Chainlink CEO: How “Mixicles” can change the game for smart contract privacy

Lack of privacy is one of the main reasons enterprise is choosing private over public blockchains, says Chainlink CEO Sergey Nazarov.
By Adriana Hamacher

Chainlink wants to make smart contracts more attractive for enterprise. The oracleprovider is tackling the privacy concerns companies cite for choosing a private chain over a public one, such as Ethereum. Its secret weapon is a new, game-changing, decentralized finance (DeFi) tool called “Mixicles.”

Speaking exclusively to Decrypt, the company’s CEO Sergey Nazarov explained how Mixicles, launched last Tuesday, is breaking new ground in enabling the uptake of public blockchains by enterprise. He also touched on the importance of oracles in the blockchain ecosystem and hinted at future projects the company is working on. 

“If we can get privacy working on public chains, it can create an entirely new level of consumption, because a lot of contracts simply cannot be placed on a public chain environment like Ethereum,” said Nazarov. “No matter how good it is, they can't be made private. That's the reality.”

But, with Mixicles, Chainlink is striving to demonstrate how oracles can change that, alongside other ills that prevent public blockchains becoming a viable choice for enterprise.   

The privacy prize

Chainlink aims to provide a secure and reliable method for a smart-contract to “know” what’s going on in the real world, enabling it to access verification of external factors—such as market prices, Internet of Things and shipping data.

The company launched its mainnet last May, after six years in development, and has inked partnerships with dozens of companies in the blockchain space and beyond. Payments company, Swift, as well as Google and Oracle, the third-biggest software company in the world, are among its collaborators.

So, it’s unsurprising that, for Mixicles, Nazarov has teamed up with Cornell Professor Ari Juels, former Chief Scientist at the RSA, the security division of Dell EMC. Juels helped pioneer formalized proof-of-work in the nineties, and his work has been instrumental to decentralized storage space–a veritable kingpin among blockchain engineers.

The result of the collaboration is an academic paper, published last Tuesday. But unlike some academic studies, left to languish in a dusty journal, Mixicles is already fully functional, Nazarov assured us. So how does it work? 

What’s in the mix(icle)

Nazarov said that Mixicles works by separating out the different parts of a contract into multiple contracts—an on-chain part and off-chain part—which are triggered by an oracle. This, he said, means that the payment outcomes are distinct from the contract outcomes, but the privacy of the off-chain part is used to help create privacy for the entire contract.

So “you can't really tell what happened in the contract, even though the contract completed on change,” said Nazarov.

Privacy is crucial for enterprise, and can be a legal obligation for many types of contracts. Aside from the various obligations that enterprises may have to keep contracts private, Nazarov explained that the tool helps to guard against frontrunning. This is where unscrupulous parties take advantage of their responsibility to order transactions so that they can profit from them, and is one of the most basic reasons for privacy in financial contracts.

An example might be a contract involving the shipment of chemicals. Legally, data about the shipment has to be kept private. Knowledge about the destination, type, and volume of the chemical could—for instance—be used to predict production levels of chips. If this information was traded, it could hurt the chip manufacturer.    

He believes that there are great things in store for Mixicles, which provide for a new level of privacy for DeFi contracts that are related to things like derivatives, a hugely important part of the sector. They can also be used to help decentralized exchanges, which can suffer from frontrunning problems (making them difficult to use, and the reason why their volume is sometimes low.) 

It’s also an example of how Chainlink’s off-chain computational capabilities, enable a lot of great things on-chain, said Navarov. “Oracles are a key part of this architecture.”

And, indeed, Chainlink seems intent on using its oracle service, not only to connect smart contracts to the real world and improve their privacy but to have a portion of future transaction-related work also take place in the oracle, thus boosting scalability too.

https://decrypt.co/9037/chainlink-ceo-sergey-nazarov-mixicles-smart-contract-defi-privacy

Supply Note: https://www.dropbox.com/s/u6xpqgyove6cqnp/mixicles.pdf?dl=0