Chapter 1: The Rise of TEE ------ Why It Is the Core Puzzle of the Web3 Era?

1.1 What is TEE?

A Trusted Execution Environment (TEE) is a hardware-based secure execution environment that ensures that data is not tampered with, stolen, or leaked during computation. In modern computing architectures, TEE provides additional security for sensitive data and computations by creating an isolated area independent of the operating system (OS) and applications.

Core Features of TEE

• Isolation: TEE runs in a protected area of the CPU, isolated from the operating system, other applications, and external attackers. Even if a hacker compromises the main operating system, the data and code inside the TEE remain secure.

• Integrity: TEE ensures that code and data are not tampered with during execution. Through remote attestation, TEE can verify to external parties that it is executing trusted code.

• Confidentiality: Data within the TEE is not accessible externally, even to device manufacturers or cloud providers. Using a sealed storage mechanism ensures that sensitive data remains secure even after the device is powered off.

1.2 Why Does Web3 Need TEE?

In the Web3 ecosystem, privacy computing, secure execution, and censorship resistance are core requirements, and TEE can provide this critical capability. Current blockchain and decentralized applications (DApps) face the following issues:

1.2.1 Privacy Issues on the Blockchain

Traditional blockchains (like Bitcoin and Ethereum) are characterized by complete transparency, where all transaction and smart contract data can be viewed by anyone. This leads to the following problems:

• User Privacy Leakage: In scenarios like DeFi transactions, NFT purchases, and social applications, users' fund flows and identities may be tracked.

• Corporate Data Leakage: Companies want to leverage blockchain technology, but sensitive data (like trade secrets and medical records) cannot be stored on public chains.

TEE Solution: By combining TEE with smart contracts, developers can build private computation contracts that only authorized users can access the computation results, while the original data remains hidden. The Secret Network (a TEE-based privacy smart contract platform) has implemented this model, allowing developers to create DApps that protect user privacy.

1.2.2 MEV (Miner Extractable Value) Issues

MEV refers to the profits that miners or block producers can extract by exploiting the transparency of transaction information during transaction packaging. For example:

• Front-running: Miners or bots submit transactions before user transactions to profit.
• Sandwich Attack: Attackers insert their transactions before and after user transactions to manipulate prices for profit.

TEE Solution: With TEE, transactions can be ordered in a private environment, ensuring that miners cannot see transaction details in advance. Flashbots is exploring TEE combined with fair sequencing solutions to reduce the impact of MEV on DeFi.

1.2.3 Performance Bottlenecks in Web3 Computing

Public chains have limited computational capacity, and on-chain computations are expensive and inefficient. For example, Ethereum gas fees are high, and the operating costs of complex smart contracts are extremely high. Blockchains cannot efficiently support AI computations, image processing, complex financial modeling, and other computational tasks.

TEE Solution: TEE can serve as a core component of decentralized computing networks, allowing smart contracts to outsource computational tasks to trusted environments and return trusted computation results.

Representative Project: iExec (providing a TEE-based decentralized cloud computing platform).

1.2.4 Trust Issues in DePIN (Decentralized Physical Infrastructure Networks)

DePIN is a new trend in the Web3 space, such as Helium (decentralized 5G network), Filecoin (decentralized storage), and Render Network (decentralized rendering).

DePIN relies on trustless computing and verification mechanisms, and TEE can be used to ensure the trustworthiness of data and computational tasks. For example, data processing devices can execute computational tasks within TEE, ensuring that the computation results are not tampered with. TEE, combined with remote attestation technology, can provide trusted computation results to the blockchain, addressing fraud issues in the DePIN ecosystem.

1.3 Comparison of TEE with Other Privacy Computing Technologies (ZKP, MPC, FHE)

Currently, the main privacy computing technologies in the Web3 field include:

• TEE (Trusted Execution Environment)

• Advantages: Efficient, low latency, suitable for high-throughput computational tasks like MEV protection, AI computation, etc.

