that way although i would say that that there are i think more of those and and perhaps some of the largest dows out there are more of that nature than i think people were envisioning in the early days so like i got interested in dao's back in like 2013. it was either dan or stan larimer we're blogging about this early on around the time of the birth of the bit shares project and and they were actually conceptualizing even bit bitcoin itself as a kind of they called it a

decentralized autonomous corporation and the idea was that like bitcoin was kind of like a decentralized paypal it's a payment system and a monetary system that's that you could generalize to you know think of as like a corporation of sorts that is just decentralized the the the institutional infrastructure of the corporation is is decentralized so you have all of these people who are autonomously coordinating around this protocol to provide the service of payment processing and they were kind of trying to take that concept a bit to the next level with bit shares where you would actually have like shareholders in this corporation

that would be voting on proposals and things like that of how to actually like upgrade the corporation and provide better services to customers and and so on and so forth and then vitalik buterin founder of the ethereum project you know started blogging around the same time about like okay how can we take that concept and then even go even further to where you you generalize the concept of the blockchain itself so that you could build any kind of organization on on top of the blockchain and not just like a decentralized paypal and and so that's where the the concept of the decentralized autonomous organization i think really start started to

to really be kind of shaped within the the minds of of the early you know enthusiasts in the technology and and there was a lot of creative thinking i think about you know how this technology would be used i mean a lot of people you know were thinking on grand scales of like oh now we have infrastructure for like new global governance and you can solve huge you know world scale problems uh uh you know using this decentralized coordination technology and you know bringing it back around to your point um you know what we've actually seen is that that dows are perhaps most effective when they actually have like a very narrow goal and perhaps even when their activities

are primarily confined to only affecting things that are happening on chain and so you know like make or dao i think is is a kind of quintessential example of this and you know for all of its faults and you know new faults are exposed i think almost every year uh in that system it's it's a pretty well functioning system when you think of like you know its purpose is to create a stable coin and die has been relatively stable um through several cycles at this point and so yeah i mean i i think that you know on the one hand there there is still i think that vision for like more human-centric dows and i think that

those dowels actually do exist i think the for example the molok dao community that has sprung up around all these different flavors of molok dao you see them a lot of them are about supporting people and not so much supporting protocols um even if you know the people are working on protocols it's still it's still more about the people than it is about the the technology but then you also have these these other dows that are managing large treasuries and such that are primarily focused on on governing protocols and so it's interesting to see this diversity emerging from the you know this core primitive that that is like doubt

you know smart contracts samuel i want to sort of throw it over to you because you are actually a multi-sig key holder of uh dao that deals in like it has a very specific goal in mind i'm curious what you make of this concept the idea of the generalized dow versus the more specific dao from yeah where you're sitting and also maybe give us a little brief on what tornado cash governance even looks like what it's for sure well i think over the past few years dows have evolved a lot you know because like remember back in 2017 there was little talks of decentralized governance power the dao and i know molok was maybe initiated it around then so it was

kind of a very new topic to the scene and not many people were familiarized with it or fully understanding the applications of it and i i do believe we saw a huge because the only really conference i went to and i found i love four was eat berlin and when i was was there at the time everyone was obsessed with defy uh but there was this is d5 without governance at that time and so it was kind of a weird time and i was in a different headspace so then i was trying to create little let's say new forms of governance that didn't use a token weighted model more about reputation and like someone's commitment that's that was actually my submission to the hackathon and so i think we went through a bit of a renaissance point with daos in the sense that you know a whole new direction was

kind of orchestrated for them because when we looked at molec there was an entry requirement you know you need to have a specific amount of eath to contribute to the dao it is kind of still dowsers still pay to participate you know the analogy everyone made was that you know skin in the game you know that's the incentive to align with these cells and that still applies today with tokens but i suppose we've seen a more interesting initiation and issuance of governing power the past year even look at unit swap look at tornado itself these did retroactive distributions to past users which is has been a really interesting way of aligning

people to participate in governance but also try many different protocols and it is very true that these are very focused on specific goals and let's say in the case of index you know it's about adding new strategies for indexes and then also i didn't even familiarize you guys with index index is uh a protocol for possibly managed indexes on chain this is the project that you were working on before all of this before all the tornados yeah i was on i was on the founding team and so governance in this specific let's say body would be aligned towards adding new indexes uh developing new strategies liquidity mining you know it's all sorts of these incentives by the user or users and

