So, whether you’re just discovering Dusk or have been around for a while but have some questions, let’s clarify some of the foundational pieces of the Dusk-osphere.
By: Jade Doherty | London - United Kingdom
Discovering a new project can be like entering a new world, especially with as many moving pieces as Dusk.
Discovering a new project can be like entering a new world, especially with as many moving pieces as Dusk.
Not only is there a whole lot of tech to get your head around (PLONK? Piecrust?) there are also terms that you may be familiar with in general but that are used in a specific “Dusk” way.
So, whether you’re just discovering Dusk or have been around for a while but have some questions, let’s clarify some of the foundational pieces of the Dusk-osphere.
Core developer (and community favorite) Hein Dauven will be adding to this series and going more into the tech, so if you’re all about the technicalities keep an eye out for Hein’s pieces, coming soon.
Why does Dusk exist?
First things first, why is there a need for Dusk? What sets Dusk apart from other Layer 1s like Ethereum or Solana?
The big challenge blockchains (and therefore cryptocurrencies) face is gaining mainstream adoption. Thus far, blockchain is quite a niche technology and hasn’t really made significant inroads into being used in a mainstream, “normal” way.
This is partly because mainstream adoption really means adoption by the regulated and institutional world, and most blockchains are not built to meet these requirements. While a lot of crypto enthusiasts might balk at words like “institutional” and “regulated” they are necessary for meaningful adoption.
Most blockchains and crypto projects exist within the crypto sandbox and are focused on solving problems within said sandbox; problems like bridging assets across different blockchains, how to incentivize staking assets, and how to scale existing blockchains.
These problems are important and need to be solved, but they do not really help with onboarding financial institutions and (by extension) “normal” people.
This is where Dusk comes in and provides a service and infrastructure that can be used by the “regulated world” while holding onto the most important aspects of the “crypto world”.
The best of both worlds
The goal of Dusk is to bring regulated assets to everyone’s wallets.
To provide the same ease and choice as you have to buy digital, crypto assets but with regulated, real-world assets. This would mean you could buy bonds, securities, and foreign currencies in a few clicks of a button. This isn’t to even mention the innovative financial products that would be possible by tokenizing real-world assets.
What kind of impact would self-custody have on the financial world, for example? If you could use flash loans on bonds, or have real custody of your assets? Not to mention being able to use your assets in more efficient ways. By bringing traditional assets on-chain we can do things like collateralize assets that are illiquid in traditional markets. It would be huge!
In order to do this, Dusk has had to build out a complex and multilayered ecosystem that satisfies the needs of regulators, institutions, and everyday people while also remaining decentralized, permissionless, and trustless.
Core concepts
The Mission of Dusk has always been focussed on 3 components, or pillars as we call them; Privacy, Compliance and real-world assets (RWAs). Lets provide a quick introduction into why these pillars are so important for Dusk and vital for the next step towards mainstream adoption.
Privacy
Privacy is one of the key components of Dusk. We believe that privacy is a right.
One of the challenges blockchains face is that their transactions are public. If you have a wallet address you can see every transaction that wallet has ever made, which severely limits how people can use blockchain and their wallets.
It might be ok so long as your wallet is pseudonymous, using numbers and letters, not your name, but if your wallet were to be doxxed and linked to you or if you were to use it for everyday transactions (for example buying a snack from a store) and the act of using it linked you to the wallet and all its transactions, suddenly the difference between privacy and pseudonymity becomes very clear!
Not to mention the fact that this would make blockchain all but unusable by institutions where privacy is incredibly important; no bank is going to publicly share their trades in real-time anymore than you want the shopkeeper to have an overview of how you spend your money.
Dusk uses zero-knowledge proof (ZKP) cryptography to ensure privacy without compromising on security or the validity of transactions. ZKPs are an advanced form of cryptography that proves that something is true without having to reveal what the statement, or in our case transaction, was.
Dusk aims to not only match the levels of privacy individuals and institutions currently have but to exceed them, preventing the oversharing of data and reducing the risks and costs associated with storing and verifying so much data.
To read up more on ZKPs, check out these articles.
Compliance
One way in which Dusk is very different from other projects is our focus on compliance and regulations, specifically EU regulations including MiCA and MIFID 2.
Dusk was founded before these regulations were even an idea, with the founders making an educated guess that regulations for blockchain and cryptocurrencies would be coming. They were right.
The vast majority of blockchains are not built with compliance in mind, which means they are not usable by entities that interact with regulated assets. It’s a bit like speaking a language; blockchains speak one language, regulated assets speak another. If you want to “speak” to regulated assets you need to be able to speak their language, and there are a lot more speakers of regulated assets than there are of blockchain.
Most blockchains just speak their own native language and can’t communicate with the world of regulated assets, whereas Dusk is bilingual, speaking the languages of blockchain and regulated assets. We call this “language” RegDeFi, as it brings the best of decentralized finance and combines it with regulated assets.
Real-world assets
This brings us to real-world assets. By satisfying the requirements of privacy and compliance, traditional finance is able to use the Dusk blockchain, and users - be they large institutions or normal people - are able to reimagine the way they do finance.
We envision an inclusive financial landscape, where users have complete control over that which they own, from bonds to money to their own identity and data. We want to remove the barriers that have stifled innovation and to make it possible for anyone to buy regulated assets from their wallet just like they can buy digital assets.
A tour around Dusk
As you can imagine, creating a blockchain capable of scaling finance is not easy! We have had to work with many experts and build many of our own products, including PLONKup - a zero-knowledge proof implementation, Citadel our innovative licensing tool which is especially well-suited to private KYC/AML, Piecrust our ZKP virtual machine (a first!) and a Layer One blockchain which is private, fast, and secure.
In our next articles, we will take a look at the various products and components of Dusk. Stay tuned!