What's New in Crypto: 03 Token Mixer Tokens
Amidst the chilliest crypto winter yet, guess what's making a comeback? The once-forgotten token mixer narrative! This week's Alpha spotlight shines on 03 up-and-coming mixer projects.
A token mixer is like a privacy cloak for your coins. It's a tool that helps hide the trail of where your coins came from and where they are going to. It does this by jumbling up your coins with other people's coins and then sending them out in a way that confuses anyone trying to follow the money. People use token mixers to keep their cryptocurrency transactions private and anonymous and to stop others from snooping on their financial moves in the blockchain. (1)
Benefits of a Token Mixer
A token mixer is a tool that aims to make cryptocurrency transactions more private and anonymous. In the traditional banking system, banks and governments keep track of transactions, which offers some level of accountability and traceability.
But in the world of cryptocurrency, things can work differently. Transactions are processed through a decentralized network, which means they aren't as closely monitored. Decentralized transactions grant users a degree of liberty, but there's always a lurking possibility of them being traced as on-chain data is always public and accessible, potentially revealing who is involved.
Privacy
To address this privacy issue, token mixer services were created. They essentially scramble the connection between your cryptocurrency's previous and current addresses. This makes it difficult for on-chain experts or loquacious individuals to trace and identify the people behind the transactions:
User sends crypto to the token mixer's address.
The token mixer breaks and mixes user's funds with others.
Techniques like transaction delays, routing through various wallets, and changing denominations are applied for obfuscation.
After mixing, users receive funds from the mixer's pool, unlinked to their original crypto.
The transaction is then confirmed on the blockchain.
Moreover, anonymity in crypto transactions can be super important for people in countries with strict financial rules, where privacy is limited, and the government keeps a close eye on financial activities. Token mixers can help protect against government surveillance, allowing people to make transactions secretly without worrying about getting in trouble (2).
Security
Beyond just privacy, token mixers also enhance security. They help protect against potential threats like hacking or phishing attacks because they make it tough for attackers to figure out where a particular cryptocurrency wallet is coming from (2).
Token Mixer Challenges
While token mixers do enhance privacy and anonymity, they also attract cybercriminals, and eventually become targets of law enforcement. Consider Tornado Cash. According to the US Department of The Treasury, it has faced sanctions from the U.S. and other countries due to its use in money laundering, involving over $7B in allegedly illicit virtual currency since its launch in 2019. Notably, it was employed in laundering more than $455M stolen by the Lazarus Group, a DPRK state-sponsored hacking group, in one of the largest virtual currency heists on record. Tornado Cash continued to launder illegal funds, including $96M from the June 24-2022 Harmony Bridge Heist and at least $7.8M from the August 2, 2022 Nomad Heist.
So Why are Token Mixer Services Still on the Rise?
The answer lies in the ongoing need for a high level of privacy and security, which can be incredibly valuable in certain situations. For example, individuals engaged in activities like journalism, civil disobedience, or protest may face risks and therefore seek enhanced privacy in their cryptocurrency transactions. Similarly, you might not want your employer to have access to the intimate details of all your bank or credit card transactions. Likewise, you may prefer to keep all your cryptocurrency transactions private, not just from your employer but from anyone else as well.
That's enough in theory. Now onto the most exciting part.
3 Token Mixer Projects for Your Watchlist
0 Knowledge Network
0KN is a decentralized privacy network safeguarding user anonymity in a network even in cases where someone is spying on the network because it always assumes some servers are considered malicious. It employs a next-gen mixnet-based metadata-private anonymous broadcast system called Trellis. In simpler words, Trellis is a secret message broadcasting network that keeps user details (metadata) hidden.
Using its Cosmos-based proof of stake implementation, 0KN rewards servers (0-Servers) for securing the mixnet-broadcast and validating the chain. It also helps keep the network safe and running smoothly by constantly checking its structure.
In this network, "Incentivized Servers" handle networking, cryptography, validation, scalability, and security, ensuring user privacy even when observed by adversaries. The goal is to maintain a certain number of these servers for better decentralization. To achieve this, they've set up a system where they define a specific ratio of investment (or "bonded-stake ratio") based on how many servers they want in the network. Ideally, they aim for more than 500 servers. This approach ensures that the network grows and stays decentralized.
Besides, servers are organized in layers, routing user messages from one layer to the next. This ensures anonymous chat and messaging platforms, social media networks, private cryptocurrency transactions, truly private email solutions, anonymous IoT communication, and more. (4)
As of time of writing, Phase 1 of the project has been successfully completed and the project is working with MEXC on its token OKN listing. The current Fully Diluted Valuation (FDV) for the project stands at $4.6M. However, if the project continues to develop and achieves the milestones outlined in the roadmap, there is potential for substantial growth.
ZKTsunami
ZKTsunami employs an end-to-end ZKAnonSNARK framework, enhancing transactional privacy significantly. In the past, Zcash introduced ZK-SNARK to the crypto world but faced setup security challenges. Drawing from this experience, zkTsunami now harnesses a cutting-edge, setup-free zero-knowledge proof to achieve both high performance and robust security in anonymous payments. Compared to existing options, zkTsunami stands out as the top choice for anonymous cryptocurrency transactions.
ZKAnonSNARK is based on the fundamental ZK Snark. ZK Snarks can be applied to identity verification systems, allowing user identity verification without divulging personal information. This technology safeguards user privacy and maintains the verification process's integrity. With ZK Snarks, users can verify their identity without exposing sensitive details. The proofs of ZKAnonSNARK are also 12% to 20% shorter and much faster than the leading Bulletproof system (5).
The team has successfully completed Phase 1 and is currently working on Phase 2, actively deploying the project. Distinguishing itself from $TORN, $ZKT extends its focus beyond mixers, aiming to diversify the blockchain ecosystem with a range of essential products.
Guiser
Guiser operates as a Telegram bot facilitating the exchange of 175 assets. Additionally, Guiser.org serves as a non-KYC crypto exchange aggregator, renowned for its commitment to transactional privacy. The process entails depositing your currency on one exchange, transferring it to another, and then converting it back to your selected currency on a different platform, effectively severing the link between sender and receiver wallets.
Essentially, Guiser acts as a platform that consolidates top-tier non-custodial exchanges. It receives User Swap Requests and directs them to these high-quality, instant non-custodial exchanges. It's crucial to emphasize that Guiser never gains access to users' assets and remains completely uninvolved in user transactions, refraining from handling user deposits or fund transfers.
Furthermore, $GUISER can be staked to earn revenue shares in $ETH (6).
Conclusion
As the cryptocurrency market navigates through one of its most challenging periods, an interesting trend is emerging: the resurgence of token mixers. These tools, designed to enhance the privacy and anonymity of transactions, are gaining traction once again. Among the myriad of projects in this space, three stand out due to their innovative approaches and promising features: 0 Knowledge Network, ZKTsunami, and Guiser. They are not just reviving the concept but are also infusing it with innovative features and enhanced security measures, ensuring that users can enjoy the benefits of decentralized transactions without compromising on their privacy.
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