that applies to token holders also um so with there it's more focused on efficiency and you know radicalization of the protocol to create new strategies it's a very let's say focus towards focus towards a financial kind of edge in the market um and you know there's things like index coupe which do things a lot different differently to indexed i would personally say you you just like when you talked about this tornado and uniswap post-use airdrop yeah i it's so funny because i actually i'm putting it together now where it's like what what it did and just for our listeners who might not be familiar like both tornado cache and uniswap were non-token projects for a long time running with users and then airdropped

tokens to those users who maybe used them to you know to different levels so if you had just sent one thing into tornado if you've done like one uh i don't know what you call it in tornado cut cash but like a a mix or deposit um you maybe would get some small token reward in this airdrop whereas had you been like very active within it or maybe contributing to the project you'd get more with uniswap it was like whether you're a liquidity provider or just somebody who used it to trade you would basically get a different amount and so here you actually saw tokens being allocated in differing levels to different use usages and then i i actually didn't put this together though

because if you're using the amount of tokens to represent your voting power you are also distributing voting power to your users whereas previously if you look at any sort of investment tokens from 2017 we can give that example like people would invest in it but it had nothing to do with the usage of it like the people using the project may be completely different from the investors and in these two projects that you just listed the users are the quote-unquote investors aka the stakeholders who could vote i find that actually very interesting and like i kind of want to dig into tornado cash with you sure in terms of like what what does tornado cash governance decide is it a broad thing about like what kind of contracts what kind of libraries

or is it extremely narrow like what is the focus of the governance i would still argue that tornado got cash governance is still forming um it had a bit of a let's say maybe a rough start i'd say in terms of issuance by air dropping path to past users as a lot of past users use burner accounts for tornado cash so no a lot a lot of that allocation was not claimed oh crap and so like we've had some votes so close to not reaching the quorum and you know it's so the actual issuance of tornado like the rate of which it has been issued has been very slow um but it's growing steadily i may say um at the moment it's been kind of we've only had seven proposals but it was

about most recently setting up the community multisig so that we can uh key contributors could come together and allocate resources uh a percent of the treasury's resources to align the community as you know we're pretty low on re reaching governance participations quite low with the state of the circulating supply and so i've recently been added to that multi-sig was it yesterday so we are now using snapchat for vote signaling since the creation of the community multisig as the community multisit can pass proposals or create proposals sorry and one thing uh has been more more focused on i suppose because

it was initially laid out that there was a nominee mining so that was giving an incentivization for users to use the protocol kind of like liquidity mining except you deposit and the longer you deposit the more ap you gain and you can swap that to torn anonymity mining so this is this idea of you're adding extra anonymity of like basically yeah like just to not have this is a whole issue with anything like tornado cash where if you only have one say one person adding contributing you can easily figure out who that is so i had tornado cash on the show but a long time ago before any of this so this is also a bit of an update there and you're using something called snapshot which i we did touch on on a

previous episode about safe snap with martin from gnosis because i know that like there we talked about how like the gnosis multi-sig and this is maybe speaking to what you said john about a glorified multisig in a way it's like the multi-sigs become the tools for voting i'd like to call it vote vote signaling you know it's kind of like to get the sediments and then if the sentiments are good they would be brought on chain then cool and it's also funny i didn't realize i i didn't think about the tornado cache with the burner ones that's so unfortunate actually this like kind of goes against this idea of like the fair distribution the idea that like all the people who've used it will be like properly incentivized in this case i guess that wasn't the case

well you gotta take into context when someone requires privacy and you know how they want no accountability to that origin address so it kind of makes sense that's only a speculation mind you yeah um who maybe these people have never claimed they're torn yet that will become uh invalid to claim in the next few months once we reached the year there's a year cap on it okay um but yeah so tornado would be more focused towards improving the protocol let's say integrating new features rewarding contributors and contributors could be anywhere from marketing to smart contract development to many other branches of what an organization would do to uphold itself index as i said it's more niche towards

its utility so it's the same with tornado as john reiterated that these dows are kind of niche to what they do and it's they're internal you know they're focused only on their own sustainability and their health but they're also not replacing like they're not replacing necessarily all parts of an organization either i i know that like the way i always understood a dow was this like and also the way that i understood like aragon was building up this tooling was like that it would be able to take care of all these different parts of what a company does but using smart contracts and stuff like that and now maybe it is that like we're seeing more experimentation or even just use in particular parts of that that make the most sense

