A recap of the Binance AMA on August 7th
With a public AMA on August 7th, Dusk Network co-founders Emanuele Francioni and Jelle Pol opened up the floor to an audience of over 110,000 Binance community members. The event saw the duo answer questions from both Binance administrators and members, with topics ranging wildly from technological developments and upcoming collaborations to staking opportunities and Decentralized Finance (DeFi).
For your convenience, we’ve gathered all questions and answers given during this event below. Minor edits were made for clarity.
Binance Admin Questions
<Binance> Alright gents, before we kick off with some questions from my side, could you guys be so kind to tell us a bit about yourself?
My name is Emanuele Francioni and I’m the founder and tech director of Dusk Network. My career spans almost 20 years leading R&D teams in distributed computing, scalability and networking for aerospace (Vitrociset), finance (Commerzbank) and automotive (TomTom) industries.
I am the co-author of several inventions and patents related to sensor networking, real time services, connected-car applications, and, most especially, a new consensus algorithm which solves the inefficiencies and lack of privacy of proof-of-work and proof-of-stake algorithms.
The consensus is called Proof-of-Blind-Bid, which is used as a privacy-enabled Proof-of-Stake (PoS) consensus for Dusk Network.
And I’m Jelle Pol, founder and business director at Dusk Network. Prior, I’ve worked for various IT companies, one which was the Shell blockchain team where I brought the first blockchain projects to production.
Together, Emanuele and I started Dusk Network almost 3 years ago, at that time we already noticed how important privacy was going to become in blockchain, especially to comply with all of the legal requirements for security tokens and other financial use cases. Those of you who are well versed in cryptography, especially zero-knowledge cryptography will know Dusk Network from our work on ZeroCaf, Ristretto, and recently the Rust-implementation of the PLONK zero-knowledge proof system. In the Netherlands we have become the most established blockchain company, and our presence is rapidly expanding towards wider Europe. I’m very happy to be here to answer your questions!
Lots has happened since the last time your team visited us for an AMA. Are you still on schedule for disrupting the financial market?
Haha yes, lots has indeed happened since the last time we spoke. The financial market is rarely disrupted on a fixed schedule, but we are progressing extremely well. We started Dusk with the idea that financial markets can be a lot more fair and efficient, and we are very excited to start seeing these benefits come to realization. The latest milestone being our brand new staking program!
While we are waiting for the next question to arrive, feel free to also have a look at staking.dusk.network for details on this latest release.
Alright, so for those who don’t yet know: Dusk Network is known as a privacy blockchain that supports zero-knowledge smart contracts. Can you tell us more about what this means and what has gone into building it?
In short, Dusk Network is quite unique as it was born as a privacy-oriented blockchain protocol where confidentiality is everywhere. Transactions, consensus, VM, all layers are powered by zero-knowledge cryptography. Since the early days, we’ve been working on making it possible to natively deploy ZK smart contracts, which means that you can create smart contracts that offer privacy to its users and their operations. When we started the Dusk project, big institutions were already exploring blockchain technology, especially in the financial field. They understood the tremendous potential of smart contracts, but could not adopt them in their business because privacy was largely absent due to their public ledgers. Large corporations only adopt a new technology when they know for sure that it provides the right level of privacy.
This is not just me saying it, Ernst & Young have been saying it all along, and we heard it directly from all institutions when we gathered their requirements. This is why we have been building Dusk infrastructure the way we have. Other blockchain projects are only now coming to that realization and trying to bake privacy in their protocol as an afterthought.
I have to say that it has been a very complex infrastructure to build in order to fulfil its strict requirements of privacy, performance and compliance, we had to push the boundaries of what was possible with ZK cryptography, networking and VM. As a result, Dusk pioneered many cutting edge technologies and developed reference libraries for the PLONK proof system, Poseidon hashing and even Zerocaf, a completely new cryptographic suite for fast operations on Bulletproofs. But we did not stop at cryptography. We also invented Phoenix, a new tx model that enables confidentiality in smart contracts and tokens; SBA, an efficient consensus algo for privacy PoS; Zedger, the first decentralized confidential protocol for security tokens. Even the Kadcast P2P networking is novel; it is an experimental algorithm developed for fast transaction propagation by the University of Berlin.
DeFi, or Decentralized Finance, has become a hot topic in the industry. On that front, I’ve seen Dusk Network detailing DeFi use cases on the website. What would you say is the most promising DeFi application for Dusk Network at the moment?
