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In a move signaling the convergence of decentralized storage and cutting-edge AI infrastructure, Yotta Labs has announced the adoption of the Walrus Protocol to power storage for its large-scale decentralized AI workloads. This collaboration highlights the growing demand for secure, scalable, and efficient storage solutions capable of supporting the next generation of AI applications.
Why Walrus Protocol?
AI workloads, especially those that are decentralized or distributed, generate massive amounts of data that must be reliably stored, accessed, and updated. Traditional cloud storage solutions, while fast, are often costly, centralized, and vulnerable to downtime, which can hinder performance and slow AI model training.
Enter Walrus Protocol — a programmable decentralized storage network that provides:
High availability: Distributed storage nodes ensure that data remains accessible even if some nodes go offline.
Erasure-coded redundancy: Data is broken into shards and distributed across multiple nodes, providing fault tolerance without excessive storage overhead.
Cost efficiency: By leveraging a decentralized network, storage costs are lower than comparable cloud solutions.
Cross-chain interoperability: Though native to the Sui blockchain, Walrus can support AI projects operating on multiple blockchain ecosystems.
For Yotta Labs, these capabilities mean large AI datasets and model checkpoints can be reliably stored while maintaining transparency, verifiability, and decentralized control.
Scaling Decentralized AI Workloads
Decentralized AI systems often rely on collaborative computing across multiple nodes, whether for model training, inference, or data sharing. The challenge lies in efficiently distributing massive datasets across the network while maintaining data integrity and security.
By integrating Walrus, Yotta Labs can:
Store AI datasets and model weights securely across a decentralized network.
Ensure high-speed retrieval for nodes performing computation on large-scale models.
Enable verifiable AI training, where each update and dataset can be audited and traced on-chain.
Reduce infrastructure costs, freeing up resources for more AI development and experimentation.
This partnership demonstrates how decentralized storage is becoming mission-critical infrastructure for AI projects that prioritize transparency, reliability, and cost efficiency.
Implications for the Web3 and AI Ecosystem
The adoption of Walrus by Yotta Labs marks a significant milestone in the intersection of AI and decentralized infrastructure. Key implications include:
Decentralized AI adoption: Storage bottlenecks have historically limited the scale of decentralized AI projects. Walrus addresses this barrier, opening the door to more ambitious AI workloads.
Institutional readiness: Both Walrus and Yotta Labs operate with standards that appeal to institutional investors and enterprise clients, supporting regulated AI applications on-chain.
Cross-chain synergy: Projects on Solana, Ethereum, and Sui can leverage Walrus for a unified, decentralized storage layer, enabling multi-chain AI applications.
This collaboration reflects a broader trend: decentralized infrastructure is increasingly being recognized as essential for AI and Web3 ecosystems, not just as a conceptual improvement but as a practical solution for real-world workloads.
@Walrus 🦭/acc #walrus $WAL

Decentralized storage is revolutionizing how data is preserved and shared in Web3. But beneath the surface of any storage network lies a critical question: what do nodes actually store? In Walrus Protocol, this is where the magic of RedStuff erasure coding comes in.
The Building Blocks of Storage
Unlike traditional storage systems where nodes might keep full copies of files, Walrus uses slivers — tiny, encoded fragments of a larger dataset.
A sliver is a single fragment derived from either:
a row code, or
a column code
from a two-dimensional encoding of the original blob. This design is part of what makes Walrus both efficient and secure.
Nodes Store Only a Random Subset
Every node in the Walrus network doesn’t hold entire rows or columns. Instead, each node stores a small, randomly assigned subset of slivers. This approach has multiple advantages:
Efficiency: Nodes only store a fraction of the data, reducing storage costs and bandwidth requirements.
Resilience: Losing a single node doesn’t endanger the entire blob — the data can be reconstructed from remaining slivers.
Scalability: As more nodes join the network, the system can store larger datasets without replicating full copies across every node.
Security Through Fragmentation
Storing only slivers also strengthens security:
No single node has meaningful information alone: Even if a node is compromised, it cannot reconstruct the original blob.
