Dialectic has joined Defi Alliance, FBG, and smartBCH in supporting the important work of Suterusu.
As we move from experimentation in DeFi and digital collectibles by a core group of early adopters into the first mainstream uses of cryptocurrency, we note that certain challenges arise amidst the current bull market conditions. We need to recognize that the future of Web3 will be high-privacy, cross-chain, and capital efficient. Further, at Dialectic, we constantly remind ourselves that crypto is unfolding faster and with more experimentation in China than almost anywhere else on the planet.
Privacy is certain to be a substantial consideration for many users around the world moving forward, as we wrestle with constantly changing regulatory demands from governments that range from unfriendly to crypto do downright hostile. Thusly, we believe that going forward, a significant percentage of the market will be interested in protecting their privacy and maintaining a certain degree of confidentiality in their operations and crypto-assets. This is why we believe there can be tremendous room for growth for privacy protocols and applications. Further, one of the core thesis postulates that we work from is the apparent realization that the future of Web3 will be multi-chain and thus applications must be cross-chain compatible in order to thrive. This reality is programmed.
There are an array of privacy services at layer-2 as well as chains that subordinate other features in favor of privacy. We believe that both the custom network and dApp approach have merit and cater to different users and needs. Generally, we tend to prefer privacy as an application rather than accepting trade-offs further down the stack that apply to all users and use-cases because privacy has a cost.
We were therefore very intrigued by the approach of Suterusu to use a multi-chain interoperable Validator Network (Layer 2), providing direct bridges with the two largest DeFi ecosystems, on Ethereum and BSC while being ready to be extended to all the other emerging promising networks. This combination sets Suterusu apart from the competition as it’s the only scalable privacy solution that can “plug-in” to multiple Layer-1 chains. We also believe the Transaction Mining Program implemented by Suterusu to be superior and to provide superior to users and incentivize all actors on the network appropriately.
Some characteristics we really like about Suterusu:
1. Team Execution
Although it is taken for granted that investing in great teams composed of technical talents is the playbook for success in early-stage ventures, it remains a fundamental factor for the success of any technically sophisticated project.
The team is led by:
Dr. Huang Lin — privacy and cryptography top expert with over 1,100 citations on applied cryptography and information security from Google Scholar
Richard Liu — formerly FBG Capital founding partner, crypto OG and legendary investor based in Beijing
JZ — ex-Uber and ByteDance algorithm engineer This leadership group along with a team of top-tier smart contract developers have been researching crypto and high-privacy solutions for nearly half a decade in Beijing.
This team has developed Suterusu into an innovative protocol that offers both compelling privacy and compelling incentivization in record timing. We’ve been very impressed by their ability to adapt and evolve the protocol very quickly.
2. The Thesis for Privacy
There is a multitude of reasons why an increase in DeFi adoption will result in an increased demand for privacy solutions. As DeFi grows and traditional centralized products interact with Defi protocols more, we will experience a stark reduction in user privacy. Most users wouldn’t want to dox their entire wealth, yielding positions or questionable 2017 ICO investments every time they make a purchase or receive a payment, and funds will want to protect their proprietary investment strategies.
3. Technical Innovations
We are encouraged to see Suterusu pushing boundaries in many directions: Layer 2 scalability, multi-chain interoperability, and novel crypto-economic design. Improving upon the traditional zk-SNARKs Suterusu developed a new type of zero-knowledge proof called zk-conSNARK in collaboration with the Karlsruhe Institute of Technology, a leading European center for cryptographic research.
There are three critical improvements available with the new proof:
- it does not require a trusted setup ceremony which has been a big criticism to other zk-proof-based solutions, and
- the proofs generated have near constant size with limited overhead generated through large input, and
- both proof generation and proof verification times have been reduced by over an order of magnitude compared to previous state-of-the-art benchmarks
An important improvement of Suterusu compared to other dApp based solutions is that the privacy-tokens can be arbitrarily fungible and thus can be split or sent to multiple separate users in a single Layer 2 transactions.
Another more practical problem that many Layer 2 privacy solutions face is that the value paid in and out of the pool contracts are publicly visible, allowing for a level of traceability. This fact has a consequence that the effective privacy of the system depends on more on volume flowing in and out of the pool than the underlying privacy mechanism.
Suterusu is tackling this through a novel incentive program that rewards users not only for deposited liquidity but for transaction volumes, thereby providing incentives for transaction flow and not just static TVL.
In 2021 to not recognize that Web3 will be a multi-chain ecosystem is absolutely ridiculous. At Dialectic we are multi-chain maximalists. Multi-chain has always been and will always be the best strategy. It is the ultimate manifestation of Smithian economic theory.
Suterusu is currently compatible with ETH and BSC, but presently working toward compatibility with Avalanche, Theta, Polkadot, Near, Solana, Harmony, BCH, and other EVM compatible public chains. This is a start contract to the majority of other privacy solutions, who are focused on one specific network stuck in their myopic coin-maximalism.
The rapid and expressive rise in DeFi on Binance (BSC) is a clear indication that DeFi will not be isolated to Ethereum and thusly privacy applications shouldn’t be either.
5. Compelling Incentivization has Lead to Significant Traction
Suterusu recently launched its first Volume Mining Program on BSC, the first program ever based on volumes instead of liquidity locked. More transactions, more rewards. We jammed on this idea as the protocol was coming together, and we are very proud of the outcome here.
The goal is to incentivize the usage of the protocol in terms of transactions: a privacy protocol with a massive TVL and no transactions is useless.
Since its launch on BSC, Suterusu volumes are tremendously growing and now it’s more than $240 million with more than 3.2K+ unique users and more than 2 million in fees that will be distributed among the xSUTER holders 👀
We expect these numbers to continue to grow in parallel with the launch of new chains and we’re excited to see where Suterusu goes.
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