zkStaking: Enhancing Security and Privacy in Staking with Zero-Knowledge Proofs

Transcript

Okay. So, good afternoon everyone. Uh, my name is Jin from Zero Base. On a schedule, you will see me, right? It's our founder, but he didn't make it. The visa got postponed. So, uh, nice to meet you guys. And, uh, on the agenda, you will see like how do we build privacy and also security into staking protocols. Can everybody hear me clearly? Okay, great. So, okay. So, this is Zerobase, the cryptographic trust layer for global finance. And uh today my TLDDR will be build ZK apps, share secrets. So, uh yeah, I know Sil and

also highly for quite a long time and u I I think we have enough people to build ZK infra. It was last year in Brussels uh ECC7 and I I might say maybe the tech is not around there but today for TLDDR I think we are more facing with uh ZK consumer apps retail facing and uh what kind of uh product mind we should have. So for staking protocols uh the elephants in the room are where does the yield come from and uh who's losing money also with what risks users are facing.

Okay. So about ZK I think ZK is one of the most powerful technologies in crypto yet most users have never used it. Not directly not knowingly. I mean like the previous questions was have you built uh ZK on yourself or I think the question is not that hard for developers and builders these days because we have uh ZKVMs you can just write all the codes in Rust and put it into the VM and it will auto compile it for you. But even though like we take a different uh approach uh zerobase build our uh gener circuits with domain sophistic languages razan building another zk VM but still

like nobody is actually knowing that why I'm using zk because from day one we never really design zk applications we design zk systems zk vms zk proves zk circuits but we never ask what does a zero knowledge feel like to the user? What a ZK UX is going to be look like and also uh ZK got trapped in the back end. It became something abstract, invisible, untouchable. Uh I would say unprovable because nobody is actually using it. So I mean not everything is actually tech and mathematics even though I keep it in my bio. I'm into cryptographic not cryptocurrency but

still like on the social layer on the consens layer I think on average a blockchain user didn't really know what kind of zk interactions they are doing. So uh I think that is these are the people that was meant to empower and uh let's check the reality check. Okay, so Infra isn't the problem. I I mean I updated my keynotes as well cuz uh ZK is uh developing so fast right now. You have like the end game. I I mean self just talk about the end game, right? And uh I mean I I think people didn't really get what the endgame really means. So

why real time proving and also latency really matters is because uh on blockchain you don't really have a timer yet. I mean there is a real reality time and on ethereum actually people are using block heights for it and for average block heights it's on average 12 seconds. So if you can make the ZK proof generated under 12 seconds then that actually means real time proving and uh yeah I put the graphs here because I think those teams are doing great jobs.

Uh on average the proving latency is about like 9 seconds. You can see that like if we took a year before it actually takes you like two two minutes to do it. So we have hundreds of gigab brains, millions of dollars focusing on making proofs faster, cheaper and easier. The endgame aka real time proving is just around the corner but still leaving the question how's the UX gonna be like and I not like uh working as a zerobase more on like a crypto enthusiast how do I interact with a ZK protocol

so I think this is uh an unpopular take is that privacy actually means transparency So even till now like all the infra is there or is being developing uh in year 2025 uh privacy is still treated as a secondary demand. The industry spends millions of dollars building an XYZ product and then adds privacy to the XYZ product as an afterthought. Like privacy is kind of like an add-on. Let's say okay so now I have uh practile I have 7702 and how do I put privacy on top of it how do I change the owner address

without really revealing who is interacting with them and I think the meta here or like like mentioned hibachi and there are a lot of like zkobs uh that is like zki the whole order book uh to put it on chain but still those are secondary demand We already have a onchain perfex that is fully transparent and then we would we would like to like explore on how we turn a fully transparent thing into a more private more showed states. So we have built dexes voting systems identity systems provers and verifier to make sure that Alice is telling the truth to

Bob without Bob knowing the whole thing. But only later we ask what does Alice want to say? Right. So the ZK actually introduces the uh prover and also verifier to make sure that the whole message uh actually goes through. It's kind of like a magical messenger for you uh sorry for Alice to really talk to Bob. But real privacy is not a feature. It's a structural precondition for trust. And ZK gave us a way to bake it into the system from the start. So without ZK, Alice never want to talk to Bob. ZK isn't just about hiding. It's about sharing without leaking. And that

sharing when verifiable creates efficiency, coordination, and also trustless UX orication is transparency. So what I really mean is if Alice just want to keep a secret and never share it to Bob possibly CK is not the tag you want to use right so let's say uh Alice got a AI model or something and never going to share it with a third party then she can just local host it and nobody actually gets access to it then you never need ZK and um if you are only interacting with a server let's say okay I want a server to send me an email on what actually is

happening in the crypto industry overnight then you can just set up a TE rather than using a ZK because if you trust a TE I mean this is a TE and I trust it it shows my body and I use it so with ZK what underneath is is that a secret that needs to be shared okay so yeah this is our product called zerobased staking or zk staking and this is the overall uh architecture about it. So the user actually stakes stable coins USDC's and USDTs to our staking protocol and then we use a custody to put it into the centralized exchanges to do arbiters uh founding rates and also cross