Collusion is required to attack availability: An attacker would need to control a significant portion of nodes storing overlapping slivers to disrupt access.
This design ensures that data availability is robust even in adversarial environments, which is critical for decentralized applications that depend on reliable storage.
Why This Matters
By storing slivers rather than entire files, Walrus achieves a balance between efficiency, security, and reliability:
Data is protected from malicious nodes
Storage costs remain low
The network can scale to accommodate massive datasets, from NFTs and AI models to decentralized applications
In essence, slivers are the secret to making decentralized storage both practical and secure.
In Walrus Protocol, nodes don’t just store files — they store carefully encoded slivers that, when combined across the network, ensure data is always available, private, and resilient. This is the core principle that enables Walrus to provide efficient, Byzantine-resilient storage at scale.
@Walrus 🦭/acc #walrus $WAL

The Core Problem RedStuff Solves
Any decentralized storage system must solve three competing goals:
High availability (data always retrievable)
Low redundancy (storage isn’t insanely expensive)
Byzantine tolerance (nodes can be malicious, not just offline)
Most systems sacrifice one:
IPFS → cheap, but no guarantees
Filecoin → guarantees, but huge replication overhead
Arweave → permanent, but inefficient and archival
RedStuff solves all three simultaneously.
Why Simple Erasure Coding Is Not Enough
Classic erasure coding (Reed–Solomon)
Split file into k chunks
Add n−k parity chunks
Any k of n can reconstruct the file
Problem:
Assumes honest but failing nodes
Breaks under Byzantine behavior
Walrus assumes malicious nodes, not just crashes.
Two-Dimensional Erasure Coding
Instead of a 1D stripe, RedStuff encodes data in a 2D matrix.
Step 1: Blob → Matrix
Suppose a blob is split into a matrix:
D11 D12 D13
D21 D22 D23
D31 D32 D33
Each Dij is a data block.
Step 2: Encode Rows and Columns
RedStuff applies erasure coding twice:
Row encoding
Each row gets parity blocks:
Row 1: D11 D12 D13 | R1
Row 2: D21 D22 D23 | R2
Row 3: D31 D32 D33 | R3
Column encoding
Each column gets parity blocks:
Col 1: D11 D21 D31 | C1
Col 2: D12 D22 D32 | C2
Col 3: D13 D23 D33 | C3
Now every data block is protected horizontally and vertically.
This is the 2D redundancy.
Why This Is Byzantine-Resilient
Let’s analyze failure modes.
Case A: Nodes go offline
Row codes recover missing blocks
Column codes recover missing blocks
Case B: Nodes lie (Byzantine)
Invalid slivers are detected via:
cryptographic commitments
consistency checks across dimensions
Case C: Adversarial delay
Nodes cannot wait to see challenges
Proofs are asynchronous
Delays = penalties
A node must continuously store data, not fake it later.
Mathematical Guarantees
Let:
f = fraction of Byzantine nodes
n = total nodes
k = data threshold
RedStuff guarantees:
Data availability if < 1/3 of slivers are Byzantine
Recovery bandwidth proportional to lost data only
Reconstruction probability → 1 as matrix grows
This is far stronger than 1D erasure coding.
@Walrus 🦭/acc #walrus $WAL

What MiCA Actually Targets (Important Context)
MiCA (Markets in Crypto-Assets Regulation) does not regulate blockchains directly.
It regulates:
Crypto-Asset Service Providers (CASPs)
(exchanges, custodians, brokers, issuers)
Crypto-assets offered to the public
Market integrity, disclosure, and consumer protection
This distinction is critical:
MiCA does not ban privacy technology — it regulates how it’s used.
The Big MiCA Fear: “Privacy Coins Are Banned”
This is a misinterpretation.
MiCA does not explicitly ban privacy coins, but it requires CASPs to:
Identify senders and recipients
Comply with AML / CFT (via the Travel Rule)
Provide transaction traceability when legally required
Why this hurts many privacy chains:
Full anonymity
No selective disclosure
No compliance hooks
Why this does not kill Dusk.
Dusk’s Key Advantage: Selective Privacy
Dusk was designed for regulated finance, not anonymity absolutism.
