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Hello everyone, I'm Mahed Roy and today I'm catching up with Anish Muhammad who is the Co founder and CTO and maybe even the lead researcher of Panther Protocol. Panther Protocol is one of the one of the main projects that is operating in the prefi space, which is extending, you know, the notions of privacy that we have in the blockchain area, right? You have a lot of projects in cryptocurrency where the idea is that a user should be able to
transact on a blockchain system. They have full privacy, as in they know only they should be able to know what they did, which makes regulatory compliance hard. And Panther Protocol is taking the approach that yes, full privacy is valuable, but also there are many use cases where regulatory compliance has to be factored in the privacy equation
right from the start. And they're building a project where various kinds of disclosures, various kinds of KYC processes etcetera can be put into D5 workflows. So there's a protocol in development and we'll we'll cover the various objectives and where they are in their life cycle. Hi, Aneesh. Welcome to the show. Hey, thank you.
Thank you for having me. So Aneesh, we have met I think the last time in 2015. So you you've been involved in the crypto space for a long, long while, and so tell us your journey of how you how we got into crypto in the first place. Oh, you mean cryptography or crypto Crypto. Yeah, crypto crypto crypto like the the meaning that we stole from cryptography. OK so a Full disclosure. A friend of mine the the two-part story. One part story is how I got into cryptography mailing list.
The other part story is professionally how I got into payment systems. So my first degree is in medicine. After I did my medicine degree in India, I was offered a job by Ericsson in Sweden. They had a micro payment system called Yelda. Yelda, as they call it, and my task was to write a wrapper for open SSL so we could actually mean. I did review and did some work on wrapping it up.
So for me, payment sisters was something was in my head like, you know, big problem offline doublesmith, right. And the second part of the thread list, I don't know you're from India, so you probably heard about that silk list. A friend of mine called Uday, Uday Shankar, he runs this list and he had John Barry, a guy who runs the cryptography mailing list on the list and he kind of got me into the list.
So you know, two things happened where, hey, I had this previous exposure and you know, having gone to grad school to do cryptography and all those things and being exposed to double spent problem, you're on a cryptography mailing list and you see this and go, wow, interesting. And I shall put my head up and say wow, interesting that's where it ended. I read the thing and then like
in 2010, thirty eleven. I think me and Amir Takiya and a bunch of people had a workshop in our hackerspace in London and be very explaining to people how to do mining and for the rest of it. Like in 2013 I became an advisor to Ruble and they asked me if I was addressed it. And when Ethereum happened again the same thing in London, Victor Tron actually met me. He asked me if I would help and then you know Ethereum swamp. I was one of the reviewers of
the orders paper. I spent a bit of time with the team. Yeah, the story goes on like you know, I've been involved in desire desire review of half a descent layer ones probably you know 1820 taps ZK for a last 7-8 years now. And do I remember it correctly that you also worked for UUBS or no Lloyds on Lloyds? Bank. Yeah. Lloyds and HSBC. Yeah. I was a retail banker. I was my day job. This is all things I did for fun, right? It's like I had I think I don't know what we met for.
I thought robotics. So I have been involved in a whole bunch of things. Cloud, big data, open source robotics which is drones and crypto crypto crypto. So I ran a bunch of meetups everywhere. I don't know what what is the recent how we met. I I still don't recollect, but you know all these things. Anything I get interested I try for in my effort. And you know, these are all my spare time activities.
In the last few years you were building Panther Protocol, which has which has a really interesting approach to to privacy and compliance for for for Defy. Why did you start building this project? What were your initial thoughts? I, I, I, I will give you the it's Whitney is always a story so I suspect I'm interested in philosophy. So my co-author his name is Shark Mohan. We wrote a paper like 2011. It is looking at the title of the paper is a new secret.
It kind of describes the information arbitrage and structures in power. So if you were to think about anything you know, if you have an information arbitrage ever. Well, I mean I typically give the example of when society was primitive there was a language existing in one smart man, woman, whatever, being able to count the number of moon days. You know how they could be the representative of moon on earth like count till 28th, 29th day. Not happening.
Go to the mount and sit so that everybody has oh moon God don't appear today. Right. There you go. Next day the oh, moon God come back. You know now that the person has said moon God not to come. Everybody wants light so they do hunting in the night. So they they haven't you know an alpha in having the moon be predictable. So there there you go. This is an information arbitrage
instructor with power. And when crypto came about I was like, look, there is going to be a real inversion happening and I've been involved as I was describing like all the big data things and all those things. It's like all the way from cloud to big data. I've been involved very heavily. So for me I could actually see what is going to come effectively, you know, once the data is all in public, the thing with, you know, blockchains, it's like a bizarre thing,
right? So all the states is visible, all the smart contacts are visible, all the vulnerabilities are visible and everything is visible. So you know if you had to apply an ML and do something both in terms of attacking and recognizing things, which is a bit of a challenge, right. If you were to look at the traditional and as as you were pointing out like you know I've been a retail banker as well. So I've understood finance quite
well. So, so I've worked in Michael, Michael Payments, reinsurance and you know finance in a larger sense. So for me and I did some work for hedge funds and things like that. So for me I understand trade, you know trade fine quite well and retail finance and banking well. And I understand the construct of you know KYC, you know KYCKYT and and the value KYCKYT has, right, it's like you know it it, it could be a limiting factor of anybody added.
What do you describe as a regulatory arbitrage if you have two countries, one has a different KYC regime and other one has a KYC regime, there's a regulatory arbitrage there. So I understood all of this and I looked at it. I went, you know what? We have an opportunity to actually this is like a two-part story. One part story is like looking into this future and thinking crypto is not going to be the crypto that we see as a tiny
bit. It has to go to the space where it's a fraction of the trade by space, right? The straight fire is always a magnitude bigger and crypto is tiny. And for trade fire to endo or crypto to end the trade fire, we need to have this mechanism where that is equivalence. Equivalence in terms of regulation, equivalence in terms of understanding equivalence in
terms of moving between the two. And you know, for me and like in my Co founder, when we had the chat for us it was like this, this the obvious thing which is like, OK, you have to build, you know, a mechanism by which we could actually have mechanisms that exist in Trade 5 like dark pools, right, And mechanisms that exist in the Trade 5, which is KYCKYT, build them two together and make it available for D5. So this is like the journey of Python.