There are a multitude of DeFi use cases that Dusk Network will be perfect for. In fact, we started Dusk with the idea that financial markets can be a lot more fair and efficient, and we are very excited to start seeing these benefits. We are a big believer in the wider DeFi movement, but for DeFi to shine it is crucial that there is an infrastructure to support such applications.
This is something we usually call a decentralized financial market infrastructure, short for dFMI. This is basically what Dusk has always been; a building block created to support the decentralization of the financial markets. There are single tech systems in the European Union alone that take care of 250 trillion dollars of securities transactions last year (T2S for those interested), and this is a market that we operate in.
Very promising DeFi applications for Dusk include: STOs, exchanges, custodians, and all kinds of governance like voting, paying dividends, etc.
Also deploying regulated digital cash is one I should not leave out. Use cases like CBDC / stablecoins / etc.
Can you tell us a little bit about the kind of companies that are using Dusk Network, what sort of use cases are they building?
We operate in a highly regulated and competitive market. We have onboarded multiple partners onto our sandbox and have been working on a number of DeFi use cases that will have a real impact on the financial sector. Examples include; creating and trading security tokens, making stock exchanges more efficient, and a lot of automation via smart contracts. Dusk can be used by all sorts of players; everyday investors, businesses, banks, custodians, exchanges, you name it.
A good example is our partnership with Firm24 which featured on Coindesk earlier this year. We are decentralising part of their business process together with LTO Network. This is a great example of concrete benefits. To explain further: Firm24 is a notary platform that keeps a register of shareholder ownership. By using Dusk this register can be maintained by all relevant parties on their platform simultaneously, adding a lot of efficiencies through automation. Since they are such a big business this brings Dusk a lot of smart contract deployments, future nodes, and transactions, whilst offering big cost reductions to the businesses that use it.
Partnerships like these are part of a wider strategy where companies use Dusk Network for one thing, but later realize they can use it to mature their entire business.
For example after initially tokenizing shares, a company can later use Dusk to raise funds, list on exchanges, or conduct shareholder meetings.
It's our goal to bring down the cost for these companies to enter the financial markets, via Dusk Network they can go through an entire company journey. To make an efficient value chain we work with large banks, CSD's, legal firms, and (again) stock exchanges. With regards to the latter we will be sharing a nice few bits of news still in this year with regards to our plans of an own Dusk-based regulated security token exchange.
How do you compare to other smart contract blockchains, or privacy blockchains for that matter?
Well, you’ve already answered it yourself in your own question 😄. There are smart contract platforms OR privacy blockchains. before Dusk, the two were competing alternatives. And, there is a reason why privacy-oriented DeFi is not a thing outside of Dusk. Other protocols either offer privacy (required by regulations and securitized assets) or the capability of doing disintermediated processing through smart contracts. When you have a smart contract you need to spend gas. Permissionless ledgers have rewards in terms of coinbase tx. These are public information. We developed Phoenix as the only transaction model that allows confidential spending of public outputs. Additionally, no existing model allows for the native support of functionalities required by regulated securities, including dividend claims, voting, forced transfers, which was the main reason to create Zedger. This is exactly what the big corporations have been requiring for adoptions and what SMEs need to enter the decentralized market inexpensively. Jelle spoke briefly about the notarization of assets. These kind of use cases lead to a staggering number of transactions, now all inexpensively at the fingertip of any size organization and individuals.
Yesterday’s announcement that pre-staking launches August 17th was very well received! Why should people stake $DUSK?
We are very happy to celebrate the launch of pre-staking and what it signifies for Dusk and the community. Anyone who is able to trade $DUSK on an exchange is allowed to stake and there are some serious benefits in doing so. Phase 1 allows people with 100k DUSK to win rewards up to 250k. In Phase 2 we will be offering fixed daily rewards on stakes as littles as 10k DUSK. Besides the very competitive rewards you can earn, you will also directly help us progress our roadmap. Getting accurate info about staking and consensus participation is key in solid blockchain design. By encouraging a lot of people to stake we will be able to develop Dusk faster and this is worth a lot to us. That is why this AMA is certainly not the last you will be seeing of us.
Binance Community Questions
What are some of the difficulties Dusk is facing right now while the crypto/blockchain industry is still young and needs time to grow?
Good question! What we see on the institutional money side of our sector is that a lot of big corporations have started their blockchain journey in big consortiums with private ledgers. They of course did this for safety and security and to very slowly begin to innovate, but that means it has taken time for them to embrace that real decentralization can be very beneficial. We are seeing that since the last year there has been a lot of positivity on this topic, and this is very beneficial to our adoption as well. Decentralization and open source technology need to lose the taboo even more, and then DLT can really help a lot of industries and people.