Dusk supports:
Privacy by default
Disclosure by authorization
This matches MiCA’s intent perfectly:
Protect users’ data — but allow regulators lawful access.
In practice:
Transactions can be private on-chain
Compliance data can be proven via zero-knowledge proofs
Regulators can audit without public exposure
This is exactly what MiCA wants.
Identity & AML Under MiCA
MiCA requires CASPs to:
Identify customers (KYC)
Monitor transactions
Report suspicious activity
Ethereum approach:
KYC off-chain
Public on-chain activity
Dusk approach:
Identity proofs via ZK
On-chain logic enforces rules
Personal data stays off-chain
Result:
Dusk enables GDPR-friendly compliance:
No mass data leakage
No permanent public identity trails
No on-chain doxxing
This is a huge regulatory plus in the EU.
Transfer Restrictions & Securities Law
MiCA overlaps with:
MiFID II
MiFIR
DLT Pilot Regime
Dusk directly supports:
Whitelisted investors
Jurisdiction restrictions
Lock-ups and vesting
Corporate actions (dividends, voting)
Via Confidential Security Contracts (XSC), these rules are enforced on-chain, not through intermediaries.
This makes Dusk suitable for:
Regulated security tokens
Tokenized equities & bonds
EU-compliant RWA platforms
Dusk’s Silent Strength
MiCA integrates the FATF Travel Rule, requiring:
Sender & receiver info for transfers via CASPs
Most privacy chains:
Cannot comply without breaking privacy
Dusk:
Prove compliance without revealing data publicly
How?
Zero-knowledge proofs confirm:
Identity exists
Counterparty is authorized
Transfer meets regulatory thresholds
No raw personal data is exposed on-chain.
Stablecoins & EMTs on Dusk
MiCA tightly regulates:
Asset-Referenced Tokens (ARTs)
E-Money Tokens (EMTs)
Dusk is well-suited because:
Issuers can enforce redemption rules
Supply controls can be audited privately
Regulators can inspect issuance flows
This makes Dusk a strong candidate for:
MiCA-compliant EUR stablecoins
Regulated settlement tokens
Strategic Outcome for Dusk
MiCA may actually strengthen Dusk’s position:
Forces non-compliant privacy coins off EU exchanges
Makes Ethereum-based RWAs legally complex
Creates demand for privacy-preserving compliant infrastructure
Dusk becomes:
A compliant privacy layer for Europe’s on-chain financial markets
@Dusk #dusk $DUSK

Dusk Network presents Citadel, a zero-knowledge proof KYC solution where users and institutions are in control of sharing permissions and personal information. The framework can be used for all claim-based KYC requests and puts users in total control of what information they are sharing and with whom while being completely compliant and private at the same time.
How does it work
Dusk Network is the first to integrate zero-knowledge technology KYC in a Layer-1 (L1) blockchain. It is a key feature of Dusk itself to implement it in its privacy-preserving protocol. Using the Citadel framework, an entity that is able to handle private information - for example, the company Dusk who is compliant with all necessary regulations and is allowed to handle private information, or a company that is verified to do KYC on behalf of institutions - can provide a list of requirements for their KYC verification. The user who needs to complete the KYC is able to provide the necessary information, share how long their information can be stored and can withdraw access to their data. The company will authenticate the data, which will be privately stored in the Dusk blockchain. To simplify: it is using non-fungible token (NFT) technology, where instead of an art piece, a license is created.

Use case

If you open a bank account, you need to KYC and share personal information with your bank. If you then decide to do stock trading, you'll need to open an account with a brokerage service, where you will alsohave to do KYC/Anti-Money Laundering (AML). You will either have to share the same information with them or your bank will provide it to them. If you buy a house and get a mortgage, you will also have to offer a lot of KYC/AML/personal information. All these players will keep your information and store it, which both has a big impact on your privacy and puts you at risk of data leakage. Instead, if you use Citadel, you would store your data with one party who is only able to store and verify data, and other services can opt to accept the licenses and use that as KYC/AML proof.