Right in my own, in my own experience, you could think of kind of the conversation around privacy as existing on a on a spectrum, so on. On the one side you have like Bitcoin and Ethereum where all your balances are public, all your smart contact interactions are public and the day I share my address with the tax authority in one country is, is the day they are able to follow me through life.
And it's obviously non ideal, I mean even as an at an individual level, but if I were to think of at like a corporate level it's it's definitely, it's definitely non ideal. Massive problem. Yeah you alpha is you know like yeah the the problem. I would describe Meher as something like this. Like you and I for us, our the half life of data for us is much lesser, Half life for data for enterprises are much bigger. And also The thing is deliveries
they have is bigger, right. They could actually do transactions which are orders of magnitude 456 orders of magnitude bigger than us, right. So for them, the strategy has much higher value. For you and me, our strategy because of multiple reasons, right. The strategy doesn't really have that was a value for them. It's very high value. So this is the thing that actually happened. So the best example I give is
Renaissance Technologies, right? Nobody really tells anybody like how they do it, but they have no 30 or 40% return on investment even when the market is going down. Known correlated gains, right. And how is that possible? That is possible because their strategy is all private. And how is that possible in the finance and why is in that it's available for us given our volatility, we should have a lot
more returns, right? If you were able to have institutions that can actually have both, to me that's that's the future of, you know, I I would say crypto, the way I see it mean like, you know, compliant crypto. Right. And on the other side, you have this other part of crypto where it's the Z cash, the Monero, the Tornado cash, all of the system one with Dark Wallet. Amit Taki is probably the perfect example of it. Where you have a generation of technologists that are building
privacy systems on crypto. Where the end objective is that when I as an individual transact on crypto, nobody should be able to know what I've done on a cryptosystem and and when when I've used those cryptosystems, my central challenge ends up becoming that and at the end of the year I have to make a tax statement. How do I even explain to the tax authority this is a particular shielded pool that I use, that's
the input, that's the output. And like I am fine as a user, I'm not doing something illegal, I I'm just using a shielded pool because I want to unlink the two And how do I even provide the trace of it to an authority? And I'm sure that the problem is
bigger for a company. And so when when you look, when you study kind of like this vision for the Dark Wallet or Dark Fi or all these systems, you realize it's it's a vision like like there is value in it. But I can't actually utilize these tools because for me, in the end I have to pro. I have to provide a a trace of what I did to a tax authority at the end of the year. Yeah, you are in the US you have, IRSIRS says global visibility of everything.
And this actually makes it difficult for a bunch of us. So I mean Amir, as I was saying, like I've known Amir now, I don't know, 14-13, fourteen years now. I told you you can go on hackerspace website or some places you can see pictures of me and him. I believe there's a couple of other people there in hackerspace, like, and I last saw him in Montenegro, right? And he invited me to his place. I haven't been there, but I
really like him. I like his idea, his idealities, and he's a very enthusiastic and meticulous person who tries to learn everything. When you meet him, you'll have a bunch of papers printed out in this app, right? So you know, credit is where credit is due. He definitely is pushing the envelope, as you rightly pointed out. The talent is exactly what he
pointed out, right? So if there is ever a tainted wallet in the mix, if you have a bigger problem because and the problem is the way the law sees this not problem is the way that how we can implement it, right. So we need to think this in a way that we, you know, we don't it's harder to provide exclusion proofs, right. This is the talent, right. So we have to actually then filter things in.
So when people come in we need to be able to say that OK, you know what we won't allow these other people that or if I can actually made a list of. So we will have to use a third party which is outside who does services to everybody else. So you know same set of services we can actually consume that traditional trade fi, investment banking finance actually uses, right. They could do the KYC and they could do this almost the same KYT as well.
And then The thing is when you want to reveal these things you can actually reveal it in different ways. So our initial symbol reveal mechanism is like a covet reveal mechanism where you as a user can actually reveal. I mean, but I should probably say this to you, one of the things that everybody should recognize when you do review is that you are reducing the privacy set, right.
If you know imagine there's a pool in which like that 10 participants, right, let's say 100 participants and like 50 of them are out of the US, then IRS would definitely get 50 transcripts, right? They are 1 1/2. You know, they have a very good time to know exactly what's happening everywhere. So that is something that everybody needs to understand. And in in one sense that is probably not the reason why they're using it, right. So they're using it to actually, you know, guard the alpha.
And if IRS recognizes the strategy they're applying assumption here is legal, they can look at it. OK. This is a tax go. That's fine that that's that's the way we should be thinking about not of the way like you know, I don't want anybody to see the transaction. The The thing is like the transaction is the privacy is bounded. When you walk in you get privacy shield for while you're doing
this thing. When you walk out you lose it and at that point in time you have to reveal all those things. Now you have the transcripts in both ends and there are a bunch of other things that are correlating. So you when you you know when use map US meha where to go back to IRS and say I deployed. So let's think of an example
you're using. You know let me walk you through how you come into Fanta and you using UNISFAP adapter and you deploying some capital in UNISF P3 as a liquidity provider and how you're going to submit it to IRS. So when you as Mehar comes in, we are currently using the third party service provider called Purify PURIFI and what they do is they would do all the normal things which is like you know they had the whole capacity to do everything.
Right now we are just doing minimal things because we restricted the total amount of money you could actually you know transact in the protocol and we want because like you know it's a test, everything is being tested out. So we kind of, you know, running things at a minimal level. So once you've actually been going through the KYC process, you know that they would do a ECDSA signature on the thing.
We have a kind of an interface that's been agreed between us Panther One side and our KYC provider. We can have multiple KYC providers, but at this moment in time we have one and we have this interface built. We're using a JUB jub, a baby jub, jub and we have a signature that comes in. Once you have the signature, then we would actually have the first set of circuits that actually map you from your KYC Violet to a new set of
addresses. In that sense that is your new address from which you're going to use, you know your access to do transactions, OK And now you go to multi associated pool and there's an adapter to Uniswap, right. So Panther, UNISWAP. So in UNISWAP you deployed some liquidity, but where everybody looks at it, it looks like Panther is actually doing it right. So they could be like you know 10,000 thousand, 10,000 whatever
that number of users, right. So it's the aggregate of everything you see on outside world, outside world sees that interaction. So you deploy liquidity in Unisab B3 like I can't remember optimism wherever that AirDrop was and somebody made like 3-4 mil. So imagine that's the case like he, you know, nobody would actually be able to point at you and say hey man how did this?
No, it'll be like somebody using you know whatever and IRS knows for sure use when you submit IRS, IRS would say, ah yes, how did may have get 2 million may have actually provided this from this point to this point these other set of transactions And all of that is clear. Mayhar is in the good. Mayhar keeps his money. Mayhar keeps his strategy. Mayhar is good and his app is good. Panther is good. That's how we think we should go forward. That's really cool.
It's like the it's like straddling the the centre that is almost absent in crypto. It's like not fully public but they're not fully trying to build that dark dark Phi, right. It's it's like Panther is ultimately straddling that centre and it's one of the few projects that is straddling that centre and getting into commerce which is just the interesting part of it and and of course like the complexity is in the is in the technology that that that makes it happen.
So we'll we'll kind of get get into that. So you gave gave this example of a Uniswap pool where? Where? Maybe in the beginning I'm imagining I have something like an Ethereum address. Maybe it's maybe it's on a different chain. Yeah, I mean Panther is pretty much on Evian compatible. We have deployed on Polygon, so we are going to deploy Flare as well. We might deploy another EVM compatible chains. So it is, let's assume an EVM compatible chain and an EVM compatible address.
And there exists UNICEP. Let's assume those things and then let's get out. OK. So it's like I can imagine Panther as kind of a smart contract, multi asset pool that can that can that can be deployed. On. On any of these EVM chains, right, so. There are some caveats to it but you know it's like a support for
the curves. You know you know effectively it's called 16 and BL 250. So it's like you know the support for library support for tooling that's kind of things that are because it's you and because it's me. I want to be very fair, you know and any of the audience that's listening to I I don't want to have a people and make it into thinking he said this that's not the case. Yes, there are some nuances to this. When he used ZKZK needs to be supported. You know it it has to be fast and cheap.
So we can actually like there is no point in providing privacy for things where it doesn't really add value. Like the key thing is like if you were to go to McDonald's and you were to buy a burger, you might get a smoothie. It's unlikely you will ever go to McDonald's just for the smoothie. Very rare. But yeah, that's that's what I was saying. Here. Right. So so then I start off with a normal Polygon address. Maybe this is even one that I had given to the tax authorities
in the past. And then the first thing is I somehow interact with the the Panther system on Polygon and I ended I. Ended. OK, so let me walk you through. Yeah, let me walk you through. So you come in. If you want to go to Panther, as I was describing, you're going to go to Purify. Purify will do the verification. And now you have a derived address from your first address. You have a derived address, so he will derive for like an address.
The map between the two or the link between the two is only visible to you in that sense. OK? And now you with this address you're going. To only visible to me, not even to purify my KYC provider. It is visible to purify in a sense like purify actually as a transcripts, right? So if they decrypt and then like what they have there is literally the transcripts of all the transactions, right? So this map, this bit of the transcript is not fully visible to them.
Whatever you do with them, they have the transcripts and that's visible to you, you and them. Right now if everything is put together, everything will be visible, right. So on their own they can't actually, you know, they can only do the first part of it, right, which is like they can say this are the transcript, this is what has happened. And they also have the KYT, right?
You know if they reveal the KYT plus the KYT, that's not they can actually reveal, but still you know, you have to, you know, reveal some of the bits to actually give the fuller picture. So this is where the IRS question and you are mentioning really makes sense. But you know you actually want to describe your your transcripts to them. So it's like a committed real mechanism. You have already committed to all those things that need to do the reveal.
They have the whole transcript and as I was describing it has some implications of doing that just like if you, if you and I were the two parties in the transaction and you reveal a mind, then they also know might as well, right. So yeah, so this is the thing. So now your new address, your derived address will be in the multi associated pool, right. And in the multi associated pool what you have is that you take
so representing assets, right. And then you know normal things like the normal Bitcoin E mechanism, right. You know the thing new proof is that this hasn't been seen before and then you can actually use this to do swaps and trades of that's off, right. So we have two mechanisms in Bantha. This is like AZ trade, which is like a one to one map. OK, so sometimes I confuse the two, so forgive me if I do. I've been in this for four years so I occasionally confused 3 for the woods.
So if I use the wrong words for the wrong things, don't shoot me. It's just that my head is so muddled in my head. There are so many things and things crosswise every now and then. So in a meta level, there's this possibility that you and I, which is Anish in my head, we could actually swap to as it's assuming we know you know we have we're happy with the KYC. We have all this. OK, so this is construct I need
to describe. The construct is like in banter, there's this construct called a zone manager. A zone manager actually looks after a zone. A zone is a place where you the KYC is valid, right? And the the zone manager kind of has to agree to the KYC provider. OK, this is a KYC requirement. I have. You do the KYC and if this is valid, I will allow this participants to get into the
zone, right. But what happens is then between you and me or we somehow figured out like we wanted WhatsApp, we can do WhatsApp, we can do a private swap, right. So, you know both of us can actually swap things and nobody will be able to figure out what we actually found. But if you go and then provide IRS transcript, IRS knows for
sure what is done, right. So in that sense you have the compliance, you have the transcript, you can actually prove that you actually did a legitimate transaction and we're just like a swap between I said A to I said B, right. So this is one way and then this is extended using an adapter. So the adapter is like I think of it like a bridging mechanism,
right. One side of the bridge sits on pad the protocol so there's some multi issued a pool and so all the access are represented in the in the and the adapter then you know does this backwards into say a normal DFAT protocol,
right. And when the normal DFAT protocol looks it's it's it's interacting with the smart contractor and the back end of this backbone practice, the assets in the pool and for the UNI strap what it looks like it's OK. This is the address from which this transaction is happening and this transaction is within the multi associated pool. Does that make sense? So the imagination I get is imagine like the entire Polygon ecosystem. Maybe imagine it as a large,
large city first, right. So imagine it does like San Francisco, it's it's a, it's a, it's a large city and there are different neighborhoods in there and I OK, one of those neighborhoods is like kind of like the Panther multi asset shielded pool in there. And then this Panther multi Asset shielded pool is like further divided into a smaller school. School areas let's say like and and and then you're calling these things the smaller things zone. So this Polygon is this city.
Oh, no. No, no, no, no. OK, so the zone is like top post, right? You can actually think of a school district as a zone, right? And you have like a smaller subunits as like a smaller mass. You can have multiple maps here, right? And like, you can actually have, like, I mean, in theory you can have one mass, but you can have as many mass as you want, right? But the question here is like, you know how big a mass need to be so it can provide the ineffective effective privacy set.
So there's a trade off between I would say 3 way trade. Off what? What is meant by a mast? Multi asset shielded pool. Multi asset shielded pool. So it's like if Polygon is kind of like San Francisco as a whole and then it's like it's it's like Panther is kind of like a big area of San Francisco. Yes, yes, yes. Dark area of San Francisco. Dark area of San Francisco, there are like multiple school districts in that dark area and it's not the case that those multiple school districts are
all equal equivalent, right. So because because I have to choose what kind of school district I will use, what kind of multi s s shield pool I will use and the better pool is the one that many other users are using cause like my anonymity set is kind of the set of users using that school district or that a mess in that case. So the essence of it is kind of I have an address in like San Francisco, the city in the beginning and then like you have the school districts, these
maps. You have APO box kind of a map which you get a new PO Box addressed into the school district that will allow you to participate in that school district, that school district and the overall the top the, the, the, the what I call the zone manager which could be the school district tour that is sets the rules for the games and the thing which is like KYC has to be this, you need to meet
this and this and this. Then you're allowed to participate within that and if you are in there you can have adapters. So if the school district test, you know what do I call relationships with other school districts in other places? You are allowed to, meaning I'm just describing A defect protocol as a school district, right. So you could actually do that and you can interact with them. Right.
So it's like the that school district or that multi asset shielded pool has some kind of administrator that's that's able. To a top level administrator A. Top level administrator that is able to set rules for for that shielded pool and that rule can include that if anyone wants that address to be generated in this pool then they have to pass KYC across these four O 5 either one of these four O 5 providers and they could be multiple. Very minimum one, right?
Like very minimum one. They can have as many as they want, but you know, constraints of creating circuits and things like that set aside mean you're absolutely right. So, so then I choose kind of like AI did the district or a mass. And I look at, OK, they accept KY, CS from like these five providers. Currently there's only one, but that's because the protocol is young. And then I send this KYC information to this provider and then this provider.
That's a separate transaction and and like banter or you know in the class of all banter protocol shouldn't actually care about this. And just that we there are no real web 3 service providers that could provide you know independently provide you with the, you know KYC. The challenge is 2 part, not just technology but the regulation, right, because of the, you know GDPR and other things. The data ownership is a bit of a
problem. So you actually, we need to get the user to go to the service provider and that KYC, right. And this is one of the challenges we have. We can't actually have the whole thing internal here. Like we can't run in a normal world. If you wear a bag, you just get, you know somebody like on a fighter to actually provide you with the service. You wrap all those things, you do all those things in one
house, right? We have the normal GDPR thing, but because we have AD 5 protocol which is decentralized and we we have to do all of this, we can't do things in a normal way. This is like doing things in somewhat awkward ways. So you know, we can meet or is dancing around to making sure that, you know, it's like, you know, the kids play the game where they hop around. So the same thing we have to hop around to make sure that we meet all the requirements that all the regulators have.
So I I I submitted my KYC and presumably the KYC provider is providing me some kind of certificate it. Gives you a signature. It's just an ECDSA signature on on a lipid. Yeah, I mean, you get the signature back saying it's valid, right? That's literally what it is. This this account passed KYCKYC with me. That's all. None of the information is revealed like OK, the information lies with the KYC provider in their servers or in
their clouding. So the transcript of that thing is in the easiest way of describing. It's like encrypted with their public key and you know it's there. So at any point in time, say for example IRS really gets interested that's the KYC provider have a word with them, you know they they can provide you with all the details. Well, you know, the rest of the
mechanism is normal. Like you know, if you think about the normal bank, you know typically once you know the the end user's name and everything is available, you know the regulatory authority will go directly to Uri or who are the end user is because they can send a subpoena to the user, right. And they can send it to both places. But the user is the easiest, let's send it to them. We don't have big lawyers.
Banks will have big lawyers. So they typically don't go after the banks, they go after the people. That's easier to you know, you know what I'm saying? So, so then this mass administrator, essentially they have set up. The we shouldn't call them the mass administrator, right? Like a protocol zone administrator because like there could be multiple.
So you know what I'm saying this there could be multiples of as been there but the the top level the zone manager what they do is like exactly what they like describe they make this list. They make an arbitrary rule like what he just described. They could have at least a list of 1K by C provider or they can have as many as they want to and they describe what their
requirement is right. And they could say, you know if you were able to prove this and this and this, we will allow you to and this will be the list of assets that will be listed in this zone, right. They might say. They might not list the cash or money or whatever up to them, not to us. Then I kind of like get a shielded address of some kind in that in that zone. Yeah. And then I might be able to do 2 things. If I'm wanting to do things that
are in the zone, it says. So another user has a shielded asset in that same zone. Then then I could do like a shielded swap with that user. So Anish is in. This like between you and me. Like imagine that we were describing like Anish and Maher, both FSR, KYC. We are both on the same zone or by same zone manager. Imagine Sebastian to be the sole. OK, so we both are here. We can trade between ourselves like that is definitely one, yes.
And on the other side, if I want to interact with a different system, now that different system is New York. That's kind of, I don't know, Uniswap running on Polygon. Then to do that different system, I just appeared as a normal Polygon address of some kind and I can commit money or I can remove money. I can do whatever I could do in New York because I am appearing as a normal. Address. So just just to be very clear. So there's a couple of nuances we need to be very sure of.
OK. So as a zone manager, you might or might not allow Interzone interactions, right. So because the risk is more for zone manager, there might be agreements between INDISM. So imagine Seb was when Adrian was our one zone manager. So they have an agreement, they allow and they have equivalency in compliance. Then they could allow us to like I could be in Sebastian's zone and you and Adrian zone, we can actually have this transfer and
we could be fine. And the thing that I think you're kind of referring to is an external one, right. The external one is like we don't have a lot of control over it. We are assuming that you know these other things and we can only prove our innocence, right? The proof of innocence is our side. We can't prove innocence on their side because we don't know. The assumption here is like they look at how the regulator looks at the other side. The regulator has a view of the other side.
I mean the question here is being asked is what is it that you have been doing? And we can definitely answer what we have been doing, the fullest required legal requirement in that sense. That doesn't make sense. Kind of. So on a high level. On a high level, it's like if there's a zone a user can come, they can comply with the rules for entering the zone, and they
entered the zone. They got some assets on a shielded address and they could use their shielded address to do some kind of more public transaction on the UNISOP running on Polygon. Your strategy? Absolutely, absolutely. The zone of course cannot provide any kind of guarantee that that thing happening on the public transaction met certain rules of the of the land. It might break certain rules of the land and and of course the zone cannot provide that guarantee.
Yeah, absolutely. But if the if the. Zone if the transaction happens between two addresses inside the zone itself. For those, the zone manager can provide probably greater guarantees. Yeah. So the, the, the guarantee is cryptographic guarantee, right? Like all of this is cryptographic guarantees. There are no other guarantees of any kind. There's like no, no, trust me Bro, no. This is all cryptographic
guarantees. Everything that's happening, you have cryptographic security margin and all our cryptographic security, right. Like you know previously said this cryptographically bounded. Your security margin is cryptographically bounded. Yeah, all of those things. So it's like there is no such thing as like we are doing magic. Trust me bro, No, everything we are doing clearly articulated photographically.
Provided the proof is visible to you, you as a user can actually validate it and you'd be happy with it, right? Right. So so in this whole journey where I started with a normal Polygon address I moved into a a multi ash zone shield zone and then I I got an address and then I did something on the uniswap I got a different asset that was also that also is now part of the shielded zone. And then at some point I unshielded and I went back to my
to my normal address. And in this whole flow there is an unlinkability. The transaction that happened on Uniswap on Polygon and my original original address, that transaction cannot be made down. Those two. Those two things cannot be linked by anyone that is not the KYC provider and not the zone administrator. Yeah, yeah. And they can't do anything in that sense. So it's like, if everybody colludes, right, then things will be possible.
The person who could actually reveal everything is you. You can actually reveal things, right? If you, as may have, want to reveal things, you can. But you know otherwise because of the way we do KYT, if KYT in a provider has some transactional detail, you can correlate all those things. But that's like you know, you need to go around the world, collect all the data, put all
those things together. Yes, in a world there is no such thing as perfect privacy transactional traffic analysis implies people can, people can actually put things in the window. So cryptographically speaking, we try our level best. It's like a classic example I give if there's a room and there's a door and you can have a 0 Ross proof that I have the ability to leave the room. Right. If it's just me, that's not privacy, right? There's 1000 people.
Yeah. One in thousand chance that they can guess who it is. The same applies to, you know Panther. If the privacy set is 1000 of privacy that is 10,000. It gives us a trade off. Right. And I always describe to people this trade off. So you know if you were to think about a circle and a square, a circle base of this and a square that fits in the area of the square is always bigger than the circle, right? So when you have a curve and you straighten it out in the area will come.
So effectively what happens is like when you do transactions, you will be forced to do batching because you have to do batching to provide privacy. That implies, you know, imagine an AMM you you have X&Y is a constant, you have a divided by DX right? Is that curve of the thing, it gets straightened out a bit, right. That means that you know that there's a small loss that's happening because the incident price is not being available to
everybody, right. So this is the price we have to pay for providing privacy. So in a perfect world, unless your strategy has better alpha than this difference in curves plus the gas charges or charges of doing whatever it is. But that's the challenge we will always have.
You know, there is definitely that thing that that's why we actually have all the, you know, dark pools and the way they're willing to spend so much money to get data centers right next to wherever the exchange is and everybody gets the cabling. You know, I mean literally one should read the book on dark polls and that that will give you the another tip. So there's a lot of money being made, right.
And so you know my expectation again, I haven't really tested this thesis out because I don't have like there is no panda that exists right now as you rightly pointed out, which you could actually do exactly what panda does.
Like we have provided all the tooling that one requires to do compliance right to best of our abilities other than just this committee right committee is hard thing to implement because in a decent life protocol it's almost impossible to agree to a committee, get the committee to, you know do all the crap right, but everything else has been done.
Now The thing is like you could easily do all these things and the assumption on the other side is that there's a value that trade 5 CS and dark pool that they will actually see in doing transactions and deploying strategies into D5, right. I mean I think of it as like a multi legged strategies right. I'm sure you've seen a whole bunch of them right. And here it's like there is a good amount of alpha to be made in multi legged strategies, right.
And you know imagine band that they deployed in multiple AVN compatible ones. You can actually go across as if in going back to your zone manager question, the zone managers agree that this transactions are allowed and you get care by C in all the different ones whichever you decide and then you can do all of this across all the zones and make your money. I mean there's nothing stopping
you. I mean, yes there is a small chance that you have to pay the gas fees for doing all these things plus any protocol fees that is incurred you have to pay. But otherwise whatever. You know, the thing I I normally say to every album, you know founder is like look what π that provides you is the ability for you to do whatever you want to do in a private sense and you keep 9099 + X of all the value that you create.
What Panther or similar protocols will do, it's like they charge you because you can't do it for free. Somebody has to pay for having to run all these things, right? So that need be fee need to be paid, but otherwise all the alpha everybody creates accrued on the L1 and L1 and L2's are the biggest winners and the users are the biggest winners. And we as a protocol provider, we we just, you know, I should probably say to a large extent this has been a very much a
passion project. So I conceptually understand the kind of party that that will be a KYC provider. This is a party that has probably some kind of automated systems where you upload a driving license and they're able to verify that it's genuine or not. They they are specialising in technology like that they they make good KYC providers. I I don't understand what kind of party in the real world is going to be this zone administrator. Is it like a Chad Fi institution? We are looking at it.
Could be somebody who has a in a virtual as a service provider license, right? So you know, day, day one we are probably going to use a Dow as a initial zone manager. But in a in a world that we have a protocol being successful, anybody who actually wants to do something startled between the two worlds who has a license to do this. So the the reason I say this is like it's a regulatory issue, right. We could just have this thing running on its own headless in that sense.
But because of the wave, you actually want to have this ability for the regulators to talk to everybody. There needs to be somebody responsible, right. So you need to have to have somebody who they could go to and ask, OK, who are all the people who could actually provide KYC and why, What was your criteria? And then you have to provide them with, OK. So when they have a interaction with the regulators, regulators say, OK, if you want to do this, these are the KYC providers.
They go, yeah, so you, the regulator asked me to do this and here is, you know, the certificate that you know or this letter of intro. What are that? Is that the interaction between the two parties so that the parties are very clear as to what the regulator requirement was and how it was agreed and how things were done. So, you know, otherwise what will happen is because we have to deal with the so-called traditional finance world, we need to have some sort of an equivalence.
So you know, this is like a possible equivalence mechanism. Still, there's a bit of lack of clarity in terms of who exactly would be that because we don't know, like we are talking to like a bunch of people. There have been different levels of interest. You know, in an ideal world, as somebody who really understands this, if they come back, come come up to us, that'll be pretty awesome because like, you know,
we build everything, right? As I was saying, he, like, my expertise is very much for search and building, right? I'm good at thinking about protocols and getting it, putting together A-Team, designing A protocol, getting it to a place where you can run. I am not a marketing guy. I am not a BDI but that's my Co founder, right. So you know whether the two of us, that's how it is.
So I can only say to you that you know we will definitely take the host to the water, whether the host has got to drink or not. Is it that left to the host? Cool. So so how does it work? So when I when I go from a normal address to a shielded address, what's the underlying technological engine that's that's making it? Very simple.
It's a very simple mechanism. You know, it's a first of the five circuits, there's a a, you know, a map that exists from your address to a new address, right. So you could actually prove that this is the address that you you have and that's it, that's that's how you get mapped to the new address. So when you come back from the KYC provider, then there's this as it allows mechanism that actually maps you from your first set of addresses to the
new address, right. And that's the first set circuits that are there and there are like a a few trees that we have like a there's a static tree, then a bus, a taxi and the other car with the name of the tree. There are 4 trees that are there. So essentially you know all the data for a zone is like in the static tree plus the zone manager contains all the things.
So effectively edit any data that need to be there is all updated there and all the rest of it get updated into trees and that's it. So essentially all of this are kind of Michael Trees and Lucid because of the UTXO thing. These are All My countries, right? So you have an address that's been created. So that will map to a UTXO in a My country that says and there's a map between the two that's kind of, you know, shielded by the normal 0 knowledge mechanism, right.
So you can actually, if you sort of decide you want you want to, really can. But you know, nobody else can actually do that, right? That's cool. That's cool. So, so Aneesh, you have a version one main net launch coming in the next couple of months, right? Yeah, yeah. I mean, like I would say, it's more 6 to 8 weeks. OK. So I'll give you a Full disclosure. We have our audit startup with Paradise. I think it's two weeks now, a week or two. I mean, I'm traveling, so I'm
pretty bad. Don't hold me responsible for the sleeping days. So when that's complete, assuming there are no major bugs we are very close to, you know, there are two, three more faces at best that need to be released so we can actually release it to the main net. And and what will be part of this first main net? OK, so let me look at my notes. So I'm going to look at my notes and tell you what's there. So you know, stage one is the Z account registration. So this is the first set that
you were describing, right? Then there's this. OK, there is some I should probably describe. That is the privacy staking mechanism, which I cannot mention in passing, but it's a mechanism by which you actually reward people for providing privacy, right? And they have this construct which is like AZZKP, just like an internal thing to provide privacy. Otherwise, there's this linking that is possible.
So that is also in V. One, so I'm I'm just imagining it as accounts that are creating transactional activity on the zone just so that genuine economic activity can be masked inside that kind of fake transactional activity happening in that zone? Yeah, I mean it could be you're doing transactions which are real transactions, but you need to have interrupt transactions, right? It doesn't have to be fake in that sense. There is no need to do fakes, right? You just need to do transactions.
If you do real transactions, you will better, right? So the overall privacy set increases. So imagine there's 1000 people and thousand people are deploying various things on Uniswap. You have a privacy set of 1000 straight up, right? That's what it is. And all of you will get your rewards from doing all these things. And then there's a map between this. So this is part of the View 1 functionality, then a shielding, so essentially what we were describing.