Do you think that Decentralized Finance (DeFi) will disrupt the existing financial systems? What is the unification approach towards the DeFi sector?
DeFi has quickly become an umbrella term for a lot of things. But purely looking at decentralized finance and DeFi applications we are big fans of it. Of course there are a lot of false statements in the sector which are never good, but there are also a lot of projects doing great work here. We are very proud to be building a layer-1 blockchain that can support the DeFi movement. DeFi definitely poses the potential to disrupt, or at least vastly improve, the financial sector. By unification I assume you mean convergence between traditional sector and DeFi; here two things are immediately important: Standards and interoperability. By building standards, like XSC on Dusk, you ensure that everybody speaks the same language and can use Dusk. By ensuring interoperability you ensure that other initiatives can work with and integrate onto Dusk's technology.
What is the technology backing Dusk Network and why is it better than the existing ones?
We use PLONK ZK proof systems (fastest universal ZK system with constant time verification). Phoenix is the only tx model that allows confidential spending of public outputs (such as coinbase and gas). Zedger is the first decentralized compliance layer for smart contracts modeled with the Mifid II regulations in mind. Kelvin is the fastest storage layer for smart contracts, Rusk is the world's first ZK-VM. Poseidon is the fastest ZK hashing algorithm and Kadcast is the most scalable UDP dissemination system. No other blockchain is equipped with such novelties.
Why does Dusk utilize two transaction models: Phoenix and Zedger?
Each transaction model has a different purpose. Phoenix is a transaction model that permits users to spend non-confidential outputs privately. This allows us to retain privacy while enabling smart contract functionality, which was previously not possible - if we had stuck to the existing models. Zedger was created specifically to preserve the confidentiality of security tokens (our Security Token Standard) while enabling the full range of functionality: from dividend claims and on-chain voting to forced transfers.
What are your major goals to achieve in the next 3-4 years? What are your plans to expand and increase adoption?
Great question! We want to continuously introduce applications and use cases until we serve a logical business journey through the financial sector. This means that Firm24 makes sense for new businesses that are just starting to use Dusk. Then you will see traction around STOs and businesses growing to raise funds. A next step will be trading assets, so places like small alternative stock exchanges. And finally, large stock exchanges and custodians will complete part 1 of the plan: Dusk being useful technology for companies of every size. Then we can expand functionality further to continue to improve the market; more functionality on top of voting, dividends, etc.
Education is partly doing things like this AMA, but also putting out a lot of educational content that helps people to understand what we're doing. That said: not everybody needs to understand the technology to get benefits from using Dusk Network.
Why does Dusk use the SBA consensus mechanism? What advantages does this consensus mechanism have compared to other consensus mechanisms?
SBA is permission-less while preserving the finality guarantees. On top of that, the leader extraction mechanism known as Proof-of-Blind bid aids in preserving the privacy of the round leader. "Instant settlement" finality implies that there are no block confirmation times for Dusk Network, as the transaction is final as soon as it is added to a block.
As I see it, Dusk Network is working on Privacy Blockchain for Financial Applications. However, won’t this provide advantages to criminals & simplify illegal activities such as money laundering? How do you prevent illegal activities on DUSK Network?
It will not! Using zero-knowledge technology and whitelisting systems ensure that whilst there is confidentiality on the network for onlookers, yet there is never a risk for illegal activity to occur. This is of course one of the biggest requirements for a protocol in the financial sector, and actually one of our strongest points.
How can we participate in Dusk Network and become a Dusk node? What are the requirements for equipment?
Despite the advanced crypto processing used, the node is quite lightweight. A normal server with 4Gb of memory and an i5 processor with sufficient network bandwidth should do.
What are your major milestones to further expand the ecosystem this year?
As a first we're now working on a wide-roll out of the staking programme, including a big awareness play. Growing the widespread support for our consensus. In the next stage, we will share more about the Dusk-based Stock Exchange that's been in the works for a while now. These things take time. Next we look forward to the first STO's and we believe releasing case studies about what we're doing with partners is very beneficial too. And of course, we are constantly working hard on our technical roadmap. You can check the progress in real-time on github.com/dusk-network.
What do you think of the relationship between privacy and blockchain? Is it the blockchain that relies on privacy or the other way around?
Mutual distributed ledgers and smart contracts are an explosive idea. One of the best in the last century. Performance and privacy was the missing bit to bring it to mass adoption.
Does dusk network support DeFi in all countries?
Yes, and our own commercial adoption efforts are strongest in the European Union. However, the technology is suitable for the whole world.
What is the biggest challenge for Dusk Network in the future and how do you plan to solve this problem?