• Disadvantages: Relies on specific hardware, has security vulnerabilities (e.g., SGX attacks).

• ZKP (Zero-Knowledge Proof)

• Advantages: Mathematically proves the correctness of data without trusting third parties.

• Disadvantages: High computational overhead, not suitable for large-scale computations.

• MPC (Multi-Party Computation)

• Advantages: Does not rely on a single trusted hardware, suitable for decentralized governance and privacy payments.

• Disadvantages: Lower computational performance, limited scalability.

• FHE (Fully Homomorphic Encryption)

• Advantages: Allows computation directly on encrypted data, suitable for the most extreme privacy needs.

• Disadvantages: Extremely high computational overhead, currently difficult to commercialize.

Chapter 2: The Technical Insider of TEE ------ In-Depth Analysis of the Core Architecture of Trusted Computing

A Trusted Execution Environment (TEE) is a hardware-based secure computing technology designed to provide an isolated execution environment that ensures the confidentiality, integrity, and verifiability of data. With the rapid development of blockchain, artificial intelligence, and cloud computing, TEE has become an important component of Web3 security architecture. This chapter will delve into the core technical principles of TEE, mainstream implementation solutions, and its applications in data security.

2.1 Basic Principles of TEE

2.1.1 Working Mechanism of TEE

TEE creates a protected isolated area within the CPU through hardware support, ensuring that code and data are not accessed or tampered with externally during execution. It typically consists of the following key components:

• Secure Memory: TEE uses a dedicated encrypted memory area within the CPU (Enclave or Secure World) that external programs cannot access or modify.

• Isolated Execution: Code running within TEE is independent of the main operating system (OS), ensuring data security even if the OS is attacked.

• Encrypted Storage: Data can be encrypted with a key and stored in a non-secure environment, with only TEE able to decrypt this data.

• Remote Attestation: Allows remote users to verify whether TEE is running trusted code, ensuring that computation results have not been tampered with.

2.1.2 Security Model of TEE

The security model of TEE relies on the Minimal Trusted Computing Base (TCB) assumption, which states:

• Trust only the TEE itself, not the main operating system, drivers, or other external components.
• Use cryptographic techniques and hardware protection to prevent software and physical attacks.

2.2 Comparison of Three Mainstream TEE Technologies: Intel SGX, AMD SEV, ARM TrustZone

Currently, mainstream TEE solutions are primarily provided by three major chip manufacturers: Intel, AMD, and ARM.

2.2.1 Intel SGX (Software Guard Extensions)

A TEE technology introduced by Intel, first appearing in Skylake and subsequent CPUs. It provides a secure computing environment through Enclaves (encrypted isolation areas), suitable for cloud computing, blockchain privacy contracts, etc.

Core Features:

• Enclave-based memory isolation: Applications can create protected Enclaves to store sensitive code and data.
• Hardware-level memory encryption: Data within the Enclave is always encrypted outside the CPU, making it unreadable even if the memory is dumped.
• Remote attestation: Allows remote verification that the Enclave is running unmodified code.

Limitations:

• Enclave memory limitations (initially only 128MB, expandable to 1GB+).
• Vulnerable to side-channel attacks (e.g., L1TF, Plundervolt, SGAxe).
• Complex development environment (requires using the SGX SDK to write specialized applications).

2.2.2 AMD SEV (Secure Encrypted Virtualization)

A TEE technology introduced by AMD, mainly used for secure computing in virtualized environments. It is suitable for cloud computing scenarios, providing VM-level encryption protection.

Core Features:

• Full memory encryption: Uses internal CPU keys to encrypt the entire VM's memory.
• Multi-VM isolation: Each VM has an independent key, preventing different VMs on the same physical machine from accessing each other's data.
• SEV-SNP (latest version) supports remote attestation, verifying the integrity of VM code.

