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R3 spinoff Obscuro launches Ethereum blockchain privacy solution

confidential computing

Today Obscuro announced it has launched its DeFi privacy protocol on Ethereum. Targeted at both retail and corporate users, Obscuro aims to support various applications such as private transactions, sealed auctions, gaming and private NFTs.

The project initially started as part of enterprise blockchain firm R3, which also has a confidential computing solution, Conclave, the inspiration for Obscuro. R3 spun out the project, which is led by James Carlyle, the former Chief Information Officer of R3.

The new permissionless protocol is a Layer 2 Ethereum network that initially focused on enabling transactions to be conducted in private. A common issue with public blockchains is that queued transactions are visible to all, enabling profitable opportunities to be front run by miners or validators, so-called miner extractable value (MEV). 

While details can be encrypted, the protocol could be used for criminal activities if they remain permanently private. To discourage this, privacy is preserved for a limited time, but details will eventually become public.

Technical advantages

The layer 2 blockchain network uses Trusted Execution Environments (TEEs), special processors that segregate secret transactions from the rest of the computer’s operating system to avoid snooping. One example of a TEE is Intel’s SGX processor. As with most blockchains, the node operators earn rewards using a native token OBX which will be used for staking once the network and token go live. An alpha version of the network is expected later this year.

Currently, the popular Layer 2 Ethereum scaling solution is Rollups, and Obscuro offers a novel approach. Rollups tend to come in two flavors: Optimistic are operationally fast but with withdrawal delays, and ZK Rollups, which are processor-intensive and slow but don’t delay withdrawals. Because Obscuro uses processors with TEEs, it has the benefits of executing transactions quickly and allowing fast withdrawals.

Obscuro is open source and uses an Ethereum compatible virtual machine, which means it often be possible to port existing smart contracts to Obscura with minimal changes. The project will be governed by a DAO with a Swiss Foundation.

Meanwhile, EY is launching its latest Ethereum privacy offering, a Layer 2 solution Polygon Nightfall that uses Optimistic Rollups, but Zero Knowledge Proof technology to keep transactions private.

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