A recap of the CryptoBenelux AMA on December 9th
For their inaugural public Telegram AMA, crypto news source CryptoBenelux chose Dusk Network, and we were more than happy to oblige. Co-founders Jelle Poll, Mels Dees, and Emanuele Francioni opened up the floor to questions from the community, with general excitement spurred by the recent news of Dusk Network becoming shareholders of the NPEX Stock Exchange. Questions ranged from Dusk Network’s future business development intentions, timelines and technological developments.
For your convenience, we’ve gathered all questions and answers given during this event below. Minor edits were made for clarity.
CryptoBenelux Host Questions
Alright, so welcome again for team Dusk. Hi Emanuele, Jelle and Mels. Welcome to the CryptoBenelux channel. Before we start on Dusk Network, could you be so kind to introduce yourselves?
[Emanuele Francioni] Sure. It’s a real pleasure to get the chance to answer any questions the CryptoBenelux Community might have about Dusk Network.
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, cryptography, scalability and networking for aerospace (Vitrociset), finance (Commerzbank) and automotive (TomTom) industries.
I founded successful startups and I am the co-author of several inventions and patents. Most notably, a new consensus algorithm that solves the inefficiencies and lack of privacy of proof-of-work and proof-of-stake algorithms. Utilized at Dusk Network, of course.
Ok great, glad to have you here Emanuele! But there's three founders here today. Also here is Jelle Pol.
[Jelle Pol] Hi all, I’m Jelle Pol. Founder and the business director at Dusk Network. Together with Emanuele and Mels, I started Dusk Network almost 3 years ago. At that time we already noticed how important privacy was going to become in blockchain, especially when servicing financial use cases like security tokens.
Before Dusk Network I worked for various IT companies, one of which was the Shell blockchain team where I brought the very first blockchain projects to production. I’m very happy to be here to answer your questions!
[Mels Dees] Last but not least, I am Mels Dees, Co-Founder and Marketing lead at Dusk Network, and also happy to be here in this first CryptoBenelux AMA.
I ended my university time graduating Cum Laude for the Masters in Marketing at the Erasmus University. I then worked for Rabobank, where I did a lot of work that had to do with new regulations, finance and IT. Then at the end of 2017, beginning of 2018, I started working in the blockchain space, and soon after joined the group that founded Dusk Network. I’ve been the marketing lead of Dusk since the very beginning.
Great to see that Dusk has such a diverse team of founders. There's a lot of expertise available when it comes to the blockchain, technology and financial world.
Host Question #1
Now there are quite the number of Dusk fans here today, but for those we are not so familiar with Dusk, could you briefly explain what problem Dusk is trying to solve?
[Jelle Pol] Sure thing, I will take a stab at it first, and then perhaps see if Emanuele or Mels have things to add from their points of view.
We started Dusk with the idea that financial markets can be a lot more fair and efficient. We're excited to provide technology that complies with the rules and regulations already in place, making for a much easier transition into what we believe to be the future of finance.
We envision a financial industry that embraces innovation and provides equal opportunity for any organization to secure capital, trade assets, and access a full spectrum of financial services.
The problem we are solving is therefore the high barriers of access posed by the traditional system. Whether that is done through cost, gatekeeping, or purposeful complexity to make the system less accessible. Decentralized technology like blockchain, together with the unique features that Dusk Network offers, are the solution to this.
I will not presume to start being overly technical when I have my co-founder with me who is far more versed in that territory.
[Emanuele Francioni] Simply put, before Dusk, there was no way to comply with the regulations of the security sector without heavy intermediation.
There was simply no technology that could provide transactions of securitized assets with all needed characteristics to be compliant - confidentiality, auditability, security, performance, to name a few - without the intermediation of several third parties. Because of such intermediation, the costs and process complexity were prohibitive and discouraging for most organizations, even big ones.
Thanks to years of research in zero-knowledge cryptography, Dusk Network was capable of solving this problem with a new breed of smart-contracts that guarantee all these characteristics, with no intermediation needed.
So, similarly to what Bitcoin signified for monetary self-sovereignty, Dusk provides organizations with the tools to meet the compliance requirement of any use case involving security transactions, without the complexity or costs.