Limitations:

• Only suitable for virtualized environments, not applicable to non-VM applications.
• High performance overhead, as encryption and decryption increase computational burden.

2.2.3 ARM TrustZone

A TEE solution provided by ARM, widely used in mobile devices, IoT devices, and smart contract hardware wallets.

It provides a Secure World (secure environment) and Normal World (normal environment) through CPU-level partitioning.

Core Features:

• Lightweight architecture: Does not rely on complex virtualization technologies, suitable for low-power devices.
• Full system-level TEE support: Supports secure storage, DRM, financial payments, and other security applications.
• Hardware-based isolation, differing from SGX's Enclave mechanism.

Limitations:

• Security level is lower than SGX and SEV, as the Secure World relies on the device manufacturer's implementation.
• Development is restricted, with some functions only accessible by device manufacturers, making it difficult for third-party developers to access the complete TEE API.

2.3 RISC-V Keystone: The Future Hope of Open Source TEE

2.3.1 Why Do We Need Open Source TEE?

Intel SGX and AMD SEV are proprietary technologies, limited by manufacturers. RISC-V, as an open-source instruction set architecture (ISA), allows developers to create customized TEE solutions, avoiding security issues associated with closed-source hardware.

2.3.2 Key Features of Keystone TEE

Based on the RISC-V architecture, fully open source. Supports flexible security policies, allowing developers to define their own TEE mechanisms. Suitable for decentralized computing and the Web3 ecosystem, can be combined with blockchain for trusted computing.

2.3.3 Future Development of Keystone

It may become a key infrastructure for computing security in Web3, avoiding reliance on Intel or AMD. The community is promoting stronger security mechanisms to reduce the risk of side-channel attacks.

2.4 How Does TEE Ensure Data Security? From Encrypted Storage to Remote Authentication

2.4.1 Encrypted Storage (Sealed Storage)

TEE allows applications to store encrypted data externally, with only applications within TEE able to decrypt it. For example: private key storage, medical data protection, confidential AI training data.

2.4.2 Remote Attestation

Remote servers can verify whether the code running in TEE is trustworthy, preventing malicious tampering. In the Web3 field, it can be used to verify that the environment executing smart contracts is trustworthy.

2.4.3 Side-Channel Attack Protection

Latest TEE designs use memory encryption, data access randomization, and other methods to reduce attack risks. The community and manufacturers continuously patch TEE-related vulnerabilities, such as Spectre, Meltdown, and Plundervolt.

Chapter 3: The Application of TEE in the Crypto World ------ A Revolution is Happening from MEV to AI Computing

The Trusted Execution Environment (TEE), as a powerful hardware security technology, is gradually becoming one of the most important computing infrastructures in the Web3 ecosystem. It not only addresses the performance bottlenecks of decentralized computing but also plays a key role in areas such as MEV (Maximum Extractable Value), privacy computing, AI training, DeFi, and decentralized identity. TEE-enabled Web3 computing is sparking a revolution, bringing more efficient and secure solutions to the decentralized world.

3.1 Decentralized Computing: How Can TEE Solve Web3's Computing Bottlenecks?

Blockchain, due to its decentralized nature, has advantages in censorship resistance and high trustworthiness, but it still faces significant bottlenecks in computing capacity and efficiency. Current decentralized computing platforms (like Akash and Ankr) are trying to solve these issues with TEE, providing high-performance and secure computing environments for the Web3 ecosystem.

3.1.1 Challenges in Web3 Computing

• Limited Computing Capacity: Smart contract execution on blockchains like Ethereum is slow and cannot handle large-scale computing tasks, such as AI training or high-frequency financial calculations.

• Data Privacy Issues: On-chain computation is transparent, making it impossible to protect sensitive data, such as personal identity information and trade secrets.

• High Computing Costs: Running complex computations (like ZK proof generation) on the blockchain is extremely costly, limiting the expansion of application scenarios.

3.1.2 Akash & Ankr: TEE-Enabled Decentralized Computing

Akash Network

Akash provides a decentralized cloud computing marketplace that allows users to rent computing resources. The applications of TEE include:

• Privacy Computing: Through TEE, users can run confidential computing tasks in a decentralized environment without exposing code and data.

• Trusted Computing Marketplace: Akash ensures that the rented computing resources are untampered with through TEE, enhancing the security of computing tasks.

Ankr Network

Ankr provides decentralized computing infrastructure, especially advantageous in Web3 cloud services and RPC. The applications of TEE in Ankr include:

• Secure Remote Computing: Using TEE ensures that cloud-executed computing tasks run in a trusted environment, preventing data leakage.

• Censorship Resistance: TEE combined with decentralized computing architecture allows Ankr to provide censorship-resistant computing resources, suitable for privacy DApps.

3.1.3 Future Outlook

As the demand for Web3 computing grows, TEE will become a standard component of decentralized computing networks, making them more competitive in privacy protection, efficiency, and security.

3.2 Trustless MEV Trading: Why is TEE the Optimal Solution?

MEV (Maximum Extractable Value) is a core issue in blockchain transaction ordering, involving complex strategies such as arbitrage, sandwich attacks, and liquidation. TEE provides a trustless MEV solution through trusted computing and encrypted transactions, reducing the potential for miners and validators to act maliciously.

3.2.1 Current Status and Challenges of MEV

• Front-running: Miners can front-run user transactions to execute sandwich attacks.

• Centralized Ordering: Flashbots and other MEV solutions still rely on centralized orderers.

• Information Leakage Risks: Current MEV bidding systems may expose transaction information, affecting fairness.

3.2.2 TEE-Enabled MEV Solutions

Flashbots & TEE: Flashbots is exploring TEE as a key technology for trustless transaction ordering (MEV Boost). Transactions can be encrypted and ordered within TEE, preventing miners or validators from tampering with transaction order.

EigenLayer & TEE: EigenLayer ensures the fairness of the restaking mechanism through TEE, preventing malicious manipulation of MEV. Remote attestation via TEE ensures that the MEV bidding system is not manipulated.

3.2.3 Future Outlook

TEE can provide "trustless ordering" and "privacy transactions" in the MEV space, reducing miner manipulation and enhancing fairness, offering DeFi users a more equitable trading environment.

3.3 Privacy-Preserving Computing & DePIN Ecosystem: How Nillion Builds a TEE-Enabled Next-Generation Privacy Network?

Privacy computing is a significant challenge in the Web3 ecosystem, especially in the DePIN (Decentralized Physical Infrastructure Networks) field. TEE provides powerful privacy protection capabilities for projects like Nillion through hardware-level encryption and isolated execution.

3.3.1 Nillion's Privacy Computing Solution

Nillion is a blockchain-free decentralized privacy computing network that combines TEE and MPC (Multi-Party Computation) to achieve data privacy protection:

• Data Sharding Processing: Encrypted computations are performed through TEE to prevent sensitive data leakage.

• Privacy Smart Contracts: Nillion allows developers to build private DApps, with data visible only within TEE.

3.3.2 Applications of TEE in the DePIN Ecosystem

• Smart Grids: Using TEE to protect user energy data privacy, preventing misuse.

• Decentralized Storage: Combined with Filecoin, ensuring that stored data is processed within TEE to prevent unauthorized access.

3.3.3 Future Outlook

Nillion and similar projects may become the core infrastructure for privacy computing in Web3, with TEE playing an indispensable role.

3.4 Decentralized AI: How to Use TEE to Protect AI Training Data?

The combination of AI and blockchain is becoming a hot trend in the Web3 field, but AI training faces data privacy and computational security issues. TEE can protect AI training data, preventing data leakage and enhancing computational security.

