On Thursday, February 20th, Neo Global Development (NGD) and Incognito Chain participated in NGD’s English Neo Live event. The recent Neo Live AMA was the first Neo Live event where the hour-long conversation was recorded in video format.
NGD marketing manager, Songping Que, NGD eco growth manager, Sarah Song, and Incognito Chain’s head of growth, Andrey Bugaevski, participated in the event. During the AMA, the trio discussed Neo’s perspective on privacy and decentralized finance (DeFi), how Incognito works, and the next steps for Incognito integration with Neo, among other questions from the community.
The conversation began with an introduction from the NGD team, where Song iterated Neo’s efforts in integrating data privacy into its blockchain. As blockchain is an open ledger, data can be tracked by third parties, which may negatively impact willingness to store documents, such as an individual’s finances or business statements. To remedy the issue, NGD partnered with Incognito Chain to build privacy-based solutions for the Neo blockchain.
In the AMA, Bugaevski cited a decrypt.co article that exposed 133,000 unique names registered through the Ethereum Name Service. The authors followed trails of transactions and deduced total digital asset holdings in other wallets, business deals, and events people may attend in the future. To combat this, the Incognito Chain seeks to implement a trustless bridge, allowing users to anonymize the amounts and destinations of transfers using its private, wrapped versions of Neo-based assets.
Neo’s vision for privacy
One of NGD’s primary goals is to build infrastructure to support DeFi projects, encouraging them to build on top of Neo. In 2020, NGD intends to offer a variety of features that are necessary for DeFi services like credit and lending, custodial and non-custodial exchanges, payments, and liquidity providers.
As an underlying blockchain infrastructure and platform seeking to build a smart economy, Song believes Neo requires additional tools and features to better support tokenized digital assets. She emphasized that there will be business scenarios that use blockchain to store personal data and reports, such as credit reports, which demand privacy mechanisms.
Song stated, “privacy is really important, [though] the underlying infrastructure will remain the same. But, Neo will use tools to implement privacy-protecting protocols (e.g., MimbleWimble, ring signature protocols, etc.).” More specifically, Neo intends to integrate second layer scalability and privacy solutions. She said, “we want to have tools so that smart contracts can have privacy features; especially so inputs, outputs, and executing the smart contract can be shielded.”
How Incognito Chain works
Throughout the AMA, Bugaevski reiterated Incognito Chain is not building a privacy coin, but a privacy tool for existing protocols such as Neo, Bitcoin, and others.
Incognito connects to the Neo blockchain as layer two solution, where a user locks their NEO in a smart contract, which mints private NEO (pNEO) tokens on the Incognito chain. Once minted, users can send amounts of NEO without the transaction getting recorded on the Neo blockchain, but on the decentralized Incognito Chain. If the user wants to move the private NEO back to the public chain, then they trigger the same smart contract. The private NEO will burn on the Incognito chain and will be unlocked on the Neo-based public address.
There are four layers of software and hardware that Incognito Chain utilizes to ensure the security and privacy of the protocols that it interacts with. The first is the application layer, where the protocol integrates zero-knowledge proofs the development team built from the ground-up, which is optimized for mobile wallet transactions.
Second is the data layer, using Bulletproofs and ring confidential transactions to create private transactions that mask sender, receiver, and transaction amount. Stealth addresses are also supported.
Third is the network layer, which has a unique state-sharing proof of stake (PoS) consensus mechanism that utilizes practical byzantine fault tolerance (pBFT) and BLS multi signatures. Bugaevski pointed out this unique consensus mechanism allows for Incognito to be a high-throughput PoS privacy blockchain.
Lastly is the physical layer, with the team offerings its “Incognito Node” device, touted as low-cost, energy-efficient, plug-and-play blockchain validation hardware that allows users to earn rewards. Bugaevski noted there were approximately 1,000 node hosts within the first month of the Incognito Chain MainNet launch. The first version of the device only works for Incognito, but future versions will integrate support and staking for other PoS networks.
The last third of the conversation involved a question and answer session for the participants to answer varying questions about Incognito Chain and Neo.
One user asked if the Neo team could shed more light on the challenges of implementing a native privacy solution. Song responded that from a tech perspective, it’s a fairly simple and implementable solution. But, NGD is currently analyzing whether they can integrate privacy on the base layer, or if they’ll face increased scrutiny from regulatory authorities.
Another user inquired if Incognito Chain is untraceable, and how businesses or individuals might meet compliance according to various regulations (i.e., auditing transaction history). Bugaevski retorted, every Incognito wallet has a read-only key, which allows any user who has the key to see the balance. So, technically, if the user does any business or accepts payment in cryptocurrency, they can use this read-only key to verify the balance is asked by a third party or authority.
Song asked Bugaevski how Incognito Chain avoid the double-spend problem. He responded, “any kind of transaction on Incognito chain is untraceable, but smart contract execution [for minting and burning pNEO] is public. In this instance, users can see how many NEO are locked, pNEO are minted, private NEO was burned, and NEO unlocked. The number of pNEO will be the same as the number of NEO.”
In the AMA, Bugaevski stated the Incognito team aims to make its Neo bridge live in Spring 2020. Users will be able to send pNEO securely and privately via the Incognito wallet. Eventually, Incognito Chain seeks to enable private cross-chain swap where users can swap NEO with other digital assets.
Further, Incognito plans to work on integrating its protocol with native ecosystem wallets like Neon Wallet or Neo Line.
The full video interview can be found at the link below: