Tornado has been sanctioned, what other protocols/tools can meet privacy needs?

Author: Lu Lu, who won't run away, Odaily Planet Daily

Editor: Hao Fangzhou

On August 8, Beijing time, the news that the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) added Tornado Cash to the sanctions list (SDN) swept through the entire Web3 world. Following the sanctions, all U.S. individuals and entities are prohibited from interacting with Tornado Cash or any Ethereum wallet addresses associated with the protocol.

Information disclosed on the U.S. Treasury's official website shows that the Ethereum mixing platform Tornado Cash has been used for virtual currency laundering activities worth over $7 billion since its establishment in 2019.

Many entities have also responded by banning related accounts and addresses. Circle froze funds worth over $75,000 from 81 accounts on the sanctions list, and GitHub shut down the project's homepage and blocked developer access. Currently, the Tornado front-end official website has been banned from access.

For the decentralized Web3 world, this sanction is historic. As Circle's CEO stated: the regulatory intervention in this case crosses an important threshold in internet history and is also a significant milestone in the history of decentralized finance: a major government is forcing all parties to completely block and restrict the operation of open-source software on the internet.

Indeed, the design philosophy and operational logic of crypto projects challenge decades-old regulatory frameworks in various ways, but privacy technology and privacy needs are not inherently wrong. Some crypto KOLs have voiced that Tornado Cash's existence is not solely for hackers; Vitalik Buterin mentioned that he had used Tornado Cash to make private donations to Ukraine, aiming to protect the beneficiaries in Ukraine.

Regardless of your evaluation of this event, privacy protocols/tools are always meaningful and have numerous application scenarios. In this article, Odaily Planet Daily has compiled several products that can meet users' such needs.

Umbra

Similar to the functions provided by Tornado, Umbra is also a protocol that allows users to make anonymous transfers on Ethereum. The difference is that the recipient can know who sent the transfer.

In terms of specific product implementation logic, Umbra differs from Tornado Cash. The logic of the Umbra protocol is that the transfer recipient first authorizes and maps out a new privacy address (this new address does not need to be backed up and is directly controlled by the original address's private key). When the sender makes a transfer, they only need to input the recipient's real address, and Umbra can automatically recognize the privacy new address; after the user receives the funds, they can transfer from that new address to a secure address (such as an exchange address or another new address) to achieve privacy protection.

Currently, Umbra supports four major networks: Ethereum, Polygon, Optimism, and Arbitrum, as well as four major tokens: ETH, USDC, USDT, and DAI.

Compared to Tornado Cash and Aztec, Umbra does not use zero-knowledge proofs but is based on ordinary elliptic curve cryptography. Umbra does not sever the link between the sending and receiving addresses like Tornado does; instead, it renders that link meaningless.

Everyone can see who sent the funds, and everyone can see the address to which the funds were sent, but this receiving address has never been used on-chain, so no external observer can know who controls it.

Official website: https://app.umbra.cash/

Aztec Network

Aztec Network is a ZK-rollup project focused on privacy on Ethereum. This project is both a privacy project and part of the L2 track. It can hide the transaction behavior of crypto users, preventing external observers from grasping users' transaction information, thereby protecting user privacy.

As an L2 project, Aztec has scalability that dApps cannot match. The working principle of Aztec is similar to multiple users anonymously placing their balls into a pool and then withdrawing them in batches and varying amounts. Funds can be transferred between accounts without revealing the amount transferred in each transaction, making it impossible for external observers to infer the subsequent flow of deposits into Aztec.

Another highlight of Aztec is that the project uses its own EVM programming language, Huff. This language is a kind of assembly language, closer to machine language that can be directly "understood" and executed by machines. It allows developers to program directly in EVM machine code, and compared to Solidity and Vyper, writing smart contracts in Huff can reduce gas fees by up to 80%.

According to DeFi Llama data, Aztec's TVL is currently about $4.6 million, having once surpassed $14 million in April this year. In December 2021, Aztec Network completed a Series A funding round led by Paradigm.

Official website: https://aztec.network/

ETH-Mixer

ETH-Mixer is an "old" mixing tool that has been operating since 2017. In addition to the Ethereum network, this tool also launched a "BTC-Mixer" that supports Bitcoin mixing.

This tool is the first mixing tool on the Ethereum network, and its basic principle is similar to most mixing tools.

ETH-Mixer charges a fee of 0.001 ETH per transaction and has been operating for 5 years, executing over 110,000 mixing transfers.

Official website: https://eth-mixer.com

CoinJoin

CoinJoin is one of the oldest mixers in history, but it is far less famous than Tornado Cash. This may be due to the fact that its service scenario is completely different from Tornado; CoinJoin was developed for Bitcoin (BTC) and Bitcoin Cash (BCH).

As an old open-source anonymous transfer tool, CoinJoin initiates a multi-party transfer through a joint signing of a smart contract and mixes the transactions of all parties together. This is also the basic principle of mixers that has continued to this day, achieving a privacy transfer effect that is almost impossible for outsiders to trace.

CoinJoin's code is completely open-source, and its development team believes that "financial privacy is feasible and necessary. The CoinJoin system allows anyone to send Bitcoin and receive new Bitcoin at another address. No logs, no monitoring, only complete privacy."

Official website: https://coinjoin.io

Cash Fusion

Unlike common mixers developed for mainstream chains, Cash Fusion is an "outlier" among similar products. This is a privacy transfer tool developed based on BCH. In the official introduction, they candidly state that "CashFusion's goal is to achieve CoinJoin functionality on the basis of BCH."

Currently, Cash Fusion has been integrated into the Electron Cash wallet. Through the Electron Cash wallet, users can enable privacy transfer functionality with one click. CashFusion's code has been audited by Kudelski Security.

Official website: https://cashfusion.org

Privacy Public Chains

In addition to common privacy transfer tools, privacy computing has long been a track that has not fallen out of market attention and occasionally appears as a hot topic in discussions within the crypto community. If you are looking for options beyond anonymous transfers of mainstream assets like ETH and BTC, some privacy computing public chains are available.

Monero, Dash… these names may seem a bit distant for users in the current DeFi era, but privacy chains and tokens have always been a direction that many developers are dedicated to.

After undergoing the baptism of industry cycles, these somewhat outdated products may have become less noticed, but Zcash was the first privacy project to adopt zk-SNARKs on a large scale, guiding the development of later privacy products. In addition to Aztec mentioned earlier, other crypto privacy networks like Secret Network and Thorchain are also continuously building and expanding their ecological applications.

In the Web2 world, user data is endlessly abused, and the centralized internet lacks constraints on giants. This is also one of the roots of people's admiration for Web3 values. We emphasize the importance of privacy for personal safety and business security. Therefore, concepts such as data sovereignty, data privacy, and user sovereignty are constantly mentioned and studied, leading to the emergence of numerous privacy projects. Regardless of Tornado Cash's ultimate fate and what regulatory measures may come in the future, it is undeniable that this track has never been and will not be abandoned by the crypto world.