This significantly reduces risk and privacy exposure. In a fully on-chain world, you can buy regulated assets simply by providing a license that you're in compliance with the requirements of the trading platform. You can borrow money from a lending service by providing a license that meets their KYC and AML requirements. You can loan out money and get yield, simply by providing the license. No need to share personal information with the three parties. For safety measures, a quarterly confirmation of the correctness of all the provided data in the license could help data stay up to date.
Cost-reducing compliance
Banks and financial institutions are often complaining that new regulations like the Travel Rule and other Anti-Money Laundering measures are costly operations, costs that are also charged to the customer. The processes to meet the requirements are tedious, time-consuming, and involve many unnecessary parties, making the process even more challenging. Citadel as an SSI protocol can provide the basis for a KYC service that could eliminate the need for financial institutions to do KYC/AML themselves and/or with third parties. It can significantly reduce the cost of gathering, protecting, and renewing client information. A KYC provider built on Citadel will speed up processes and information is always up to date, real-time accessible, and privacy-preserving. With Citadel, the client will be fully in charge of their own details, without unnecessary information duplication and a reduced risk of information leakage.
Next to digital identity verification like in the use case above, Citadel can be used for privacy-preserving transactions and global compliance.
Additional uses
This is just one way that Citadel can be used. Citadel offers much more than can be described in a single article, so expect more information and use cases in the future.
Citadel offers access to services without having to share personal data or information. This is practical, efficient, and preserves privacy for users. We’re so used to having to share and expose our personal data to gain access to services that it’s hard to imagine not needing to do this.
It has benefits for companies and provides relief from GDPR which is currently a heavy burden for companies to bear. By allowing users to access services and membership etc without sharing their identity or data, there is nothing that needs to be “forgotten” to comply with GDPR. This will be a huge relief for companies operating in the EU.
It offers protection from hacks and data leakages. From LastPass to Celsius to the countless hacks and leaks you won’t have heard of, companies simply won’t have this data so there’s nothing to hack. This is good for institutions as it makes them more secure and is good for users who don’t have to trust a 3rd party to look after their most important data.
Citadel changes the relationship between users and providers and eliminates the need to swap your identity for access, and the security and management needed to keep that identity private. And it does so in a way that is compliant to regulations, providing a real and necessary solution to the challenges users and companies face, and will continue to face as more and more parts of life go online.

In September 2020, Dusk Network reached an important turning point—not through a protocol upgrade or consensus change, but through a strategic investment from iFinex Inc., the parent company of Bitfinex. The investment, totaling over US$1 million, was aimed at accelerating the development of a regulated security token exchange built on Dusk’s privacy-preserving blockchain infrastructure.
This move marked a clear signal to the market: Dusk was positioning itself as infrastructure for compliant, real-world financial assets, not just another privacy-focused blockchain.
Why iFinex’s Investment Was Significant
iFinex operates at the intersection of cryptocurrency exchanges, liquidity, and regulated financial infrastructure. Its backing of Dusk was less about speculation and more about strategic alignment.
The investment supported The Tokenizer, a project designed to bring regulated security issuance and trading on-chain, using Dusk’s unique combination of:
Confidential smart contracts
Programmable compliance
Privacy-preserving transaction logic
At a time when regulators were increasing scrutiny on blockchain-based finance, this approach stood out.
The Tokenizer: Bridging Regulation and Privacy
The Tokenizer aimed to solve a fundamental problem in tokenized finance:
How can securities be issued and traded on-chain while complying with regulations—without exposing sensitive investor or transaction data?
Most public blockchains expose balances, transfers, and counterparties by default. This transparency is incompatible with many regulatory and institutional requirements.
Dusk’s solution was to embed compliance directly into confidential smart contracts, allowing rules to be enforced cryptographically rather than through public disclosure.
How the Investment Accelerated Dusk’s Ecosystem
1. From Concept to Infrastructure
The iFinex funding helped turn regulated tokenization from a theoretical use case into deployable infrastructure.
2. Institutional Credibility
Backing from a major exchange operator validated Dusk’s technology for financial institutions, issuers, and regulators.
