Incognito Chain has announced the completion of its trusted privacy bridge to the Neo blockchain, enabling users to swap native NEO tokens to a shielded version, pNEO, managed on an Incognito sidechain. After the swap, they can transact and trade privately, swapping back to the Neo blockchain as desired.
Transactions on the Incognito chain are touted to grant total anonymity, offering comparable privacy features to Monero through the implementation of a homomorphic commitment scheme, linkable ring signature scheme, and zero-knowledge range proofs. Together these technologies are used to shield sending & receiving addresses along with transacted amounts, ensuring that data on the ledger remains private.
To use Incognito’s shielded transactions for NEO, users must first swap tokens between the two blockchains, requiring the use of custodians. Using the Incognito wallet, Neo users generate a unique temporary wallet address to deposit funds to. Deposits will trigger a contract on the Incognito chain, minting an equal quantity of pNEO which is sent to the user.
At this point, the user can now transact pNEO privately on the Incognito blockchain. When desired, assets can be swapped back to the Neo blockchain using the reverse process; pNEO is burned on the Incognito chain and the funds are returned on the Neo chain by the custodian.
In the current implementation of its privacy bridge, Incognito itself acts as the sole custodian for cross-chain swaps. This means the bridge is currently trust dependant, however the team has noted its intention to move to a trustless model.
This approach is currently used for the project’s Ethereum bridge, allowing anyone to become a custodian by supplying a bond contract with a sufficient amount of collateral. By doing so, the team aims to decentralize the custodial process, safeguarding user assets through custodian over-collateralization and an auto-liquidation mechanism.
Custodians are incentivized for their participation through shielding and unshielding fees, which are both currently fixed at 0.01%. The trustless bridge implementation for Neo is tentatively scheduled for Autumn 2020.
Alongside the bridge launch, pNEO has been added to pDEX, Incognito Chain’s official non-custodial exchange. pDEX is available from within the Incognito wallet, and includes trading pairs for multiple Incognito-based versions of popular cryptocurrencies including Bitcoin, Monero, Ethereum, and BNB.
Similar to Ethereum-based decentralized exchange Uniswap, pDEX replaces traditional order books with bonding curves for automated market making. Users can instantly trade assets or liquidity to any pToken pair, which entitles them to a share of trading fees for that pair.
More information on trading with pDEX can be found here.