for d5 like projects i think it's worth kind of digging in there a little bit that nowadays there's kind of a bifurcation of dao so i think using the phrase dao to actually classify both of these categories uh might even be a bit of a misnomer but basically on the one hand you have people who are trying to replicate traditional organizations in an on-chain setting kind of like using smart contracts to replace the llc or something like that and then you have dowels that look much more like say just protocols that happen to have some human

intervention on a regular basis likes formalized human intervention uh for like managing different parameters of the protocol both of these categories are are organizations in a sense but like one just looks a lot more like an organization as we would recognize it based on you know our experiences working for companies and other kinds of organizations then the protocols which which are much more i think anarchic in a way and and also just very focused on that that very narrow use case of okay you have this this protocol it has some parameters and there are these stakeholders that have some sort of

aligned interest together to to ensure that the protocol is well governed i think it's a good time i might want to come back if we have some time later to some of the other issues that like come up with general dowse and government instructor i know we've just sort of scratched the surface here in this intro to daos but i do want to dig into the dows and privacy topic that i've brought you both here for um and yeah if we have some time at the end we can revisit it now i know that in the zk sessions event john you did this really great rundown of the the places where you could imagine in like in a dow structure where privacy could live and it's not even the verticals

necessarily it's like the levels like how deep into the protocol itself privacy could be found do you want to maybe just share that with our listeners because i i thought that was really useful as a as a primer for this this intersection yeah sure what i was actually doing as i was going through that in the zk sessions thing was was actually just imagining the aragon gap and going like from app to app and thinking of you know basically each each each of those sections of an aragon organization and what could be private there but so i think it starts with the actual stakeholders in terms of what could be private in a dow and i'll say maybe

this disclaimer up front which i mentioned in the zk sessions uh show which is these are things that could be private not not necessarily things that either should be private or or things that that maybe are technically uh to be private but if you were trying to you just say build a private dow from from scratch and you're just thinking of all the things that could be private you would think about like who are the token holders so basically what what are the addresses that have the ability to interact with with this dow what is the voting weight of each of the token holders in the in the when there

are votes how does each token holder vote and what is the you know the weight of each of their votes and then you could start thinking of things on the on the dow level where you think about what what are the votes actually about what assets are the dow holding you know it's it's possible to individually conceal what assets you're holding on chain today using things like tornado or like aztec but everything you know the the assets that dallas hold are are still completely public in all dows that i'm aware of today what addresses are the dow sending

payments to oh yeah once again as an individual uh user of of of the blockchain i can send a private payment to somebody but dao's have have to send all of their payments in the clear today and then finally uh something that people might not think about but what are the rules of the dao could could the rules of the dao itself actually be private so that only the members of the dao know what the rules are and how they interact with the dao there's an interesting new technology that's being deployed to bitcoin right now called taproot which enables a technique called merklized abstract syntax trees where you're actually able to conceal

the different paths of a script that that your coins are encumbered by and so as a user of of this script when you go to spend your money you can choose to only reveal part of the the script and and then keep the rest of the script private and so you can imagine something with dowse that would be that like this way where you know maybe there's like some emergency protocol that stays encrypted or hidden off chain until the moment that it's needed so that it's harder for an attacker or a hacker or something

to like figure out how to hack the dow because they can't they can't see the script it's not stored directly on chain it's just an idea right but like having the actual rules of the dow itself uh private um i think is something interesting to think about but yeah those are i think some of the various levels and maybe there are things that i missed i love it i actually want to almost just recap it because as you were going through it this is this is sort of what i was hoping we could we could clarify too which is privacy for the stakeholder and its privacy for the functioning of the dao in a way right that seems to be like these two or like the like the dow itself and so on the stakeholder side it would be like

privacy of who the stakeholder is their voting weight and what they voted and then privacy for the org would be what are the votes actually happening what assets are held what addresses this distribution may go to and what are the actual underlying rules exactly yeah cool one thing i just realized we we should probably do is discuss why we would even want privacy and then other tools that are are there to actually create some of this privacy that we just kind of outlined all at all these different levels so let's start with like should we have privacy why do we even want it is it super necessary i wonder samuel do you have any thoughts on this do you think we need privacy

