Anonymous DeFi option for ZCash (ZEC)

Anonymous DeFi option for ZCash (ZEC) - trading experience on a Decentrilized Exchange, Liquidity provision, Yield Farming.

Hey guys, it’s nickvasilich from IncognitoChain, a privacy-oriented protocol. I’m a fan of privacy & DeFi and I work to bring anonymity and DeFi to non-Ethereum assets. I’m here to share some decentralized finance tools that the Incognito team launched recently for ZEC holders.

While we’re still developing new solutions for privacy in DeFi and improving what we have, we’ve already been noticed by industry influencers and a wide swath of the crypto community. In this post, I’m going to explain Incognito DeFi and available options for ZEC, with some outside reviews.

TL;DR: You can use Incognito to anonymously trade your ZEC across blockchains in the privacy DEX, you can anonymously yield farm your ZEC using the Provide feature in the app (yielding 13% APY), contribute to liquidity pools, and more.

Recently, Incognito was featured in Jeff Berwick’s and Ed Bugos’s. The Dollar Vigilante Newsletter on Jan, 2021, and described as an interesting DeFi opportunity for non-ETH assets.

Here’s a piece of the newsletter:

“…example of Monero on DeFi is ​Incognito​, which is a wallet and exchange that claims to feature a “pDEX” (private decentralized exchange) with pooled funds.
For ​example​, when you deposit BTC into your Incognito wallet, the BTC goes into Incognito’s pool and is wrapped into shielded Bitcoin, or pBTC. When you deposit XMR, Incognito wraps your coins into shielded XMR, or pXMR. You can then privately transfer your shielded coins to other users via the Incognito wallet, or convert them into the Incognito pDEX’s native token, PRV.
Incognito basically allows you to wrap your regular coins into shielded privacy coins within their wallet, and it uses technologies like zero knowledge proofs along with an Automated Market Maker algorithm to enable anonymous exchanges as well. However, one downside in my opinion is that Incognito utilizes Proof-of-Stake (PoS), and has a 5% premine of PRV which is used to fund its development. I have my doubts about whether or not their system is truly as decentralized as they claim, but it looks like a fascinating project to experiment with in small amounts, nevertheless.“

The letter mentions DeFi for Monero, and shielding BTC, but nothing about ZEC. It’s a direct quote from the newsletter that highlights the ability to “wrap your regular coins into shielded privacy coins”. This and nearly every other Incognito feature is available for all the assets listed on the pDEX and ZEC in particular.

The “Private Exchange” (pDEX) is not private as in centrally owned, but private as in enabling anonymous trades. It’s a decentralized, permissionless exchange with zero trading fees. The current iteration of liquidity pools is temporarily centralized, but decentralizing in stages. All features are live, so you can download the app (iOS, Android) and try it out for yourself by trading or adding liquidity to yield a farm right now.

Incognito is still a relatively small project, with around 10,000 users. It’s important to ensure the project is trustworthy (until it’s fully decentralized, that is), so here are a few stats.

TVL (total value locked) : ~ $34,954,328 with $87,760,822 Trading Volume - check it;

All that said, I’m not trying to tell you to use Incognito. I’m hoping that by presenting a little bit about our privacy movement, I’m starting a conversation. Privacy is essential to the fungibility and safety of crypto, and Incognito makes every trade anonymous. And, taking DeFi beyond Ethereum is great too.

For conversations with real people, ask me questions (no need to go easy on me!) or make a post at we. incognito. org, where most of our users are active.

Feel free to share your concerns or questions, or join us in the February PRV Holders Call. It’s a monthly call when the core team reports to the community about the progress made and plans for the future, and then opens up to a Q&A and general chat.

Thanks!

Hi @incognick, welcome to the forum.

I appreciate your work in providing another use case for $ZEC

I understand that you are building something new here and things will improve. However, I have a lot of questions regarding incognito as a project.

  1. Are you running everything on your own blockchain currently? I understand that it is sharded-PoS but it does not seem to have a trust-less bridge to every chain that you are interacting.
  2. I tried using your android app and it seems $ZEC shielding is currently down. Is this a common occurrence or should I expect this to be a one-off?
  3. Who are the custodians of those assets? I doubt that all of the node are actively involved in the custody process. Is it a simple multi-sig for every chain?
  4. You are using somewhat ambiguous terms in you wallet.“Shield” should actually be “Mix”, right?