And because of this, we’re already seeing a lot of traction towards tokenized securities.
Host Question #2
That was the elaboration of the specialist. Thanks for that Emanuele! So, at this very moment, what stage is Dusk Network in and what are the coming milestones?
[Emanuele Francioni] Our focus these past years has primarily been on validating our assumptions; creating the technological foundation on which to build our mainnet, and the road to mainnet launch is paved with auditing and testing.
With the formalization of our economic model, the implementation of Provable Encryption & PLONK gadgets, our latest Phoenix code release, the R&D efforts on PLOOKUP and a lot more we’ve been cooking up, we’ve set the stage to have all individual tech components for mainnet released and implemented in time for integration into a first E2E release candidate by Q1 2021.
I am currently busy outlining a graphic so [as] to show off the many moving parts of Dusk Network’s technological advancements on the road to mainnet. The aim is to give our community a better overview of our progress, and we’ll be sharing it quite soon.
[Jelle Pol] You can imagine that there's a lot of stuff that needs to happen in order to launch a decentralized ecosystem for the financial markets. It's not simply a case of building tech and then people will come. We need to do change management with the businesses and people we work with, ensuring governments, regulators, etc. are all up to date on this new innovative mindset.
Because we are building a secure infrastructure for tokenized securities, we can leave nothing to chance. Of course, this means rigorous testing and auditing of the technology but also, like I said above, getting the users ready to adopt tokenization in their day-to-day lives.
We work with partners to design processes and products that benefit from tokenization, educating a very wide ecosystem of players. We work hard to provide lighthouse projects (big example cases) to showcase the world how to get the most out of Dusk Network.
Big business announcements we did this year, like Firm24 and more recently NPEX, a leading Dutch stock exchange, showcase some of the potential we are moving towards. These are all players in the existing financial ecosystem that are ready to move towards a tokenized future, helping thousands of businesses and investors.
By showing the world how it is done, we expect a huge amount of traction to follow once everybody sees the benefits of security tokens, etc. The end result will speak for itself. Being able to build completely new business models and working towards a better capital market in Europe through Dusk Network is a very rewarding path with many milestones already taken, and many more to come. Practically speaking, we are very well placed in the Netherlands right now and will continue working on our European milestones.
Host Question #3
What’s been the most exciting developments for you, on a technological and business development level?
[Emanuele Francioni] Well, everything about Dusk Network is very unique. There are no privacy blockchains with smart contracts and no smart contract blockchains with privacy. The best they can do is for the latter to add an L2 (layer 2) and try to work around the openness in the L1. Dusk, instead, was born as a privacy-oriented blockchain with native confidential smart contract capabilities, where confidentiality is everywhere. Transactions, consensus, VM, all layers are powered by zero-knowledge cryptography.
Creating smart contracts that offer privacy to users and their operations, satisfies a multitude of use cases, but is particularly suited for tokenization and innovation of financial services.
Some of the technical aspects I get most excited about are the SBA consensus and the PLONK proving system. SBA solves a lot of problems with existing consensus’ protocols and provides the first private Proof-of-Stake implementation, while PLONK opens up a lot of opportunities. Both in new ways we can use zero-knowledge technology (while keeping the chain fast), but also as a means to attract a lot of developer attention from big organisations.
There are many other exciting features, of course.
[Jelle Pol] From a business point of view, I love the progress we have been making in the trading part of the sector. Security tokens can do a lot to increase the tradability of shares and bonds through tokenization. This is truly a multibillion dollar market that is up for grabs. We call all of our efforts in the secondary markets (trading of securities) by the name 'Project Dawn', i.e. everything related to a future where fully tokenized stock exchanges will be the norm.
Especially in this area we have seen many of our developments come to light. I already mentioned the NPEX deal, but we also saw our joint venture for Dawn announced earlier this year, with an investment led by iFinex, the mother company of Bitfinex. We are working in consortia with several other notable players in the space (banks, exchanges, custodians, you name it) to bring this future to fruition. An example of an ecosystem consortium you might have heard of is 2Tokens, with whom we are working on a use case called Next Generation Capital, which focuses on tokenized start-up funding with institutional investors.