Then there are transfers between interval to mass, so between you know you and I in that sense. Then that is like a that is the accounts directory service so we can actually get some idea of where things are. Then intra mass transfers and messages, OK, so you could transfer between two mass. I remember we were talking about New York and San Francisco going
back. As part of one of these zones, with one administrator, Anish being another zone, another administrator being able to exchange assets across zones provided the rules of the two zones match in some way. Absolutely, yes. And then it's like we call it a bundler. So you know, when the transaction happened, somebody needs to put all these things together. That's, you know, we could call
it a miner or a bundler. So that's one of the things that we have built and that I told you about like you know, different kind of trees that are there for trees. So there's a tree called taxi tree, so that then the bus tree and then a Cairo by the a fairy tree, OK. And then there's a last tree, a car by the name of the tree. Then withdrawals, basic disclosures and Z account renewal, right. So withdrawals is like you want
to withdraw something. You know, basic disclosure is you do the transaction you want to reveal as Z account renewal is like KYC. You remember our conversation about KYC, We have KYCFE Middle. They are not permanent, right? So you have to renew, OK. So then we have AD 5 swap essentially there's an adapter to you, you know a protocol, that's AD 5 protocol. So we can do that. So there's something we call advanced disclosures.
So it's like it's kind of hard to describe it in simple terms, but essentially you have ways by which you can reveal bits of things, right. So disclosure is like a computer real mechanism. Advanced disclosure is like you want to reveal some bits of it, right, and increasing the number of assets that need to be there. So the number of assets that are there is kind of limited. So we are kind of you know, adding more and more assets. So last of the bits is what we
call an involuntary disclosure. So this is if it's required that, you know, if authorities come in and all the parties, you know, agree to do what they need to do, then they can actually construct certain pieces. And then this Z trade, which is what I was describing between the two of us and then migration from .5 to one that is, yeah, I think that's pretty much, I think I've described all of it. Actually, there's a huge. There's a huge list list of features.
There's a huge list of features. Yeah, we've been working very hard. It's been working very hard. So I should give my team the credit, right? Like I talk nonsense to them, get byports, draw things, They actually go come back, you know, look at it and come back to me. And yeah, I'm very lucky to have a very good team. Yeah, of course. Like the flip side of it is because it's a huge list of features.
There would be like unexpected behaviors where people will end up leaking information that they thought was safe and things like that. It is possible. We will have to, yeah. It is very possible. We might find things, yeah. Oh, yeah. We didn't think people could do this. Wow. Yeah, that's very possible. But you know, you're optimistic. Yeah, so it's like important to start small, important for users to to start with small amounts and test, test on the. System, absolutely.
The overall the protocol is kind of limited to 1000 bucks. So you know that that's a whole idea. The idea is like, you know, minimal KYC, minimal amount of transactions. So you could actually get used. People can get used to Panther, and then when Panther is much more known to people and people are used to the behavior they can, then the the world is the oyster. They can build their strategies and deploy it and go to whatever they want. I am actually curious.
There's an element to such a protocol, which is there's a massive element, which is OK how do you even conceive of and like, build this thing which you've solved? But the other problematic part is distribution, getting people to actually use it, which is a very different problem. So are there any breakthroughs or successes in that dimension, like X or Y parties committing to use Panther in a certain way?
So yeah, I mean, I have to admit, like, you know, I've been mostly the personal responsible for the first part, right? I'm the Co founder, CT and the chief scientist who's been thinking about the problem and I've actually delegated the BD and we work together. But in the larger sense, you know, the conversations I had either one of us and my Co founder. So there have been a bunch of conversations that's been there. We have lots of interest from
various parties. We are in conversation with Coinbase and other people. So I don't know, like you know, it's between, you know, talking and signing the contract, right. So he's kept. So definitely there are multiple parties that we've been talking to. You know I can't name names, but definitely there are three, at least more than five people that we've been talking to like who have a possible, you know kind of institutional kind of somewhere in the spectrum, right.
So that's the that's the thinking. The thinking is like what are these people who are institution in what? I wouldn't call it institutional because institutional would require a lot more than Panther could actually do right now, right. So the idea it is like get Panther. Panther has been aimed at this space in the market where you know retail uses all the way up to say you know, minimal family offices who have minimal regulator requirements can
actually go use. That's where we are aiming it. But if you want to go beyond where we go to like traditional, you know, hardcore set of people that would require a lot more heavy lifting, right? Like you know, all the integrations and everything, which I think it will take a while. But you know, the idea here is getting people who are from standard retail investors to people who run family offices with minimal regulator requirement like KYCKYT tax returns.
That's the kind of thing that you are required to, you know fulfil that's the idea getting them on boarded. I mean we are also giving people incentives, right, like to you know play with the protocol. So the initial plan is to, you know pretty much the largest chunk of the protocol, you know tokens were allocated out to give everybody incentives, right. So the idea here is like if the protocol succeeds, everybody who participates succeeds.
So that you know assumption here is like A there is some need for users to average or in the street who understands what privacy is and has some strategies that they want to deploy. Would like to use a protocol like that though. And B, given the regulatory you know landscape that the utility function of regulation is quite high and people want to have you know things in the right manner,
right. And that's B&C is that given there is you know, some slight expenses that effectively you have to pay for this gas fees and all the things, right, there'll be a fee. And the assumption here is like the alpha that people have is bigger than the fee. So it really makes economic sense for them to actually do this and the friction is with an acceptable bounce. These are all assumptions that we're making.
So, Anish, is it correct to understand that the fee is there because, OK, the underneath Polygon is charging something, But in a sense because in order to provide privacy, you have to incentivize people to do transactions that might sometimes be fake, Somebody needs to pay for those transactions to happen, which reflects as a fee on the genuine users of the Panther protocol, right? Yes, absolutely. You're absolutely right. Yes, yes, spot on. Thank you.
You're saying A? Fee for cover traffic in a sense you, you, you. Yes, absolutely. That's that's, yeah, that's that's one way to think about it like you know, there has to be a fee that allows the ecosystem to have a process to some gate, right? So otherwise it would be like a, you know, you know, it's a tragedy of Commons. So we have a problem with tragedy of Commons. So that's why we have a fee
structure. The fee structure would allow, you know, a fee to be, you know, levied on the users and give it out to everybody who has the ecosystem to to flourish because you know, it's in the best interest of everybody in the ecosystem to provide, you know, privacy. You know, it'll be a lose lose if everybody through the status of revealing their set, right. So that's the whole idea.