Scalability is probably the most compelling challenge as the network is bound by the proof verification time (5ms nowadays). However, we have plans to scale to thousands of TPS and see ZK tech playing a role there. We are tackling this with ZK Rollups^2 and layer-2 scalability solutions. There are lot of potential solutions, and each of them unlocks new use cases.
What should I know, and be excited for, about Dusk Network Staking?
The staking program is great because it showcases both the block generator and provisioner roles that are so key in our consensus mechanism. That means that already during pre-staking you can learn how our consensus works, and pick a role that suits you best. We have made the participation barrier for the total program very low, which makes it possible for everybody to participate. You will be able to firsthand experience how a novel piece of technology works, whilst earning some serious rewards as consideration for your efforts.
What is the importance of developers and the community in the Dusk Network ecosystem, and how easy and convenient is it to connect and apply Dusk Network technology to your existing enterprise infrastructure?
While the stack is complex, we are working to make the UX level very accessible. At the moment, we have a preprocessor of rust-lang programs named Cake! which transforms normal programs into confidential smart contracts. In the near future we are planning to roll out a DSL to further simplify the process of creating sophisticated smart contracts.
Launching the main-net in Sandbox Mode is something that many in the crypto-space are still not used to seeing, even though it’s fast becoming a requirement in the financial world. In what way has doing so benefited the Dusk platform so far?
The reasons for sandbox environments are two-fold. First, as a solution for enterprises, we can guide early partners to tap into the power of the Dusk Network blockchain. By granting them access to a controlled environment they can safely deploy confidential smart contracts while we gather important insights about how users interact with the blockchain. It provides a safe and harmless environment for testing while the technology is maturing. Secondly, it enables us to kickstart adoption, while we continue our work of creating additional features and improvements.
What is the new token standard that the Dusk Network is developing on its network, and how is it different from the ERC-20 standard?
There are mainly three standards we are focusing on. XSC (Confidential Security Contracts) which is the token standard for securitized assets. We also have developed a privacy oriented equivalent of ERC20 targeting confidential utility tokens and another to govern a fungible confidential stablecoin.
Dusk Network has done a lot in Europe. Are you considering expanding focus to other continents?
Yes! We see a lot of room to grow. In the UAE for example there is a logical synergy for security tokens and cash flows because they are also on the IBAN system. There are also other hubs like Singapore where we have visited on trade missions to discuss integrating security token chains globally. We also see a lot of interest in other parts of the world, such as Africa, where some of the bigger banks do a lot around rural business funding.
What strategy do you have to overcome strong rivals like ZEN, XMR, ZEC?
They do not provide smart contract capabilities and are not in the same market niche as us, so we are not competing. In fact, we are in quite close contact with developers of other propositions (for example ZEC and Aztec) and collaborate on the development of various cryptosystems.
What features or improvements are you planning to add to your products in the near future?
Block compression, ZK rollups, ZK^2 rollups, Privacy oriented state channels, ZK compiler.
Can you explain a little more about the 2Tokens project and who has the possibility to acquire it?
Of course! 2Tokens is an ecosystem initiative to help clarify tokenization for businesses and investors in Europe. I am part of the advisory board and the foundation, and our involvement is really about us giving back to the wider community and using these great events to connect to new institutions and corporations. The 2Tokens project was done by us to help them kickstart a small but fun use case that they can show people who are a part of the ecosystem. For the people in this chat it is nothing special; you are all intimately aware of tokens and ICO's and other crypto/DLT implementations, but not everybody is on your level. This was an easy one for us to help with, so we did it. These things help mature the entire sector into becoming more blockchain embracing.
What is your plan for Dusk’s future?
Full End-2-End lifecycle of financial assets: regulator-friendly (and approved) primary market for asset and debt instrument issuance, secondary market for exchange and trading, P2P marketplace for brokering and, finally, confidential security DEX (when regulation fully matures)
This is the year of DeFi, my question is: what has Dusk Network done in this regard?
We started working on it 3 years ago, before DeFi was a term. But more concretely; we are facilitating the new plumbing of the financial sector. The technological building blocks required for decentralized finance.
You have commented on Dusk Network, its function, its objective and its future. What do you want to receive from us the Binance Community?
Exposure, awareness, participation to our (pre-)staking campaign, evangelization and Open Source development capacity & interest.
Can I stake more than the required 100K DUSK for Block Generator staking? What happens when I want to stop staking?
Block Generators are a fixed 100k per wallet, for Provisioner Staking you can stake from as low as 10K Dusk up to a - yet to be released - maximum threshold. All details can be found at staking.dusk.network and staking.dusk.network/faq.