you do work on a few privacy related projects so i feel like you're right yes uh i actually came up with some like points of sensitivity of a dao that could be privatized for such reasons as collusion from voting so when someone votes in a dao their action is public and also the outcome of that action so whether they voted for a proposal or rejected that proposal is completely public everyone can see that therefore bribery is almost incentivized as you can prove actions so private voting would be very suitable to inhibit collusion or let's say decrease the chances of it occurring as no one can prove the execution of an action but they can prove the execution of an action but not

the underlying let's say decision taken within that action and by collusion in this case you mean the idea of a number do you sort of mean like entities forcing other people to vote in a certain way or do you mean like cabals kind of getting together or like what does that mean exactly collusion could either be internal or external so internal collusion would be participants would collude together to try incentivize a certain outcome and that could be done through bribery or blackmail and you know it's very open-ended an external could be applied similarly but it could happen in either way and so the aim there would just be to completely anonymize

the action of a vote and using zero knowledge that is possible for example in macy we should come back to that in a bit but liability is also a very sensitive point within a dab because some dows specialize in certain functions for example dorg if you've ever heard it or d org is for smart contract development and i only thought about this maybe a few nights ago because my friend used to actually work for them if one of those delegates or participants is applied to develop a smart contract and that smart contract is then used in production and creates complications is the developer who authored that liable

and not the dow itself you know there will be a trace there and so i think that if the dao could privatize the details of executions uh and keep that actor anonymous over its consensus reached on delegating that actor and it also payment as john previously said you know these would be two links to the creator in that or let's say the participant in the dao and that was only just one place where i thought it could be quite controversial because you know smart contracts are quite expensive things to develop but also they maintain certain structures that may hold a lot of assets and then thirdly which we've already kind of touched on is assets under management and i think that in certain dows it only applies i don't

think it's applicable in every single form out there today but let's say an investment dow may have some complications in building positions or liquidating positions in a selection of assets as they could influence markets through those actions and then also i know it was touched lightly in the zk sessions uh bidding or selling on non-fudgible assets could be and also another point that would be interesting but then also without assets under management they could be targeted to attack if they hold large positions in multiple assets i feel like you just you just outlined another level in the sort of framing that john had first articulated which is this

john you you mentioned the like privacy of the rules the underlying rules and samuel what you're suggesting is like privacy of the creator of those rules almost who contributed to that who deployed it who i do feel like that is almost like sitting underneath that it's it's who built the dao it's basically privacy of the creator of the dao well not not really that it's more about like say me anna sam and john create a dao we delegate the task of creating a smart contract to john john creates a smart contract which we're affiliating to a different party that mayor contract has an exploit you know is john accountable or is the dow accountable that's what i was trying to get into and

i think the org is the perfect kind of example there i'm not too sure how they handle this but it could be something that it could be susceptible to i guess there you're talking also about more like anonymizing who performed something and it's not necessarily saying that like everyone in the org is unknown but the entire this is sort of the decentralized idea like everybody is somehow responsible exactly it's the body it's represented by the body and not the actor and i think that's important so you've mentioned now a few reasons why privacy would be useful i think the example of collusion is very very clear um i think the idea of the responsibility within an org personally i think that would almost need to be thought through

more like i wonder if that is something that that people are super ready for like to to take that responsibility as an entire organization for an individual's bug potentially i don't think organizations are prepared for collusion if you ask me uh even multi-sigs a lot of multi-six don't have time locks i know lots of people can test this and funny enough we've actually been looking for one for tornado cache community multisig because we there was some scrutiny over the current structure and you know i try to do some research over some formal projects trying to create a time lock that is dependent on token holders and i saw recently with tally if you've ever heard of them their governance platform

they're creating this uh gnosis time lock structure called safeguard so it's really interesting and so the tornado cache community multi-state colludes and tries to take some assets there's obviously a time lock on the execution token holders can intervene and stop the action from happening okay so this is a mitigation but this this doesn't have that much to do with privacy though it doesn't but it helps it helps like prevent collusion so that's why it was kind of relevant but i do say that yeah daos are not really prepared for collusion that's what i'm trying to tie into there's multiple multi-sigs that probably could participate in collusion i see are there other reasons why privacy at maybe some of these levels would be very