exchange arbiters. We are live on uh Binance by bit and also hyperlquid. But this is like how we generates the yields but also uh why do we need that fund and why user to stake that into the network? It is because the funds actually bootstrap our security and the proven network generating zk proofs in real time to make sure that all the yields that generated are verifiable and auditable. So uh the ZK staking protocol actually maintains key features and uh we have third party verifiers to check in the ZK risk and neutral proofs. So yeah ZK staking uses uh ZK proofs to validate the arbitrage risk ensuring the

optimal C5 staking strategies. If risk and neutability is breached users get real-time alerts I will get to that later. So now let's say in this case Alice is actually running the strategies. So what act what actually Alice wanted to share is the outcome of knowing that secret the secret sauce the magical weapon that makes you money and uh what we are actually asking under under the hood is uh the maximum leverage rate is it smaller than 300% in total we use zk range proofs and uh are you trading the

white list trading pairs and also like what is the biggest drawback or say draw down is it less than 5%. So these are the questions we are asking Alice to share with us. Uh but you want to make sure that you are actually asking the real right questions rather than sorry which pair are you trading? I want to know exactly what you do. This is the magic of ZK proofs. So here comes Bob and uh here comes the three elephants in the room once again.

Where does the yield come from? Who's losing money and what risks uh users are facing? So the yield actually comes from inefficiencies. I would say we focus so much on infra and we created so many markets for people to actually trade. But the more markets we created the more fragmentation we have which means the more efficiency the market have. But these strategies are actually being I would say farmed or say being adopted by institutional uh hedge funds for a long time like even before crypto but it's still it's not open doors to a retail user in this case it's actually Alice

doesn't want to share the secret with Bob so uh with ZK we actually make sure that Alex is telling the truth and Bob didn't know and even us as the third party pro proof generator we don't know what Alice is actually doing so we use ZK to open access letting any user to participate the verifiable safety and second there is no direct counterparty because it isn't a trade it's not subjective it is actually depends on the in inefficiency and also the fragmentation of liquidity on the market so yeah I would say there definitely somebody can make better choices to

making uh to holding a position in other markets in other exchanges I would say with funding rates and uh uh other circumstances but overall people do their choices and the inefficiency the glitch between those centralized exchanges is being hatched by our protocol and also being verifiable and also uh auditable using CK proofs. Moreover, we're are building towards a future that without hidden risks. Of course, like I said, not everything is mass or tac. So even though the proof are actually secured and also u verifiable through CK proofs, but on the

other hand, you always have singularity uh sorry single point failures like say what if uh the centralized exchanges went bad, right? So, so we chose uh three centralized exchanges for a reason like they come back they they are battle tested and we chose them. I do have an crazy idea is that given we have so many onchain or say decentralized per decks uh right now you might I might list have a list of them. So if we are doing cross exchange arbitragees on onchain per decks is it really makes it defy?

So uh I think through proofs and also without promises we are creating a new uh defi sector which is bridging through or say uh alleviating the fragmentation through all these onchain permissionless uh per stacks. So moving on next is like how Bob really know what actually Alice already told them. So here's uh our our proof scanner and uh this is literally the UX. I think uh I really love one of the stuff that ENS guys have been uh pushing for for a long time is that you cannot just make languages uh through

like I mean programming languages. You want to make sure that the information you are given away is actually human digestible. By digestible I mean efficiency. People don't really want to uh go through our circuits, go through our proofs. Is everything correct? And um not all the people are capable of this. So by digestible uh information we have this very minimal I would say uh proof scanner that tells you the hash and also you can have the verifier uh after that and if you click on you will have a uh a UX to tell you uh if the verification go through

and we already generated 4 million proofs in uh 12 monthes and also like accounted for a a lot of like third party verifier uh proofs I would say and uh generate the revenue from uh stable coin arbiting and from our ZK products. So yeah this is about to go go alive in next month and this is a sneak peek of it. So uh what if there is a messenger between because you always have validators node uh nodes and uh people are use we are using building another like a proxy or a relayer to make sure that even though kind of like a zk RPC so nobody really knows how where the zk

proofs are sended to the uh verifier through uh zerobased prover network. So the last thing I want to mention about is how we design ZK consumer apps. Uh this is a Swiss cheese model for ZK use cases I think and that actually comes from a normie like a non-crypto user. So first I need a wallet and then after I have a wallet I need some money. So maybe I need to do a KYC or I just on RAM from a centralized exchange. Okay.

So now I have my wallet and also my funds. I want to put it into DeFi to play around with it. So there might there might be like dark pools, ZK CEX, ZKDEX and also ZK staking protocol on top of it. There will be like cosabilities and modular stuff running on. And enough about money. I want to do social. I want to do gamefy. I like some people in the room might also being from uh fully onchain games and also uh verifiable games sector. we are in the trenches. So these are the stuff that how ZK can empower the UI and the UX uh the user journey. And last but not least ZK AI of course because I have my own

intelligence, I have my model and uh I still need to share it with somebody else. So I think that's it and uh uh open to questions. Break break.