Espresso, a privacy-focused blockchain, Is Being Developed By Stanford Researchers
If blockchain technology becomes truly mainstream, it must become less expensive and more efficient. Gas prices have remained high, and scalability has been hampered on some of the most popular blockchains, most notably Ethereum, due to low transaction throughput. A slew of new projects has emerged to increase blockchain efficiency, each with its own set of compromises, like proof-of-capacity blockchain Subspace, which recently completed a $32.9 million fundraising round.
A group of scholars from Stanford University’s applied cryptography research division has joined the battle. Espresso, a new layer-one blockchain that the team is developing to enable greater throughput and reduced gas fees while prioritizing user privacy and decentralization, is coming out of stealth mode. According to CEO Ben Fisch in an interview with TechCrunch, Espresso uses zero-knowledge proofs. This cryptographic technology allows a party to verify a statement is accurate without revealing the information behind that statement.
Want to hear how @EspressoSys is building the single-shot scaling & privacy infrastructure for Web3? Listen to their #greymatter podcast interview w/@GreylockVC‘s @SethGRosenberg https://t.co/PBL6zqWPtR pic.twitter.com/CdhWPseJtN
— Greylock (@GreylockVC) March 8, 2022
Fisch, COO Charles Lu, and chief scientist Benedikt Bünz, all of whom worked together at Stanford on other high-profile web3 projects such as the anonymity-focused Monero blockchain and BitTorrent co-founder Bram Cohen’s Chia, lead Espresso Systems, the company behind the blockchain technology project.
Espresso leverages ZK-Rollups, a method based on zero-knowledge proofs that allow transactions to be performed off-chain to increase throughput. ZK-Rollups combine numerous transactions into a single, readily verifiable proof, decreasing the consensus protocol’s bandwidth and computational load. According to Fisch, scaling solution providers like StarkWare and zkSync have already popularised the technology on the Ethereum network.
However, anonymity and decentralization are at the heart of Espresso’s strategy. According to Fisch, the team set out a year ago to create a flexible privacy-focused blockchain solution but has now adjusted its aims to prioritize both privacy and scalability after realizing the latter was the “most obvious pain point” for customers.
He went on to say that the broad, industry-wide race to scale blockchain technology has been going on since 2018 when Solana and other layer-ones first started proposing cost-effective and throughput-focused solutions. According to Fisch, new projects today face an even more difficult problem.
“One thing that’s been clear in recent months is that it’s no longer just a race to grow, but a race to scale with the fewest possible sacrifices in terms of decentralization,” Fisch explained.
While zero-knowledge proofs are used in various blockchain ecosystems today to promote efficiency, Fisch claims this efficiency has come at the expense of decentralization.
“If you use a zero-knowledge proof to prove the validity of a huge number of transactions that never get communicated to the consensus protocol, the consensus protocol can validate their validity, but they can’t supply data to users that are needed to construct future transactions,” Fisch explained.
Users, therefore, rely on the ZK-Rollup server for vital data access, implying that the data is centralized on that server.
“We’re working on a technique to carefully integrate the roll-up with consensus so that we can obtain higher throughput and consequently reduce costs while maintaining decentralization,” Fisch explained. For many cryptocurrency users, privacy is just as crucial as decentralization. Public blockchains, such as Ethereum, keep track of all transactions in an electronic ledger that anyone can see. According to Espresso Systems, even if users’ identities are protected on the blockchain, if a wallet is linked to a human, their transactions could be exposed “in real-time to anyone who might choose to check, including business competitors and threatening actors hunting for targets.”
Configurable Asset Privacy for Ethereum (CAPE), the company’s leading privacy solution, is a smart contract application that allows asset creators on the blockchain to control who can view information about the ownership and movement of their assets.
CAPE, according to Fisch, is especially well-suited for financial institutions or money service organizations that develop blockchain-based assets because it enables them to match customers’ needs for privacy with the institutions’ risk management and regulatory requirements. He gave the example of a stablecoin issuer creating a private version of their coin that allows users to deal privately while the issuer still has access to transaction data.
“With CAPE, asset creators can contemplate defining a flexible viewing policy, or even a freezing policy, that gives them additional visibility and control over assets that are completely confidential and private to the rest of the blockchain’s public viewing,” Fisch added.
Fisch claims that the application will eventually run directly on the Espresso blockchain. According to Fisch, Espresso is also taking advantage of Ethereum’s fame as the most frequently used blockchain by constructing a direct bridge to Ethereum that will allow assets to be moved from Ethereum to Espresso.
Espresso Systems also announced that it had raised a $29.9 million Series A round-headed by Greylock Partners and Electric Capital, with Sequoia Capital, Blockchain Capital, and Slow Ventures as participants. Greylock’s investment in Espresso Systems was led by Seth Rosenberg, who also backs Chia.
Espresso Systems raised $33 million in a seed round headed by Polychain in November 2020, bringing its total capital to $33 million. Gunter told TechCrunch that the team now has 26 members, 18 engineers. She went on to say that several of these cryptography-focused engineers joined the Espresso team as a result of her co-founders’ ties to Stanford and academia in general. Gunter believes Espresso can compete with other layer-one solutions addressing the same set of problems.
“One advantage we have is that we get to design and construct for this from the start, whereas a lot of other systems working to scale right now have these massive, sort of backward compatibility concerns where they have to design around current systems,” Gunter added. “Other blockchain projects, such as Solana, have had a lot of success being able to start fresh in the past.”