important like why do we even care about this topic and i mean i have i have an example here which is like if you're a business if you are an actual functioning business and you want to start to incorporate a dow into your work that maybe doesn't deal just with like a public facing negotiating a percentage of a fee that's one thing but if you're talking about like revealing your entire treasury that maybe isn't initially public but you want to use a dow you want to have the immutability of a dow but you don't necessarily want to reveal to the entire world everything that you have potentially if you are paying a supplier through this dow like making a decision for assets being paid out to supplier and maybe you've had negotiations with

other suppliers and it would be really weird for everyone to see what you paid i mean just this is sort of the regular kind of doing business type stuff like you don't necessarily want all features of the business to be public but yeah john do you have any uh like do you have any kind of like other ideas for why we should want privacy for any of these things yeah i mean i think that's that's a great example right there is that not every organization is public by default you know either is or should be and in fact i think probably most organizations in the world are not public uh organizations and so yeah for various reasons whether that's the privacy of their own finances or the privacy of the people that they are

making payments to doing business with privacy might be valuable for various reasons that's at the the organizational level another thing is you know i i think i mentioned earlier like if you're able to actually hide the rules of the the dow itself this could be useful as a security measure because if you can't see the code then you can't exploit it so that might be one aspect and i mean at the level of people participating in the organization i think it's useful just for various individual privacy reasons like you know

you might not want everybody that you make a payment to to also know like all of the organizations that you've ever interacted with you know a lot of this stuff in certain jurisdictions might have you know questionable legal standing and so what might be permissible today might not be permissible tomorrow so you don't want this history attached to your addresses that that might be called into question at a later date um because certain you know certain jurisdictions aren't shy about you know retroactively punishing people for things that weren't illegal in the past and so yeah just for legal or regulatory reasons you might

want more discretion over the the information that's linked to to your addresses those are a few reasons that that come to mind for me on top of the ones that you all have already mentioned in having this conversation like you said sort of your preface to all of this was here's why we want privacy here's what you could where you could add privacy but it's not necessarily that we should or can and i think that this conversation is definitely just like an exploration of where in the stack this is possible not to say that like it would actually be in a regulatory framework that it actually would be like there are certain things like for example if you were to create an

entirely private in-transparent dow on every level and then it was used for horrible horrible things i think that would be very very bad for all purposes for like and i think this is something that anyone in the privacy community or people arguing for privacy should hold fear that like of course we want smart privacy but we don't want crime privacy ever the thing is is that like the same tools that criminals use for privacy are going to be the same tools that the normal person will be using to protect their own privacy this goes back to the age-old you know crypto wars kind of back when crypto meant cryptography you know discussion

over consumer grade strong encryption pgp in the early 90s more recently the discussion has come up because of apple encryption or signal like these tools don't have back doors and this is this is a good thing for the normal law abiding end users who just want privacy because if they had a back door the back door would almost certainly be exploited by criminals by authoritarian governments by maybe not even necessarily authoritarian governments but just bad actors within an otherwise well-functioning government

there have been plenty of examples of that within first world democratic regimes and so i think it's important that whatever level of privacy that we give to people that it be the strongest level of privacy possible because it that is going to be what what protects them from these other bad actors who want to get access to that information and exploit it for for personal gain and we have to i think accept that bad actors are also going to use that technology themselves to conceal their activities and that anybody who's who's interested

in countering those activities whether it's law enforcement private investigators whoever has an interest in fighting bad actors they're going to have to find other ways of of tracking these people down they cannot rely on back doors or golden keys or any sort of flaws that would allow them to penetrate the the encryption in in these technologies because if we had that then then everybody else who's using those technologies would be vulnerable yeah but going back to the dow part in this case we're not talking about an individual per se we're talking about an organization would you say from the list of places that there

could be privacy are there some that you would say are most important like would it not make sense to maybe have like certain levels of privacy that are so fundamental that they must be built at the origin of this protocol in the thinking and construction of an organization whereas there are some other parts where transparency could be very beneficial and so we do want to leave some public yeah i would say it's up to the organization to decide that for themselves but i would you know if one was asking me for advice i would say you probably definitely want to do what you can to prevent collusion because this could just undermine the effective governance of your system uh your organization

