Satoshi Scoop Weekly, 27 Sep 2024

Crypto Insights

Lightning Network on CKB: Fiber Network Testnet Full Version Release

The full version of CKB Fiber Network Protocol Testnet is now live, bringing multi-hop routing support and watchtower service. These features build on the basic version, which already enabled users to open, update, and close channels between two nodes, supported any RGB++ Coin channels, and ensured cross-chain interoperability with the Bitcoin Lightning Network.

Shielded CSV: Private and Efficient Client-Side Validation

Shielded CSV is the first fully private Client-Side Validation (CSV) protocol that hides the transaction history, with the following features:

• Coin proof size and verification cost independent of transaction history

• 64-byte cost on-chain per transaction, regardless of transaction size

• Supports t-of-n accounts and atomic swaps

• Protocol spec is written in Rust

One application of Shielded CSV is adding privacy to Bitcoin at a rate of 100 transactions per second, provided an adequate bridging exists.

For more details, read the white paper.

Privately Sending Payments While Offline With BOLT12

Andy Schroder describes how devices can authorize payments from their remote online node, even when the device authorizing the payment has no direct internet connection. This method requires a slight adjustment to the BOLT12 invoice to ensure security.

UTXOzkp: Confirming LN Channel Presence On-Chain Without Revealing Specific UTXOs

Johan Halseth introduces a proof-of-concept for proving UTXO set inclusion in zero knowledge that allows users to prove they control one of the outputs in the current UTXO set without revealing which output. The goal is to allow the co-owners of an LN funding output to prove they control a channel without revealing any specific information about their on-chain transactions.

This proof can be attached to the next-generation channel announcements messages to build decentralized routing information for the Lightning Network.

Expand the Concept of DNS-Based Resolution of Payment Instructions Via DNS TXT Records

Selfie Records, by Synonym (@Synonym_to), is an extension to BIP 353. It expands the concept of DNS-based resolution of payment instructions to a broader application of identity and data verification through DNS TXT records.

Is Babylon's Sustainable Interest Narrative Valid?

The author believes: “Babylon only acts as a secure reinforcer in this BTCFi wave. The real play still depends on other liquidity aggregation platforms, like Solv Protocol, BedRock, Lorenzo, PumpBTC.”

What Exactly Counts as Client-Side Validation?

The author shares a method to identify client-side validation, with the core principle being that “users can directly complete P2P validation locally without relying on a global ledger or centralized services.”

New Evidence of Mining Pool Centralization: Block Template Similarities

The author 0xB10C conducted a follow-up analysis on the potential issue of mining pool centralization, confirming previous findings—Antpool and Bitmain indeed act as a "pool of pools".

"All pools together have had a 37.6% share of the network hashrate over the past month …. That said, while the block templates might be unusually similar between some of these pools, and some pools might be engaging as proxy pools for others here and there, it’s not proven that there is a single entity behind these nine pools. Yet, it adds more data points to the discussion around mining pool centralization."

Privacy-Friendly Tools Covering Crypto, Desktop, and Mobile

A privacy-focused VPS provider Mynymbox.io offers a list of privacy-friendly tools, including Bitcoin wallets, KYC-free exchanges, marketplaces, and various other privacy-friendly tools related to desktop and mobile devices.

Entering Bitcoin Development With Rust Language

This course teaches how to build a raw transaction decoder from scratch using Rust, covering topics such as types, data structures, references, stacks, heaps, traits, error handling.

Enjoying Warm Coffee While Mining Bitcoin

The coffee warmer, priced at £249.99, comes with a built-in Bitcoin miner, harnessing the power of mining to provide a constant temperature of 55 - 65 degrees Celsius to keep your coffee warm.

Cracks in the Onion: How German Law Enforcement is Piercing Tor’s Anonymity

The Tor network has long been considered a beacon of privacy and anonymity for users, but it is now facing serious scrutiny. Recent reports from Germany reveal that the country’s law enforcement agencies successfully deanonymized users involved in illegal activities on the dark web.

Top Reads on Blockchain and Beyond

NOIST: a Non-Interactive, Single-Round T-of-N Threshold Signing Protocol

NOIST (Non-interactive single-round) allows multiple untrusted entities to come together and jointly produce a group key and generate signatures in constant time, where a disruptive signer cannot force a re-do of the entire round. The resulting signature is a single 64-byte BIP-340 compatible Schnorr signature.

NOIST allows signatories to add or remove participants or change setup parameters such as the threshold, while FROST and ROAST quorums are immutable once the shares are distributed.

Shielded CSV Whitepaper

• Client-Side Validation (CSV) removes transaction validation from the blockchain consensus rules, allowing sending coins along with a validity proof directly to its recipient, reducing communication, computation and storage cost. However, the CSV protocols deployed on Bitcoin today do not fully leverage the paradigm’s potential, as they still necessitate the overhead of publishing ordinary Bitcoin transactions. Moreover, the size of their coin proofs is proportional to the coin’s transaction history, and provide limited privacy.

• This work introduces Shielded CSV, which improves upon state-of-the-art CSV protocols by providing the first construction that offers truly private transactions. It requires only 64 bytes of data per transaction, called a nullifier, to be written to the blockchain. Moreover, for each nullifier in the blockchain, Shielded CSV users only need to perform a single Schnorr signature verification, while non-users can simply ignore this data. Also, the size and verification cost of coin proofs for Shielded CSV receivers is independent of the transaction history.

• The authors specify Shielded CSV using the Proof Carrying Data (PCD) abstraction, then discuss two implementation strategies based on Folding Schemes and Recursive STARKs respectively. Finally, they demonstrate the power of the PCD abstraction and the extensibility of Shielded CSV, highlighting the significant potential for further improvements to the Shielded CSV framework and protocols built upon it.

Smart Contracts: Decoupling Services from Decision Maker

• This article begins with the arrest of Telegram founder Pavel Durov, suggesting that the lack of independence between the services of the product and its leader/founder contributed to his arrest (as Pavel Durov held accountable as a responsible individual). It raises the question of how to make services independent from project leaders.

• The author believes that smart contracts can meet this challenge. Once deployed, the contracts run autonomously on-chain, ensuring the service’s independence from its founder or developers. Tornado Cash is used as case, where despite the arrest of Tornado Cash developer Alexey Pertsev, the smart contracts continued operating independently on Ethereum according to its original code, without the policy-driven instability seen with Telegram, where users feared privacy issues after the founder's arrest.

RWAs: A Safe Haven for On-Chain Yields?

• Real-world assets (RWAs) refer to tokenized, on-chain versions of tangible and intangible non-blockchain assets, e.g., currencies, real estate, bonds, commodities. Key categories include tokenized US Treasuries, private credit, commodities, stocks, real estate, and other non-US bonds. Emerging categories include air rights, carbon credits, and fine art.

• This report covers cover six projects: Ondo (structured finance), Open Eden (tokenized Treasuries), Centrifuge (tokenization, structured credit, aggregation), Parcl (synthetic real estate), Toucan (tokenized carbon credits), and Jiritsu (zero knowledge tokenization). It also points out the technical risks to be aware of when considering RWAs, including centralization (due to the very nature of RWAs and regulatory requirements), third-party dependencies (particularly for asset custody), whether the complexity of the system is worth the yield, the robustness and dependency of oracles, as well as privacy and compliance considerations.