3.4.1 Bittensor & TEE

Bittensor is a decentralized AI computing network that uses TEE to protect the data privacy of AI training models. Through remote attestation, it ensures that AI computing nodes have not been tampered with, providing trusted AI computing services.

3.4.2 Gensyn & TEE

Gensyn allows developers to run AI training tasks in a decentralized environment, with TEE ensuring data confidentiality. Combining zero-knowledge proofs (ZKP) with TEE achieves trusted verification of decentralized AI computing.

3.5 DeFi Privacy and Decentralized Identity: How Secret Network Uses TEE to Protect Smart Contracts?

3.5.1 DeFi Privacy Issues

Traditional smart contracts are transparent, with all transaction data public, leading to a huge demand for privacy in DeFi. Users want to protect transaction data, such as balances and transaction records.

3.5.2 Secret Network & TEE

• Private Smart Contracts: Secret Network uses TEE to protect the execution of smart contracts, ensuring that transaction data is only visible within TEE.

• Decentralized Identity (DID): TEE can be used to store user identity information, preventing identity leakage while supporting KYC compatibility.

3.5.3 Future Outlook

TEE will play an increasingly important role in DeFi privacy and decentralized identity, providing stronger privacy protection for decentralized finance.

Chapter 4: Conclusion and Outlook ------ How Will TEE Reshape Web3?

As one of the important technologies in the crypto field, Trusted Execution Environment (TEE) has demonstrated tremendous potential in many scenarios. With the continuous development of the Web3 ecosystem, the role of TEE will become even more critical, especially in decentralized infrastructure, privacy-preserving computing, and smart contracts. This chapter will summarize the current status of TEE technology, explore how it will drive the development of Web3, and analyze potential business models and token economics opportunities in the crypto industry.

4.1 How Does Trusted Computing Drive the Development of Decentralized Infrastructure?

4.1.1 The Necessity of Decentralized Computing

With the rise of decentralized technologies, traditional centralized computing architectures are gradually unable to meet the needs of the Web3 ecosystem. Decentralized computing can enhance the security and fault tolerance of systems while improving network transparency and censorship resistance. However, decentralized computing systems face many challenges:

• Trust Issues: Unstable trust between nodes may lead to data tampering or untrustworthy computation results.

• Privacy Issues: Protecting user data privacy in a decentralized environment has become a significant challenge.

• Performance Issues: Decentralized computing may face performance bottlenecks such as uneven distribution of computing resources and low throughput.

4.1.2 The Role of TEE in Decentralized Infrastructure

TEE technology is key to solving these problems. By providing a protected, isolated computing environment, TEE supports decentralized computing systems in the following ways:

• Trustless Computing: Even in the absence of complete trust, TEE can ensure the integrity of the computation process and the confidentiality of data.

• Privacy Protection: TEE can perform encrypted computations without disclosing data, protecting user privacy.

• Enhanced Performance: With the development of hardware TEE solutions, computational throughput is expected to improve significantly.

TEE will become a core technological support in decentralized computing networks (like Akash and Ankr), promoting the maturity and popularity of decentralized infrastructure.

4.2 Potential Business Models and Token Economics Opportunities of TEE

4.2.1 TEE-Driven Business Models

As TEE technology becomes more widespread, several emerging business models and platforms are beginning to take shape. Here are some major business models:

• Decentralized Computing Market: Platforms like Akash and Ankr allow users to rent computing resources through a decentralized computing market, ensuring the trustworthiness and privacy protection of computations through TEE.

• Privacy Computing Services: Companies providing TEE-based privacy-preserving computing services can offer data encryption and computation assurance services for industries such as finance, healthcare, and insurance, with a revenue model primarily based on charging for computation tasks.

• Distributed Computing and Storage: TEE can be applied in decentralized storage and computing platforms to ensure data security and trustworthiness in distributed systems, with related business opportunities including revenue from storage fees and computation service fees.