you know if people are you know able to collude or be coerced into colluding i think having an environment where everybody's votes are are public publicly linkable to their known addresses is a recipe for for toxicity because you know people can look at the votes and you know say hey why didn't you vote you know the way that i would prefer you to vote um and and you know apply pressure to people this way and especially in organizations that are hierarchical to do to a degree it could exacerbate power imbalances that that that already exist and so you know i would i would definitely say you know at the very least try to figure

out you know voter privacy and anti-collusion mechanisms so let's dig into one of these samuel is working on macy which we had covered on the show i'm kind of curious samuel like listening through those those different levels and like where privacy could be used like help us understand macy let's dig into that and how that could be a tool in this theoretical private dow that we're talking about and maybe what level because i don't think it doesn't protect against everything it's just it's like one it helps with one piece one piece correct so it's basically around voting that's what's more specified towards anonymitizing privatizing sorry uh and so macy stands for the minimal

anti-collusion infrastructure it was proposed by vitalik back in 2019 looking at the eat research post and so it wants to inhibit collusion resistance so it doesn't want anyone but the coordinator to be certain of the validity of votes and basically so the way that macy is structured it has a coordinator who let's say coordinates the whole structure and unfortunately right now if the coordinator needs to be honest for macy to work effectively if the coordinator is dishonest then the whole system is not going to work as it intended but it exhibits collusion resistance because no one but the coordinator can be certain of the validity of reducing the effectiveness of bribery

but also no voter may prove their vote to external parties parodies except the coordinator uh it's unsensible it provides privacy uh unforgeability the correct execution of votes so not even the coordinator can mess with the execution of votes and so i'll kind of go into a little top level description of how it works um it requires a trusted setup uh as much many zero knowledge kind of or zk snark systems do and this would create keys for the coordinator to operate within the system and there's also two other contracts so we have the gatekeeper contract which basically

is using the registration of users to the system so any deployment of macy could configure it so that only individuals holding a certain erc721 or erc20 or is a part of a dao could sign up to macy and so there's a sign up period in which people can sign up to vote in that deployment of macy that is a limited time frame so if you can obey the conditions set out in that gatekeeper contract you can register within the sign up period and then also there's a voice credit proxy contract which you can define how voting rates are defined with among participants and as you see with crl fund that's using quadratic voting it could be a token weighted it

could be one individual one vote model it's completely up to anyone's preference are the addresses actually unknown in this like or are those public like the the individual voters like is that a transparent thing where you can say these voters are in it but we don't know how they vote or the weight of their vote or is it we don't even know who they are so the voters who participate with the system are known because they have broken they have to broadcast transactions too macy it's the outcome of their actions that is not known and that's how it inhibits collusion because they cannot prove that they voted in a certain way but i can give you a little example of how it works so imagine we have alice and bob

and alice signs up to macy during the sign up period let's say a poll a comes up and bob approaches her and says i want you to vote vote against paul a and i'll for some sort of agreement either compensation in the form of either carrot or stick yeah exactly and with the way that macy works is that individuals bro publish messages which are like encrypted commands and inside a command you can either change your key pair so you can change your voting address and you can also vote so you could do this in the same transaction and so this is how you would prevent bribery is that in the same transaction you vote for what

that briber would want or maybe not because they will never know but in the same transaction you change your voting address and therefore if you want to void that initial vote you then vote from the new address which it invalidates the other action and therefore it becomes it's not viable anymore and then the bribery will never know if it's actually been confirmed or it hasn't do you prove that you vote like if there's this person putting pressure on you can you actually show oh i did vote the way you wanted me to at least it looks like it they don't know that you could still send a transaction hash and say oh yeah i've done what you've asked but they can never know if you actually have because you could just broadcast a transaction from that new address that you just set

and just avoid that vote and then the coordinator comes afterwards and tallies the votes and as i said previously the coordinator could not mess with natalya votes uh they could potentially not tally the votes which would probably halt the system and we can't go forward to figure out the outcome of the vote but like that's the only way they could stop the system if they're like okay i'm not going to touch this that's how they could intervene at the moment but they cannot affect the execution of the votes the tallying like the actual results to what they tally to and i suppose in a distant future we're hoping to and hopefully my participation in macy will be decentralizing the coordinator and completely making that a a non-human position i suppose

not human operator position and that's how kind of macy inhibits collusion or at least reduces it to bring it back to that list of levels so basically this covers two out of the three places in which privacy could exist for the shareholders or stakeholders or voters currently the address is public still but the voting rate and each and the way the vote went is private correct when you're talking about the coordinator just for the listeners the coordinator is actually more in the mechanism this isn't in a dao setup this is in the snark itself there is a coordinator that you're saying is currently a centralized entity that like if that coordinator was in in some way corrupted