What does Dusk focus on when forming new partnerships and what does it look for in its partners?
They need to fill a component in the ecosystem that we are trying to build. They need to embrace DeFi or at least be using blockchain in places where it makes sense. And they need to be honest hard-working people that are willing to commit, because building a new financial sector cannot be treated as a hobby. We take our work very seriously, and we look for the same in our partners.
What rights and freedoms does the Confidential Security Agreement (XSC) give users on legal privacy and data protection?
It provides a confidential and automated way to meet regulation and requirements laid out in the relevant smart contracts governing the asset. It fully support privacy-oriented bidirectional exchange of assets (token/asset exchanges are fully cleared in the smart contract), right to repudiation, escrow, cap requirement compliance, explicit tx acceptance, etc.
The COVID epidemic is affecting the entire world economy and Dusk is no exception. How does the disease affect Dusk? Do you have a plan to reduce the damage caused by COVID?
The team was already experienced in working remotely, what affects us most is the lack of physical events where we can share what we are doing, educate potential partners on all the options, and share our story. One of the reasons we're doing more events online, like this.
How does DUSK provide ‘Complete Privacy & Anonymity’?
The confidential smart contracts can be configured to carry a set of rules that are auditable by third-parties, for example a regulator. Transactors anonymity and transaction confidentiality is guaranteed by the zero-knowledge proof system embedded in Virtual Machine (VM). The transactors need to add a ZK proof of correctness to their smart contract invocation which they are not capable of doing if they are breaking the rules that are specified in the smart contract. For example, they can prove their inclusion in the whitelist via zero knowledge proofs, or that the transaction is within an (predefined) and approved range, or that they do not own more stake in a company than they should and so on.
From a non-crypto perspective, how will you explain your ecosystem and how reliable is your system data?
Very good question! Typically we adjust the message based on the use case it fulfills for the audience that we are talking to. Crypto users will be interested in block times, staking rewards, and things like this. Whereas banks or custodians will be interested in how secure the wallet is, and how easy it is to manage large amounts of funds. When I talk to SMEs or funding platforms then I talk about how easy it is to raise funds using smart contracts, and how you can achieve savings by automating processes, and doing it digitally.
Simply put: We focus on the use case, and not always on what is under the hood, as this can get unnecessarily complex for a lot of people.
Reliability and robustness are key features of most blockchains, but ours especially; financial sector information is some of the most highly regulated market data out there, and it needs top notch protection, hence the focus on confidentiality.
At the moment you only have a desktop wallet for DUSK. Do you have plans for mobile wallets? Will staking be available on the desktop wallet?
Yes there are plans for both! Once the work on the Desktop wallet is fully released, we will continue with our plans for a mobile version. The tools we're using to develop it are already taking these iterations into account. Also, we are working to enable staking via the desktop wallet in the future, alongside all other types of neat functionalities; transacting XSC, creating and managing smart contracts, and managing your security token portfolio.
Which countries is Dusk Network focusing on for growth? Are the present markets with huge data sources, such as India and China, in your target markets?
We are well established in the Netherlands, and EU, which is a target market that we aim to capture via our deep connections with key stakeholders. Through ongoing business missions, for example those organized by the Dutch ministry of Finance, we are developing relationships with institutions in the Asia region and are actively exploring major asian markets (such as India, China and South Korea).
Does Dusk Network have any staking programs? Is there a minimum and maximum amount of DUSK needed for staking? What is the minimum duration of staking and how many benefits can we receive from staking?
Dusk is made unique because it offers privacy combined with smart contracts, of course powered by all kinds of technological innovations which you have already heard a lot about. The entirety of Dusk is powered by staking, and it is great to see so much interest being placed in it today. We would deeply appreciate it if you supported Dusk by participating at staking.dusk.network. On the staking website you can find answers to most of your staking-related questions at the FAQ section.
Each project has interesting stories before it is created. Can you tell us about the story that gave you the motivation to build and develop a great project like Dusk?
In 2017, during the bull market, we were approached by various financial institutions to develop smart contracts to automate financial operations. As privacy (of communication as well as transactionality) was a requirement, I could not use anything already available without a huge intermediation from a trusted third party. That is when I met Jelle (who had similar requests on his side), Dmitry Khovratovich (the developer of ZEC hashing algorithm) and my other partners and decided to develop an infrastructure from the ground up to meet these requirements.
About Dusk Network
Dusk Network is an open-source and privacy-oriented blockchain based on years of academic research. You can use Dusk Network to create smart contracts that control digital assets and securities.