3. Clear Market Positioning
Dusk differentiated itself from both:
Pure privacy coins (often incompatible with regulation)
Transparent blockchains (often unsuitable for securities)
Instead, it positioned itself as privacy-enabled compliance infrastructure.
Strategic Impact Beyond Capital
The importance of the iFinex investment lies not just in the capital deployed, but in strategic direction. It reinforced Dusk’s focus on:
Security token issuance
Regulated secondary markets
Confidential financial smart contracts
This direction influenced Dusk’s roadmap in subsequent years, shaping its evolution toward MiCA-aligned, institution-ready blockchain solutions.
@Dusk #dusk $DUSK

As Dusk Network’s protocol evolves towards the next phase of Testnet, unique opportunities arise for those passionate (and savvy) enough to get involved in the process. The rolling Incentivized Testnet will be accompanied by a multitude of initiatives, each adding to the security of the network and opening the doors to compensation for participants but also educating the community on what is required to be a participant within the Dusk Network protocol. If you’re looking to spend your time strengthening the financial framework of the future while racking up rewards, keep reading to find out more.
The Shape of Mainnet
Rolling Incentivized Testnet is a sign of things to come; a crash test dummy version of the final mainnet. Its sole purpose is to be pushed to its absolute limits, every nook and cranny patched and rendered waterproof to prevent any unwanted behavior, incompatibilities, or openings for exploitation. This testnet is the mold that dictates the shape of our mainnet. There can be no room for errors. That’s where the incentivization comes in.
A campaign such as the one mentioned below is part of the incentives that ensures testnet is properly stress tested. It represents an invitation for all those who are technically inclined to go in and set up their first Provisioner Node on our testnet. Furthermore, it is an opportunity for long-term supporters to actively participate in the security of our testnet by running a provisioner, thereby verifying blocks as they’re created.
The activities outlined in this post will be the bedrock for the launch of our Incentivized Testnet, but they are not the end of the story! Expect more opportunities, like Learn 2 Earn campaigns, hackathons, and bug bounty programs in the later stages of the Dusk Network rolling ITN. Community Node Campaign The launch of the rolling ITN will positively impact our testing KPIs, our efficiency in disseminating upgrades to our protocol, and even the fairness of our token distribution. We believe that the introduction of incentive mechanisms consistent with our mainnet will ultimately benefit the consensus timelines and educate the community.
@Dusk #dusk $DUSK

The world of cryptocurrency is perpetually oscillating between two core, often competing, ideals: transparency and privacy. While public ledgers like Bitcoin and Ethereum offer unprecedented transparency, a subset of projects known as "privacy coins" emerged to fulfill the original cypherpunk vision of digital cash—untraceable, fungible, and private. However, the trajectory of these assets has hit significant turbulence. So, what’s going on with privacy coins, and what does this shifting landscape mean for a project like Dusk Network?
The Squeeze on Traditional Privacy Coins
Privacy coins like Monero (XMR), Zcash (ZEC), and Dash have faced mounting pressures from several fronts:
Intensifying Regulatory Scrutiny: Global regulators, particularly the Financial Action Task Force (FATF) and its member nations, are implementing strict Travel Rule (VASP) requirements. These rules mandate that virtual asset service providers (exchanges, custodians) collect and share sender/receiver information for transactions. This is fundamentally at odds with the obfuscated nature of most privacy coin transactions. As a result, major centralized exchanges like Coinbase, Binance, and Kraken have increasingly delisted or restricted access to privacy coins in key jurisdictions to maintain compliance.
The "Tainted" Narrative: Privacy coins have been disproportionately linked in media and regulatory discourse to illicit activity. High-profile cases involving ransomware payments or darknet markets often cite privacy coins, painting the entire category with a broad brush. This has created significant reputational headwinds and made institutional adoption nearly unthinkable.
Technological Arms Race and Potential Vulnerabilities: The privacy tech itself—primarily ring signatures, zk-SNARKs, and CoinJoin—is in a constant battle. Governments, particularly the U.S. IRS, have funded bounties and research to develop de-anonymization techniques for networks like Monero. While the core cryptography remains sound for now, the perception of a looming crackdown creates uncertainty.
