Panther Protocol - Restoring Privacy To Web3 And DeFi

Panther is designed to enable trust while preserving complete privacy. 

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The biggest irony with decentralization is that its main features that are keeping the blockchain  foolproof and secure—the lack of a central ruling authority, its public transparency—are also the very things that can be worrying to live with, given that there is no shortage of people who might not have the best intentions when they are accorded such privileges. 

Since blockchains are public, DeFi users are easy subjects for surveillance. Anonymity can be compromised by analyzing transaction behavior and history. Trading strategies can be reverse engineered to take out competition. It doesn’t matter how big a whale you are—in fact, the bigger the waves you make when you splash around, the more you put your assets and competitive edge at risk with all the attention you are potentially drawing to yourself. 

This privacy problem was identified early on which is why cryptocurrency like zCash and Monero have been around for quite a while now. And though transactions using these coins are indeed confidential and untraceable, their lack of composability makes them impractical for use for mainstream DeFi applications, hindering mass adoption.

Composability means the ability of a platform to interact with other platforms or applications seamlessly without the need for special permissions¹, that is, their codes and protocols can “talk” with one another on their own—so you can see how this is a real necessity as the cryptosphere continues to rapidly grow with new DeFi projects constantly being launched. It is this composability with the greater DeFi community which Panther aims to incorporate with its vision of decentralized privacy—and in doing so, become the de facto privacy infrastructure for all decentralized finance.

How does Panther work?

Simply put, Panther is designed to prevent others from eavesdropping into your transactions while being compatible with any platform on the Ethereum network. In a traditional world setting, imagine that it’s like having a dedicated and untappable hardline directly with your buyers and sellers—without the need for a third party to set up or verify the exchange, without operators or technicians to connect the call, and even without a translator should you happen to not be speaking the same language. Everything is simply taken care of by code. 

In short, Panther is designed to enable trust while preserving complete privacy. 

Panther mints “zAssets” in place of your digital assets. So to conduct a private transaction, a user simply deposits their BTC, ETH, or USDT into the Panther vault and gets zBTC, zETH, and zUSDT in return which they can now deposit into Panther’s Multi-asset Shielded Pools. zAssets are minted on a 1:1 exchange value and while in this state are guaranteed to be untraceable and completely private. 

Panther mints zAssets in exchange for the users’ coins which can then be used for completely privateDeFi transactions. 

What does this privacy entail? When conducting transactions using zAssets, the existence of the transaction itself is acknowledged, but any useful information related to it can be made inaccessible to any third party. The sender and receiver of the transaction are unobservable, including the amount, currency, and fees paid in conducting the exchange.

The information itself is inaccessible even to the developers as the transactions are completely executed by smart contracts. No data is collected by the system itself but users have the option of exporting their own transaction logs. 

Aside from that Panther is also designed to use Stealth Address protocols which means that a new address is generated for every user for every single transaction, even if conducting business with the same recipient multiple times, to further increase security.² 

But Panther goes beyond ensuring privacy. Among its features is that it can be used with regulatory compliance in mind, so you won’t have to worry about getting yourself into shady transactions, or being required to expose your identity to a third party to prove your compliance with regulations.

The ‘Privacy vs Compliance’ question

Ensuring the anonymity and privacy of cryptocurrency exchanges has also led to another big problem from the blockchain’s very inception: it also has the tendency to attract the wrong crowd. Because of guaranteed anonymity, zCash and Monero have become a tempting conduit for illegal exchanges, often to avail of services on the dark web, or as a convenient means for money-laundering. 

In 2019 alone it was estimated that around $2.8 billion was laundered through Bitcoin, almost triple the figure from the previous year³. This has prompted the push for the inclusion of crypto exchanges under anti-money laundering regulations, specifically the Anti-Money

Laundering/Countering the Financing of Terrorism (AML/CTF) and Anti-Money Landering/Know Your Customer (AML/KYC) regulations enforced by global coalitions like the Finance Action Task Force (FATF) and the Financial Crimes Enforcement Network (FinCEN). But the problem with regulation is that it defeats the purpose of decentralization itself, as they apply lengthy and intrusive scrutiny to financial services and they require the full disclosure of personal data when it comes to investigating illegal transactions. 

As such, privacy is a paradoxical gift. We want everyone to have it—except for those with ill intentions. But how do you employ privacy and ensure regulatory compliance at the same time?

To counter this, Panther relies on a selective disclosure system wherein Trust Providers can attest to your credibility or those of whoever it is you are transacting with. Panther users have the option of generating disclosure statements to prove the legitimacy of previous interactions with Panther or other legal requirements needed prior to engaging with a transaction—but only to satisfy the system, not directly to the other party you are transacting with. Once the protocol is satisfied with the proofs provided, the smart contracts automatically proceed with the transactions without giving away any underlying data if the user is transacting with a Service Provider.   

Trust Providers thus perform the function of the KYC regulators but with complete anonymity. In turn, users also have the option of choosing a Trust Provider based on ratings and attestations of other Panther users and they can also choose multiple Trust Providers to oversee a transaction. In this game-theoretic model, trust is maintained by the different players being incentivized by the protocol to act honestly and fairly.  

Other Features and Benefits

Aside from composability and compliance, Panther also plans to include the following features in its ongoing development:

  • Interchain Layer1 Private Dex — private exchanges means transactions can be carried out with lower latency and lower fees across different blockchains.

  • Controlled Liquidity Pools — by using subnets, users can privately trade with other selected users without interaction from other users outside the subnet.

  • Privacy Staking Rewards — the more you deposit and provide liquidity to a Panther Multi-asset  Pool, the more you earn from rewards.

  • Superior User Interface — privacy, compatibility and compliance are simplified for the average user to increase mass adoption. 

Tokenomics

The Panther Token ($ZKP) is scheduled to go on sale in November of 2021. It will be used for governance voting and to provide incentives for the system’s maintenance, with a finite supply of 1,000,000,000 (1 billion $ZKP). It will be allocated as follows:

200 million $ZKP (20 %) —

for founders and advisors with gradual unlocking over a period of three (3) years

50 million $ZKP (5 %) —

public sale with unlocking being determined at a later date

150 million $ZKP (15 %) —

reserved for the Foundation between General (8%), Reserves/Liquidity (5%), Education (1.75%) and Bug Bounties (0.25%)

150 million $ZKP (15 %) —

private sale to strategic investors with an unlocking period of three (3) years

450 million $ZKP (45 %) —

reserved for Panther DAO for Protocol Rewards and Privacy mining incentives

Conclusion

Privacy may seem at some level, oxymoronic in the context of a blockchain that relies on public transparency to achieve network consensus. But Panther predicts a future wherein private cryptocurrency will become an asset class of its own and that even stablecoins, utility tokens and NFTs will all be infused with privacy features. The matter of privacy is turning the cryptosphere over on its own head and Panther seems crouched deftly in the shadows ready to pounce and change everything. 

References:

¹ The True Power of Defi: Composability, Coinmonks, April 28, 2021. Retrieved from  https://medium.com/coinmonks/the-true-power-of-defi-composability-14fe8355e0d0#:~:text=Composability%2C%20in%20DeFi%2C%20is%20the,and%20therefore%20each%20other's%20utility.

² Jake Frankenfield, Stealth Address (Cryptocurrency), Investopedia, March 21, 2021. Retrieved from https://www.investopedia.com/terms/s/stealth-address-cryptocurrency.asp

³ Money Laundering Through Crypto Exchanges, Comply Advantage. Retrieved from https://complyadvantage.com/knowledgebase/money-laundering-crypto-exchanges/