The institutional side and the new exciting blockchain side of the financial markets are really starting to come together.
That sure is one of the things we've seen this year, Jelle. We can feel the enthusiasm and drive from all three of you guys!
Host Question #4
Final question before we open the floor for the community to ask questions. How confident are you about what you're building?
[Jelle Pol] Simply put, I am supremely confident in why we are building Dusk Network and why we are doing this. When I look at the supertrends in the European Union, everything is pointed towards a digital open market across all countries, and this perfectly fits our vision of a decentralized financial market infrastructure. Of course, I have to be a practical businessman that also knows that a lot of small things will continue to change as the market gets more mature, but we have every reason to believe that we can make every change necessary, or in many cases even be the leaders in why that change is happening. We are 100% on the right track, and it is a matter of when, not if.
I am actually working on an article series that explains a lot of what is happening in the market and how it shapes the wider vision of the ecosystem, which will launch this month. That is a good one to look forward to for people interested in this kind of stuff.
[Emanuele Francioni] I think Jelle said it well, but the one single thing I am extremely bullish about is our recent acquisition of our position in NPEX.
We are the only public DLT with a direct line to an impressive pipeline of assets that are only waiting for mainnet, and traditional investors are very impressed with the advancements we showed them already.
For sure that is very relevant for the Dutch and/or investors here today!
[Jelle Pol] Yep, a lot of people are in this space to make money of course, and there is nothing wrong with that, but I think we can improve the playing field. So as long as we can do both for the people we are building Dusk for, I am happy.
CryptoBenelux Community Questions
Are you guys currently in discussion with [the] U.S. Exchange to be listed?
[Emanuele Francioni] It is under attentive consideration right now.
Many projects enter [the] blockchain industry with very good plans, promise to do good work but disappear in time and lose community. So without losing believers, how can #DUSK survive this long [in a] challenging blockchain [industry]?
[Jelle Pol] You are completely correct in the fact that a lot of companies have entered this space with big promises only to perform very poorly. Hopefully we can clearly show that we are an exception to these incidents. We started a few years ago in the depths of the previous bear market which no sane person would ever do unless you believe in what you are building. I also think our continued involvement with the community, transparency in our corporate and financial management, and steady stream of news, PR, and announcements serve to further prove that we are progressing and in this for the long run. Of course, Dusk too started with a big dream, but if you have kept an eye on our channels all these years you will see that we are slowly but steadily realizing our ambitions to play a big part in the multibillion dollar securities markets.
Bittrex recently announced tokenized stocks such as AAPL, TSLA, etc. Are Dusk and NPEX planning to do something similar with Dawn and set up trading for tokenized shares or index funds for example?
[Jelle Pol] Yes we are actively working on tokenized shares and funds. The stocks you mention are often implemented in legally very poor ways, for example through a nominee structure that does not really protect the investor. For example a company buys some Apple stock, lets say 1000 pieces, and then lists a thousand apple tokens on an exchange. As long as this company keeps their promises then of course this can practically feel the same as trading tokenized apple stock, but legally the protection is very poor. We want to do a lot better than this and bring security tokens to the market that come with adequate investor protection. You will also see a few other instruments like bonds, or more mid-term; commercial paper markets, etc.
There was a tweet that the Dusk Network has a use case for OTC trading. Will the OTC use case be part of the Dawn Exchange or just a capability of [the] network?
[Jelle Pol] Both. Dawn and other security token exchanges can offer OTC Desks, for example through an algorithmic market maker for private equity tokens. But similarly companies or VC's can set up their own OTC networks to deal in previously illiquid stocks.
When can we expect Dusk sweaters?
[Mels Dees] Great question! 😄 I know there's demand for them, and we've had prior brainstorms with the marketing team about how to best go about this. We'd love to tie the ability to get a sweater to a meaningful activity (do people earn them, or win them?), and there's some logistical challenges we need to overcome to ship them effectively, etc. I'd love to get this going and am happy to hear your suggestions!
Great news on the business side. Good for you guys! (1) Why go over all the work of maintaining a community with retail people like me and what's in it for this community assuming they invest in DUSK tokens as well? (2) How is the public network coming to fruition? Any news regarding the 'mainnet' yet? (3) If it turns out a public network is not the way forward, how would DUSK position itself towards token investors? What way would investors be able to get sustainable and proportional ROI without a public network?
