Research Summary: Privacy Preserving Decentralized Netting

@jmcgirk That’s a good question! Currently, the netting protocol makes use of both ZK proofs and MPC. While it is relatively straightforward to deploy the ZK specific step on the blockchain (as has been done in prior work), it is unclear how to perform MPC in a blockchain ecosystem. Current fault-tolerant MPC protocols require an honest majority assumption among the MPC servers. Maybe this is possible if you are in a permissioned setting where you can dedicate some specific nodes to perform MPC computation (under the assumption that only a minority of those nodes will be corrupt).

Also, there are some papers (see this and references therein) which study the possibility of MPC in a blockchain-like setting but I am not familiar with any real-world deployment of such a system. So I guess the next step for the community would be to figure out how to integrate MPC into the blockchain world in a secure and scalable way. This seems like a precursor to deploying the netting protocol using a web3 solution.

Having said that, I think a web3 solution to netting would be immensely useful for the banking industry as it would remove the need for a central bank to be involved (except maybe for the setup phase) for doing transaction settlement. It might also be interesting to see if other applications on web3 can be integrated with the netting part to make it more “feature-rich”, for example, integrating a web3 decentralized “reputation system” with the netting protocol to assign priorities to the transactions e.g. a transaction originating from a bank with higher reputation will be assigned a higher priority during the netting process compared to a transaction originating from a lower reputation bank.

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