When the $ZEC supports goes online again, I might try playing with your app again.

Cheers!

Hey @tokidoki,
Thank you for your warm welcome, appreciated!

Let me go through your questions:

  1. Incognito chain is a Layer 2 solution enabling anonymity for crypto assets accordingly to corresponding bridges. Currently, we have the Trustless bridge for Ethereum (a trustless smart contract for ETH and ERC-20 tokens). For other coins we’re building the Portal - a trustless solution for all assets. Check our Approach to decentralization.
    In plain English, we have an initial implementation for Bridges, that are not trustless yet, next iteration is the trustless Portal.

  2. Reviewing the issue.

  3. At the moment, for assets except for ETH and ERC-20 crypto stored in one of the wallets maintained by the Core team. We’re researching implementing multi-sig on thee chain.

  4. Incognito is not a mixer by no means. Shielding means that the native asset is locked and the corresponding pASSET (private Asset) perform transactions in invisible mode - untraceable p2p or private trading on pDEX (private decentralized exchange). In opposite to a mixer soft that works with public chains, we go another way, so I don’t think the “Mix” term is applicable to Incognito.

I’d like to be the person who’ll notify you about enabling shielding for ZEC again.

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hey @tokidoki,
shielding for ZEC is working now, you can play with app again if you wish.

thank you for your interest

Cool, just tried to deposit and it shows in my balance. I believe this is currently in the custody of the dev team?

Weirdly though, I need your token PRV to do stuffs but there is no way to for me to get PRV with ZEC. Did anyone actually tried to use the app with Zcash before? I’m feeling like a guinea pig here. lolz

Please make sure someone from the dev team actually use the app with ZEC before announcing it here.

Cheers!

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Hey @tokidoki,

  1. Sorry, that’s my fault, I didn’t warn you about a PRV balance requirement for internal TRXs.
    just send me your prv address via forum mail, I’ll fund you with a small portion to proceed your test further. Your feedback is valuable for us.
    Waiting for your address.

  2. I believe this is currently in the custody of the dev team?

as I mentioned above for the current iteration of ZEC bridge the Core team maintained those assets.

I think requiring the use of native assets to use a chain is fine, we already see it working for Ethereum. My problem is that for someone who only have $ZEC and want to use your app, currently there is no way for them to obtain PRV. I believe you have trade option but currently it does not support $ZEC? Weird.

Sending me PRV to test the app is fine but this will not work for others down to the line who want to use the app. Currently, too many pain points for me to recommend incognito to others. I think a great case for incognito is not to have everyone who wants to use it to download the app, but to build a no-KYC exchange such as sideshift.ai with incognito backend.

I appreciate the fact that you use Zcash shielded address for deposits though.

Actually, there’s a simpler solutio. With efforts of our community we’ve implemented the Faucet - getprv.com
Try it out, and let me know about your shielding and provision experience. Highly appreciated.

Thanks for pointing to interesting solution with an exchange.

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Some ideas for improvement related to ZEC on incognito:

  • Give people option to access the faucet from inside the app to ease first-time user onboarding
  • Add ZEC trading pair, currently unavailable. Would be really helpful for those who only have ZEC
  • Allow for no-fee trade (or paying tx fee in any token). Again to solve the problem of those who only have ZEC
  • Build sideshift.ai-like service that utilizes incognito as backend. You will need to solve the problem of waiting for deposit confirmation + having good liquidity for tokens you are offering. This will add utility to the network while giving people hassle-free exchange products. We still don’t have inter-chain uniswap yet.
  • Be very honest about which part of your products are centralized, semi-decentralized or decentralized

I wish your team and community success in the future. The project looks interesting to me but it is too early for me to recommend it to anyone.

Cheers!

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Reading this feedback makes me feel so excited my topic got under your review. I definitely will attentively review and try to implement these important points.

My personal favour to you, I wish I could stay in personal touch with you if you can accept that. Unfortunately, I can’t send dm messages to you as you have withdrew the message(topic).

Keep in touch!

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