[Emanuele Francioni] wow, many questions at once.
Dusk is all about community. We want retail to have the exact same opportunity that accredited investors have with [the] same low risk profile. It is about opening the market, not catering to the 1%. Similarly we want SMEs to fully participate in the financial environments without the barriers to entry that can only be overcome by big corporations.
Public network is very close. Like I said, we expect to roll out the E2E release candidate in Q1. From that point, it’ll be just a matter of testing and small incremental improvements, but nothing big. Our R&D has successfully commenced.
Public Network IS the way forward. There is no permissioned network in Dusk future. To the contrary, we are in the game to disintermediate traditional exchanges and platforms, by extending the license to a decentralized market of securities and other assets.
Every asset issuer will have to stake Dusk in order to partake in the network. This means that they will play an active role in the infrastructure, and drive scarcity down. Moreover, apart from all use cases related to issuance, trading and management of securities, we are actively working on a security DEX concept that will create real transaction volume.
Can you speak at all to the volume of assets you expect to be tokenized, say, within a year of launch? Are we talking 10-100M, 100-500M, or 1B+?
[Jelle Pol] This is a tricky one to do a lot of justice. As with many things the trick is always in the first few times, and after that it can grow exponentially as people are very willing to run with what you have trailblazed. Realistically, I expect us to personally be involved with a volume to the tune of 100-500M, however once we have deployed the first successful bonds, shares, funds, etc. there is no telling how quickly the market will pick it up and start replicating with assets that do not require our personal involvement to deploy. This could quickly blow things way beyond your 3rd bracket of 1B+.
Our goal of course is to show how things are done in a way that people can replicate. We want our security token standards (XSC) to enjoy the same effect of what ERC-20 did for utility tokens. People like vitalik showed the way, but of course were not involved with every subsequent use of the technology. It's roughly the same comparison here. So it's about building examples, and the tools to replicate them.
Exactly how big is the NPEX deal here, like do we immediately have an exchange practically ready to go?
[Emanuele Francioni] It is a HUGE DEAL! Not only [do] we have a position in NPEX and a lot of skin in the game, but we are also in an active commercial partnership with the common firm intention to bring Dusk vision to reality, through NPEX license and compliance. So yes, we have an exchange practically ready to go.
Will dusk list on more exchanges for wider adoption?
[Mels Dees] We always consider the addition of more exchanges, especially in regions where our exposure can grow. That said, we also need to take into account all legal and regulatory matters, and safety of users. There's a lot of thought that goes into any listing. Btw, we recently listed on WazirX, the India based crypto exchange that has been acquired by Binance.
[Emanuele Francioni] In a word yes. Also, although we are very focused on the EU, we are also aware of the deep interest shown in [the] U.S. for our value proposition. So we are particularly keen to formulate a path to get in the U.S. market too.
Is there going to be developer onboarding or incentives for building on Dusk?
[Mels Dees] You may have noticed 'Dusk Network Development Fund' mentioned in our recently published Economic Model Paper. The Development Fund is allocated with 10% of the block rewards and was created to incentivize developer adoption on Dusk Network. We are currently in the process of finalizing the governance model which will be responsible for the proper allocation of the resources from the fund.
Hi Dusk team, any plans that the DUSK coin will get similar use cases like BNB for binance? e.g. lower trading fees on the listed products?
[Emanuele Francioni] Yes. In my answer above, I briefly mentioned "apart from all use cases related to issuance, trading and management of securities, we are actively working on a security DEX concept that will create real transaction volume”. More than an BNB equivalent, I would say that the similarities will be with a regulated Uniswap of sort.
Most of [the] users are still not aware of Blockchain & its related projects! So, how [does the] DUSK platform create awareness about their project with NON-CRYPTO users too?
[Jelle Pol] You are right in saying that blockchain does not mean the world to every normal person like it does to us. The importance lies in that we need to see for every group of people whether they need to understand blockchain. Outside of the crypto space we see for example companies in the financial sector, governments, etc., and these big players of course need to understand on a pretty good level what we are doing, so we spend time educating them.