The result is a paradox: the features that make privacy coins valuable to their proponents are the very same features making them pariahs in the regulated, institutional financial world that crypto is increasingly trying to enter.
Enter Dusk Network
This is where Dusk Network distinguishes itself. Rather than being a "privacy coin" in the traditional sense, Dusk is a privacy-centric blockchain for financial applications. It’s not aiming to be anonymous digital cash; it’s building infrastructure for compliant, private securities trading, decentralized finance (DeFi), and asset tokenization. The difference is critical.
Dusk approaches the privacy-regulation dilemma with a nuanced, institutional-grade framework:
· Confidentiality, Not Anonymity: Dusk uses zero-knowledge proof technology (specifically, its own Zero-Knowledge Proof-friendly consensus mechanism called SBA) to allow transactions and smart contract logic to be verified without revealing underlying sensitive data. Parties can prove their compliance and solvency without exposing their entire balance sheet or trade history. This is selective disclosure—a concept familiar and acceptable to traditional finance.
· Compliance by Design: Dusk is built with regulatory requirements in mind. Its technology can natively support features like whitelisting, investor accreditation proofs, and audit trails that are only accessible to authorized entities (like regulators or auditors) under specific conditions. This transforms privacy from a shield against oversight into a tool for secure, compliant operation.
· Focus on Asset Tokenization: Dusk’s primary use case is the issuance and trading of regulated assets like bonds, stocks, or funds. In this context, absolute anonymity is not desired; rather, confidentiality for commercial sensitivity and protection against front-running is the goal. Dusk provides the "publicly verifiable, privately settled" environment that institutions require.
What the Privacy Coin Crackdown Means for Dusk
The pressures on Monero and its peers create both a challenge and a significant opportunity for Dusk.
· Market Differentiation: The regulatory exile of traditional privacy coins clears a space for a solution that solves the core problem—data confidentiality—without inviting regulatory wrath. Dusk can position itself as the sophisticated, compliant alternative for serious financial applications.
· Validation of the Need for Privacy: The ongoing demand for privacy coins, despite the crackdown, proves that the market desire for financial privacy is intense and enduring. Dusk channels this demand into a legally and structurally viable outlet.
· Attracting Institutional Interest: As traditional finance (TradFi) explores blockchain, they are terrified by the naked transparency of public ledgers. They need Dusk’s model: a blockchain where trading strategies, large positions, and corporate actions aren’t broadcast to competitors, but where regulators can still ensure integrity.
Conclusion
The narrative around privacy in crypto is evolving from one of "anonymity versus the law" to "confidentiality within the law." The struggle of classic privacy coins highlights a dead-end for the former path in the current global regulatory climate.
Dusk Network, by contrast, is pioneering the latter. It recognizes that the future of finance on blockchain isn't about hiding everything from everyone, but about giving users and institutions control over their sensitive data, enabling compliance without compromising competitive advantage or personal sovereignty.
The pressure on privacy coins isn't the end of financial privacy; it's the catalyst for its maturation. It means the spotlight is now on next-generation, compliant architectures like Dusk to deliver privacy where it matters most—not in the shadows of the digital economy, but at the heart of its future, regulated infrastructure.
@Dusk #dusk $DUSK

These regulations aim to bring clarity and oversight to the crypto industry by introducing licensing requirements for exchanges and wallet providers, as well as mandating the recording of transaction sender and recipient information, regardless of the transaction amount. In light of these developments, questions have arisen about the implications for Dusk and similar crypto companies operating with privacy-focused protocols in the EU with the following conditions as a summary:
- All exchanges and wallet providers must be licensed.
- Names of senders and recipients of transactions must be recorded regardless of the amount.
To learn more about the recently approved EU regulations, check out Ryan King’s blog series on MiCA.
Dusk's Unique Approach
Dusk provides a unique solution that combines privacy and compliance through the use of zero-knowledge cryptography. This means that transactions conducted on the Dusk network are private, while also being auditable by the relevant authorities through provable encryption. Dusk's protocol ensures that transactions are both secure and transparent, striking a balance between privacy and regulatory requirements.