I mean it's OK if you reveal it to your, you know, regulators and you know your the, the, the construct here is like you did your transactions end of the year, you all reveal everything to your regulators. Not a problem because like you know your strategy, you can have it for a whole year, right? You run your strategy, you made your money, you submit your tax
returns, everything is fine. Now, you can't go ahead and use the same strategy tomorrow, because now you know IRS has access to all of this and you know who knows what happens, right? So you have the Panther token and tell us about how these were distributed and and you know what is the tokenomics, how many tokens and. Oh gosh, that's a tricky bit. I can't have it on my head, but
I will describe it to you. It's been a file since I last worked on it. As I was saying, like you know, as the person who, you know, puts a lot of this in one's head, a lot of the things skip my mind, right? So you have buckets of problems as they go.
It's like a bucket of problems where you need to talk to the regulators to make sure what you're doing meets whatever it is, a bucket of problems where you look at CK and the progress in CKA, bucket of problems in D5, where you look at D5 and solve that. And then there is other things that you did in the past, right? So in terms of tokenomics, what has happened? It's like an early model was produced in 2020-2021. So we had like a bunch of
private sales. So you know, both me and my Co founder put in our own money, a bunch of our friends put in money and then we had a public sale in 2021. And then, you know the tokens, there's this, a fraction between 10 to 15% of it was allocated to the team at 10 to 15% was allocated to the foundation. So there's a foundation that actually is supposed to, you know, look after this. So the foundation is based on Gibraltar.
Then this whole bunch of tokens has been allocated to, you know, providing rewards for, you know the thing that you were describing, which is essentially provided for what she said. Then a small bit of tokens were allocated to actually help build ecosystem. So this is kind of how it was overall made out. It is a very long curve. It's like an emission curve first for like 144 months, if
I'm not mistaken 12 years. So we kind of thought about it for like you know, in my mind if a protocol would take that long, it's not the optimal place to be, right. My expectation is, you know, maybe a year, maybe two years before that it should restate equilibrium. Equilibrium means there's enough of fees that's coming into the protocol that the protocol is still sustaining. So once that happens then the emission doesn't really matter,
right? Like emission is just an emission, it doesn't really make any difference because you know fees in this thing makes it sustainable. So that's that's the thinking. Perfect. And I'm actually curious on what is the fee making model of Panther. So I'll I'll define my question better. So in your protocol you have the different parties, so the QIC provider, the zone administrator, the user that's shielding. Probably in the future the Regulator might itself have some
kind of powers, except. If they decide right. Yes, so and and of course it is pretty obvious that the user will pay for pay for privacy like the. So if if I'm on Polygon and I interact with Uniswap without Panther, my cost is X, but if I interact via Panther it is X + Y and that Y. You can imagine that Y is paid for this cover traffic or this extra economic activity that Panther protocol A. Whole bunch of things, right?
It's to pay for the gas fees for running the ZK is also to provide like you know things that are required also to provide cloud traffic or everything, right? Like you need to think of it like you know, one says they need to be in my head sometimes I think of it like you need to build upgrades. So if you are very successful what you need to happen is that you should go to the Dow.
You know users of the Tao should be able to put a proposal just like OK, you need to actually improve this from whatever this is to that. So you know that this is all list of all things that you want to do. The cost of all of that needs to be under return overtime by fees like the otherwise it's kind of impossible like you can't have a loss making mechanism to be able to deliver services to everybody that that that's the whole idea. Right.
So do you intend to charge the use like you intend to charge the user, but do you also intend to charge the zone administrator as well? Because in a sense that zone as zone administrator is a financial service provider. And is there a business model to be made on their side too?
We haven't really thought that through in that sense because like it is very possible that if if you were to create a a particular zone which is like very internal to yourself and nothing to do with like an external protocols maybe right. The assumption here is like you know this is public good, right In my head this is public good, privacy for protocols is public good, right? And we need to support it and we need to be as as in like users of the the ecosystem, right.
And that's the way we are thinking. But if it's like separate and completely segregated and the zone manager runs this in a very different world, you know the value of public good to you and me as an average user to the ecosystem is diminishing. Maybe there's a case to be had, right. We haven't come across anybody who said this to us. We want to do something that you would never be able to interact with. It is very possible they might do that right.
They might have some sort of what do we call a hybrid kind of chain that they use for something and they want to deploy and and they want to, you know, be his own manager. Well, yes, they can be in that instance, yes, that's a different instance, right. So you know we are not you and me as an average. You know L1L2 user is not getting anything out of it. Cool. So we're coming to the end of the conversation.
Aneesh, would you like to tell our listeners where they could find more about the Panther protocol and what are interesting resources? OK. So the thing would be, you know, if you go to pad the protocol dot IOSETPS pad the protocol dot IO, we have a bunch of things there. Then there's docs dot pad, the protocol that's there as well. Then there are a bunch of blocks there as well. So and there's playing a bunch of talks that's been given mostly by me and members of our
team. So we've, you know, I should have said we've actually done a bit more work in the ZK space as such. We've been you know active in the Z Price. We've actually published as it gets snack scheme of our own. We have an IBC scheme of our own. Like we've done a bunch of things. So you know there are a couple of preprints that's available. So you know, if you feel free to, you know, look around if you have any difficulty that that,
there's our community manager. His name is Youris and if you want to get hold of him, it's Zouk 780 on Telegraph and he would definitely respond to any of those things. If everything fails then drop me an e-mail. Anisha Panther protocol dot IO Oh, I'm zero knowledge on Telegram. Cool. Thanks Anish for the for the interview and I look forward to try Panther most. Welcome. Thank you. Thank you for joining us on this week's episode. We release new episodes every
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