From a technological point of view we of course want to interest developers and tech teams working for traditional players in our technology, so we work closely with partners on pilots in the sandbox, and show them concrete quantifiable benefits. In the end nothing talks like money.
Finally we reach the group that you are most likely referring to, and those are the retail users and investors. Perhaps the typical everyday Joe that does not know what blockchain is, and probably does not care. For this group it is way more important that you can explain what they can do as a result of blockchain, that they could not do in the past. This group we do not approach with explanations of a consensus mechanism, our how advanced our zero knowledge proof modules are, but we explain that they can now support the small business that their friend started because of tokenization this is now basically free, instead of coming with a big notary bill that makes it unattractive to invest smaller amounts. Or we tell them that they can own small pieces of stocks in big companies, that they previously were not able to. Here it is extremely important to talk about the use cases and the benefits and what it means in their daily lives, because that is what they are passionate about, and only then they might get interested in what's happening under the hood of the car, but rarely the other way around. So here you will see a lot more traditional marketing and PR, like for example our recent NPEX PR spree in traditional media.
Mels Dees, have you guys thought about doing sponsored videos thru top YouTube influencers?
[Mels Dees] It's something I've looked at various times, and will consider especially when we have a very clear call to action, for example once we launch one of our user interface components and can use it to immediately increase traffic.
After having invested in NPEX one would think you already have the upper hand on other projects in your niche, would that be true?
[Emanuele Francioni] I am not aware of any other significant efforts in the space. When talking securities, everybody. focused on STOs, which is only one of the many use cases, and not exactly the most significant. The capability to disintermediate the financial market is dependent on the secondary. A Uniswap for regulated assets, if you pass me the comparison. This is what we are busy with, also thanks to our partnership with NPEX, and I see no one else actually doing this. So, in a word, yes, I believe we have the upper hand. Actually, I believe we are the only one really positioned to meet such a goal and is not in the game for empty speculations that do not really benefit anyone other than empty hype.
Will there be a beta test for the community before the mainnet opens up for everyone?
[Emanuele Francioni] Yes, this is what the release candidate is for.
Is there more in the pipeline for dusk with partnerships?
[Jelle Pol] Yes, as I mentioned earlier I will shortly start releasing an article series on my vision of the financial ecosystem and how it will shape up the next 5 years. In this series I will also paint a picture of what the new value chain looks like and which players are part of it. In those articles you will already see how our past announcements fit into a much bigger plan, but you will also see some logical places where you could expect some new partners to take up a strategic spot. This will give you some first hints to the kind of parties to look out for next.
Is it true [that] Dusk is the 3rd blockchain worldwide with its own transaction model besides BTC and ETH?
[Emanuele Francioni] Yes, Dusk actually has 2 novel transaction models. One is Phoenix and the other is Zedger. The former was created to allow for full confidentiality, also when spending public outputs like coinbase or gas reward. The latter has been developed based on current regulatory framework to support security transactions and guarantee auditability, confidentiality, bi-directional exchange, KYC set inclusion and explicit token acceptance.
What other layer 2 solutions besides zk-rollups [is the] team looking at for this DEX ? Are state-channels a viable path too?
[Emanuele Francioni] We are looking into multiple L2 solutions including zk-Rollups, zk^2-Rollups and zk-Plasma (a.k.a. Validium). No, the state-channels are not applicable for the required use case.
On that note, given the MASSIVE staking rewards upon public mainnet launch, will current ERC20 stakers be given some sort of "early supporter" advantage in securing a mainnet staking slot?
[Mels Dees] We will make sure that our early supporters willing to participate in the Mainnet are the first ones [to] hear about it, and have every opportunity to be the first ones to join. More concrete details will be made public closer to the Mainnet launch.
Question 20 .
Is the fb [Facebook] level partnership still on?
[Emanuele Francioni] After the wolf in sheep's clothing that is Libra (or however the heck is called nowadays), I would be wary of bringing FB up when talking [about] decentralization. Let’s say that the pipeline in front of us is one that warms our heart and give us the confidence that we can make a real impact in the accessibility and evolution of finance.
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.