Privacy protocol Manta Network is developing the first private DeFi decentralized exchange (DEX) using Polkadot parachains and zk-SNARKs to ensure transaction privacy.
The decentralized finance ecosystem, also known as DeFi, is gaining great popularity and importance for the crypto community, which is why the layer 1 privacy protocol, Blanket Network, which uses the protocol Substrate, is combining the potential of zero-knowledge proofs (ZK-snarks) and the interoperability benefits of the parachains that the network offers Polkadot, to prepare the launch of a new product for DeFi, which will allow users to enjoy a high level of privacy in their transactions and business operations.
The launch of this private DEX is made possible by a $1,1 million funding round, which was led by Polychain Capital and several other crypto investment companies.
The vision of this protocol is to build a “DeFi Stack” or a stack in DeFi that guarantees interoperability with various networks block chains, while allowing users to enjoy a high level of privacy while transacting and trading within these networks. Manta Network is launching a new decentralized exchange (DEX) focused on privacy, as the first use case of the DeFi stack. With this, the protocol will allow privacy to be a feature added to the core architecture of protocols, rather than being located on top of blockchains.
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Fully private exchanges in DeFi
Manta Network's new private DEX, built as a parachain on Polkadot, seeks to protect the privacy of DeFi operations to, among many things, eliminate the possibility of bots manipulating operations to extract value from transactions before they are executed.
Known as MEV for its acronym in English, “miner extractable value” is a more common practice than you might think in decentralized protocols based on Ethereum. According to several experts, some Ethereum miners may be programmed to identify large money transactions, in automated market protocols such as Uniswap, Sushi Swap, and others, to copy said transaction and broadcast it with a higher commission fee. This way, the bot will be able to obtain value from the transaction, and the user will be able to confirm a transaction before the original sender of the transaction.
Although DeFi users are not required to fill out data or identity records, the transactions that occur within these protocols, and the flow of money that moves through these operations, can be easily tracked by means of different blockchain analysis software, revealing and filtering the addresses of the users who participate in these transactions. To avoid these risks, Manta combines Substrate, zk-SNARKs, and Polkadot to guarantee completely private token exchanges.
DeFi needs more privacy
The protocol developers conducted a survey in the crypto community to understand the need for privacy that exists within the growing ecosystem of decentralized finance. results This survey shows that more and more users are becoming aware of the need for financial and digital privacy.
DeFi is a rapidly growing space that, compared to traditional finance, provides greater value and utility to the community at large. But despite its enormous potential, the decentralized finance industry still has several privacy-related issues that can negatively impact users of these spaces. These issues are leading several analysts to consider DeFi as pseudo-anonymous systems, similar to what happens with blockchain. Bitcoin, which is not a completely private and anonymous network.
Shumo Chu, CEO and co-founder of Manta Network, noted that in relation to privacy, the big difference that exists between DeFi and CeFi is that in the blockchain “Anyone who knows your wallet address can review your transactions, track your transactions, and see all your assets”; while in CeFi, that is, in centralized finance, information is handled with a higher degree of privacy.
In the survey, nearly 80% of respondents were skeptical about the level of transaction privacy in DeFi, and expressed concern that their transaction addresses may somehow be linked to their identities. Therefore, Manta Network is integrating solutions based on zk-SNARKs to provide a complete level of anonymity, guaranteed end-to-end, that ensures complete transaction privacy without affecting performance and high interoperability between chains.
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