then this entire kind of awesome system doesn't work doesn't work as intended is probably the right description because you know people can still vote the specific ways the coordinator cannot mess with the way that people vote but they he could decide not to process those votes and therefore stop the system i see okay the coordinator could break it but they wouldn't necessarily reveal the underlying data it's unforgivable so they cannot manipulate it or the only thing they could do is saying you know put the hands up and say i'm not doing any more further actions to stop this process um so at the moment that's that is the sensitive point of missy and it's definitely somewhere i would like to work on in the future is removing that

and making a completely permissionless process where we don't need to depend on a honest human to execute the system would you call macy a product or would you call it a architecture i know that it it is developed and like it is implemented and people can use it for like clr fun stuff but like is this something that could be replicated is this something that you would almost like love to see re-implemented is it still in the design space yeah i'm kind of curious what you call macy like what is it i was having this discussion with wayjay when we kind of on my our first call and you know i i came out to call it kind of like a standard but that wasn't obviously effective there but it's definitely a piece of

architecture a component that you could integrate to your architecture i wouldn't say it's a product per se it's very you know and it's very configurable to your own preference and so i think that's the whole the whole incentivization behind the ethereum foundation supporting the development of this is to have it integrated in many different forms of governance after it's been produced and it can be integrated at its current state now but it has a lot of let's say constraints and then also it depends on where you integrate it because if you integrated this on mainnet you would be paying a lot of money to even operate this thing and so l2 is probably the only solution right now within that sort of

cheap bracket of maintaining it we do know that crl fund i'm not too sure the architecture behind how they have integrated macy i presume it's l2 i know git coin actually had some relevance with it too but i don't think they implemented macy yet they do quadratic funding but they don't do i asked way jake last time unless it's changed but i i have a feeling i mean they're now working with um tk sync which is an l2 but i as far as i know like there's no zk tech other than zk sync which is yeah just to go on you know onto the l2 i don't think there's any zk tech under the hood i know they were looking at it anyways yeah yeah if there's any git coiners out there who have who say different like get in touch and i'd love to hear about

how you're looking to integrate this or if you have but yeah as far as i know it isn't what i like about this is you know through this interview through this conversation we've covered like what dows are why privacy is interesting like the levels and now we're talking about a tool that sort of aims to solve one part of that i have a question to both of you do you know of any tool that could solve the other part the privacy of the dao itself the privacy of the assets privacy of which addresses receive that's a good question i mean i think that there are two potential paths here one would be creating a dow or something approximating a dow

in zero knowledge using a like a zero knowledge programming language aztec for example is working on this programming language called noir which will enable some degree of programmability within their fully shielded zkz rollup i don't know how expressive the programmability is or or will be with noir so i'm not sure if you could actually you know code up a full dow i think that would be an interesting question to to ask them but given that they will have a programming

language could be possible if not right away then maybe in the future and then another possible way would be using some you know trusted execution environment magic like intel sgx magic uh where you have you know the smart contracts for your dow living and executing in it you know in a completely private environment within these you know trusted execution environments which you know some projects have started to experiment with for like quote unquote secret contracts of course you know sgx has like a new

vulnerability that comes out every quarter it seems like i'm glad you're saying that i was about to our listeners definitely were thinking it okay yeah you know they're pretty notoriously uh you know vulnerable to side channel attacks and and various other exploits but accepting that as as the bar uh that is a thing but yeah other than that i mean i i mentioned you know taproot earlier i i think i think techniques like that where basically you just put a hash of your contract on chain and then you're able to selectively reveal parts of the contract when you're on the happy path

and then maybe selectively reveal a different part of the contract if you're on the unhappy path uh you know it could be a way to preserve some level level of privacy at the level of the organization those are the ideas that come to mind one word that comes into my mind as like especially with the what assets are here is this concept of this selective disclosure i talked about this i think a few years ago i know ben fish is the first person who ever told me about it ben fish is a cryptographer and founder of a few privacy projects but what he had talked about when i first heard it was this idea of like being able to prove that you have something without proving

