Panther Protocol — how it works
Panther is an end-to-end privacy protocol for digital assets, which can be deployed in a confidential way on any public blockchain. Panther enables the creation of interoperable, zero-knowledge assets (zAssets) collateralized 1:1 by their original counterparts.
Crypto assets are secured within Panther vaults and zAssets are minted in return. Each zAsset is one-for-one collateralized with its underlying asset. Whether the zAsset is a zUSDC, zETH or zBTC, the new zAsset is a private, fully collateralized synthetic of the underlying asset.
Key features of Panther Protocol
- Privacy for any digital asset. Panther is not going to be limited by layer 1 or type of asset. Panthers’ privacy features can expand to any digital asset on any public layer 1 (we call them peerchains). We want zAssets to go wherever DeFi goes.
- Interoperability. It’s unlikely that one chain will rule them all, so there will always be a need for cross-chain transactions. Panther will provide a private interchain DEX module to enable these cross-chain transactions.
- Confidentiality. Panther provides users with the ability to select the level of privacy they want at the transaction level. One of our most interesting approaches is to enable selective disclosure of any of their transactions to meet the requirements of the counterparty or regulator.
With Panther Protocol, in addition to complete privacy, there are two other levels of privacy: On the first, Zero-Knowledge Disclosures allow users to prove to the counterparty that they have behaved fairly according to a certain rules engine, meaning, the counterparty knows what they need to know, without having access to any of your transactional data. When providing a zero-knowledge disclosure, the message is basically “User X complied with the rules engine, and that’s all you need to know”. This is achieved by using Zero-Knowledge Proofs (ZKP) technology. The second level is when you disclose transactional data to the counterparty but still preserve your privacy on-chain.
We believe that in addition to providing users with the ability to enjoy full privacy, these selective disclosure mechanisms will set the design space for the entire compliance industry to evolve. Selective disclosures can become the de facto standard for balancing transactional privacy and compliance requirements.
- Strong privacy threshold. Mixing services require a large set of inputs to effectively obfuscate the link between input and output of a transaction. Panther will ensure that a certain privacy threshold is met to allow transactions of a particular zAsset to go through. The tokenomics will incentivize liquidity provision for mixing to ensure there is a large enough pool of assets to provide a strong privacy threshold for users.
- Price discovery for privacy. In most privacy protocols, privacy is not explicitly priced, even if it bears a cost for the user. With Panther, privacy will be priced explicitly through dynamic transaction fees and paid in ZKP rather than as a fee applied to the transacted digital assets. We will write more about this novel pricing mechanism in future articles. In short, the more privacy is provided to users, the cheaper it will become to enjoy privacy, resulting in powerful network effects for on-chain privacy.