The Inner Workings of Dusk's Protocol
Users select a user key, which is used to encrypt the transaction payload. The user key is then encrypted using the auditor key, ensuring that only the auditor can decrypt it. Through zero-knowledge proofs, users can demonstrate that the auditor key was utilized for encrypting the user key and that the transaction payload adheres to all the rules. This innovative approach combines privacy, digital identity, and encryption to ensure compliance.
Digital Identity and Compliance
Dusk recognizes the importance of digital identity and compliance within the EU's regulatory framework. We are actively working on our European Union Digital Identity (EUDI) ambitions, leveraging Citadel as the underlying technology. This strategic approach positions Dusk well within the regulatory landscape, providing a pathway that is more favorable compared to other crypto companies. Dusk is using privacy, a digital identity solution, a proxied license, and 2 custom-made transaction models to be compliant.
Regulatory Clarity and Real-World Use Cases
The approval of comprehensive cryptocurrency rules by EU legislators brings much-needed regulatory clarity to the crypto industry. For years, Dusk has been preparing for such regulations, and the introduction of these rules aligns with their predictions. Dusk believes that regulatory clarity is crucial for the broader adoption of blockchain technology and the realization of its potential for real-world use cases.
Marginalization of Protocols Lacking Privacy and Auditability
The new regulations are expected to marginalize protocols that lack simultaneous privacy and auditability at the base layer. Other protocols which focus primarily on privacy without built-in auditability, may face challenges in gaining traction within the EU. Public coins will be considered toy protocols, while anonymous ones will be stigmatized, reflecting the views of established corporations and financial institutions.
Provable Encryption and Data Leakage
One concern raised is the potential leakage of provable encryption by authorities. However, it's important to note that what can be leaked is the information of transactors, rather than the encryption itself. The likelihood of such leakage is minimal, as there would be no practical reason for the authorities to do so.
Auditable Transactions and Compliance
Dusk's protocol enables auditable transactions, ensuring that the names of senders and recipients can be retrieved as required by the new regulations. The auditors, such as the Netherlands Authority for the Financial Market (Autoriteit Financiële Markten - AFM) ) and licensing organizations overseeing exchanges, play a crucial role in ensuring compliance. Dusk has designed its infrastructure to meet these regulatory requirements and is well-prepared to navigate the new landscape.
KYC and Digital Identity
While KYC (Know Your Customer) is not implemented at the base layer, Dusk incorporates digital identity solutions as part of its protocol. KYC is a subset of the broader digital identity framework. Users have the option to attach their digital identity to a KYC provider, enabling them to access services that require KYC. However, users can also choose not to undergo KYC and still utilize Dusk for certain services that do not require it.
While some worry that transfers between Dusk wallets might necessitate KYC, the use of Dusk and its decentralized applications (dApps) that regulators don't directly oversee, like a stock exchange, can be done without mandatory KYC. However, accessing services requiring KYC would be restricted.
Conclusion
Dusk presents a compelling value proposition for businesses seeking affordable access to financing opportunities. It serves as a protocol where users from other permissionless networks can invest in Real-World Assets (RWA) as a safe haven during periods of crypto market volatility or bearish trends. Unlike the failed custodial platforms of the past, such as Celsius, Vauld, or BlockFi, Dusk offers a self-custodied approach. It facilitates collateralization by businesses generating tangible revenues, creating tradable assets within the network. By seamlessly enabling transitions between RWAs (essentially securities) and major cryptocurrencies like ETH and BTC, without the need for off/on-ramping, Dusk aims to attract significant assets and entice permissioned walled gardens to adopt its platform on a large scale.
The approval of comprehensive cryptocurrency rules by the EU finance ministers signifies a significant step towards regulatory clarity in the crypto industry. The conversation sheds light on the implications of the EU's comprehensive cryptocurrency rules for Dusk and similar privacy protocols. By combining privacy and auditability, Dusk has positioned itself favorably to comply with these regulations. The adoption of provable encryption, zero-knowledge proofs, and a digital identity solution showcases Dusk's commitment.
@Dusk #dusk $DUSK