how much you have or like basically being able to the selective disclosure you'd prove like you fall into a threshold so you do have between this many like x and y of a certain token you have somewhere in a range but without revealing exactly how much and this is sometimes thought of as like interesting for funds or any sort of like if you had to prove something to tax authorities you could actually do the selective disclosure and here i wonder if there couldn't be some interesting tools i mean i just don't know that there are any tools that do this yet it's more like there's currently protocols being like developed or thought about that definitely have selective disclosure in mind but that made me think of it this idea

of like which assets do you hold do you actually hold enough to do what you say you're going to do yeah do you have the types of tokens you say you have without necessarily revealing which ones they are i can't think of anything that comes to mind that is trying trying to develop something but you said selective to closure disclosure and keep their assets privatized from the public i don't know anything at this moment that is working towards that or has let's say a tangible lead on it because it is kind of a topic that needs to be it's a topic i i wouldn't even myself know how to start tackling although i would say if if there was to be a tool i feel like it would come out of the

applied zkp group probably yeah because you guys are doing amazing experiments in there definitely and funny talking about the applied zkp branch uh cephamore if you've ever heard of it or some or it was another semaphore yeah correct that's another place where you can privatize voting as well uh wage a worked on it previously so it is uh worthy to mention that also and it also has some other utilities too as in mixers and another one was private logins as well it was an authentication which is another application of it but for assets under management i definitely it's a very i can't confidently say that i see anything on the horizon that will solve that problem uh

and obviously because you know we have zk roll ups and l2s and that's not going to solve that it's really only for scalability and actions within that l2 and not bridging over which would sacrifice privacy i do think liability is definitely something about let's say you could use zero knowledge in the fact that we are delegating a task to someone and but not revealing who that person is even if they're in the organization or not i think that could definitely be solved with zero knowledge i don't know anyone kind of working on that it seems in theory though it could be applied i mean this is the point of this episode is also to you know share with folks the design space and obviously if anyone's

interested in jumping in on something like this there's a lot of work to be done to think through some of these things definitely i do hope that people do kind of walk away from this understanding why having privacy within some of these infrastructure especially just picture like if the if dow like structures start to take over really important parts of our world right now they still live in the land of experiments and doubt you know dows for defy defy governance and financial tools but like what if they start to really be these entities these powerful entities you know deciding things in our world and things that we participate in all the time like i think then this idea of having privacy in it

becomes so much more important and and i think right now is the time that the experiments have to happen and like the things have to be tested fleshed out developed thought up architected and then some of them might fail some of them might not make sense but i think that like if these things do grow in power which i actually believe they will i think now is the right time to start thinking about it so one thing like sadly we're at time and we didn't get a chance to go into the other issues facing existing dows that's such a bummer but is there any sort of thought or last thought that you want to share that relates to that like something that maybe we could keep our eye on to further that design space around

dallas i would have loved to brought in if we got into that other topic was uh using the metric of the bands off power index in governance systems there's actually one done from for molecular that i think jake broomham of coin uh the coin shares or coin funds jake berkman yeah yeah uh he created a little website showing the bands off power index in molok dao and basically the bands off powered index shows the ability of a single actor to skip a vote in any direction and it's like 50 percent for the top two holders or let's say stakers stakeholders in moloch dough i suppose if that voting rate was privatized we wouldn't even know the skew

of voting distribution either so is that bad yeah that's bad so yeah that that is yeah that is bad because the dao could just be a theater you know uh as some doubts are today they they're literally decentralized decentralization theaters not many people want to admit it but i mean for a molock i think it's probably not it wouldn't be terrible if it was private because if a vote went the way you know if somebody really disagreed with a vote then they could just exit right so and they had that rage quit function as well in moloch vt didn't they yeah that's what i'm referring to like you know even if one person controlled the dao if they tried to do anything like really evil people could just rage quit and take their eat out yeah yeah interesting

huh i do want to say a big thank you to both of you for coming on the show and helping to sort of scratch the surface and dig into this problem space with me yeah thank you so much for the invite anna it was a pleasure to chat with you and and you as well sam thanks for having me on it was great to go over some of the sensitive points of taos and where privacy could be integrated based on certain contexts as we discussed and uh i do think privacy would become a more let's say discussed topic going further into the future as governance evolves totally cool so thanks again and i want to say thank you to the podcast producer andre the podcast editor henrik

and to our listeners thanks for listening [Music] you