• Blockchain Infrastructure Providers: Providing specialized hardware or software tools that enable Web3 projects to run smart contracts and execute decentralized applications (DApps) in TEE environments.

4.2.2 Token Economics Opportunities of TEE

In the Web3 and crypto ecosystem, TEE can be deeply integrated with token economics, bringing new value creation opportunities. Specific opportunities include:

• Tokenized Computing Resources: Decentralized computing platforms can exchange computing resources through tokens, allowing users and node operators to participate in computation tasks, submit and verify data, with all exchanges of computing resources and tasks executed through smart contracts.

• Token Incentives for TEE Services: TEE-based privacy computing services can use tokens as user incentives or payment methods to ensure the smooth execution and verification of privacy computing tasks.

• Decentralized Identity and Data Exchange: TEE can provide technical support for decentralized identity (DID) systems, ensuring user data privacy while promoting the adoption of decentralized identity and data exchange through tokenized incentive mechanisms.

4.3 Key Development Directions of TEE in the Crypto Industry Over the Next Five Years

4.3.1 Deep Integration of TEE and Web3

In the next five years, TEE technology will play an increasingly important role in Web3, especially in the following key areas:

• Decentralized Finance (DeFi): TEE will be widely applied in DeFi protocols to safeguard user transaction privacy, ensure the trustworthiness of computation processes, and enhance the security of smart contracts.

• Privacy Computing: With the improvement of privacy protection regulations in various countries, privacy computing will become a core component of Web3. The combination of TEE with zero-knowledge proofs (ZKP), fully homomorphic encryption (FHE), and other privacy computing technologies will provide more trustworthy privacy protection solutions for Web3.

• Decentralized Artificial Intelligence (AI): TEE provides a secure computing environment for decentralized AI, supporting the secure training and inference of AI models, thereby enabling decentralized intelligent applications.

• Cross-Chain Computing: As the blockchain ecosystem continues to expand, TEE will facilitate trusted computing between different chains, making cross-chain asset exchanges and data processing more secure and efficient.

4.3.2 Innovations in TEE Hardware and Protocols

As TEE technology continues to develop, innovations in hardware and protocols will drive improvements in its performance and security:

• Hardware Innovations: New-generation hardware TEE solutions like RISC-V Keystone and Intel TDX (Trusted Execution Extensions) are expected to surpass existing solutions in performance, security, and scalability.

• Protocol Innovations: The integration of TEE with multi-party secure computation (MPC), zero-knowledge proofs (ZKP), and other technologies will drive the emergence of new privacy protection protocols and trustless protocols.

• Decentralized Hardware Platforms: Decentralized computing hardware platforms will break through the traditional single-supplier model, encouraging more small nodes to participate in the trusted computing ecosystem, maximizing the utilization of decentralized computing resources.

4.3.3 Evolution of Regulatory Compliance and Privacy Protection

As global privacy protection regulations become stricter, innovations in TEE regarding compliance will be a key development direction in the next five years:

• Multi-Country Compliance Solutions: TEE technology will adapt and innovate according to the privacy protection regulations of different countries and regions (such as GDPR, CCPA, PIPL) to ensure that decentralized computing environments comply with global data protection requirements.

• Transparent Privacy Computing: The combination of TEE with ZKP and other technologies will make the privacy computing process verifiable, thereby enhancing the trust of regulatory agencies and promoting compliance implementation.

Chapter 5: Summary

TEE technology has broad application potential in the Web3 ecosystem, providing not only a trustless computing environment but also effectively protecting user privacy. As TEE technology continues to develop, it will play an increasingly important role in decentralized computing, privacy protection, and smart contracts, driving the maturity and innovation of the Web3 ecosystem. At the same time, TEE will also give rise to new business models and token economics opportunities, bringing more value creation opportunities to the crypto industry. In the next five years, with hardware innovations, protocol developments, and regulatory adaptations, TEE will become one of the indispensable core technologies in the crypto industry.