January 2023 Summaries

The text explores the concept of self-custody in cryptocurrency, emphasizing its importance to crypto purists who advocate for direct control over crypto assets rather than relying on centralized exchanges. Self-custody, however, presents challenges such as the risk of losing cryptographic keys, which can result in irretrievable losses. To address this, the text introduces the notion of social recovery, where individuals can enlist friends, family, or even institutions to help recover lost keys, a concept termed "fourth-factor authentication." The text highlights the potential role of institutions using systems such as DECO, which allows users to authenticate in a privacy-preserving manner without explicit support from the institutions. By incorporating both social and institutional support, the text suggests that self-custody could become more accessible and secure, ensuring the viability of cryptocurrency as a technology and social movement.

In the latest installment of their research series, Chainlink Labs delves into the transition from Vector Oblivious Linear Evaluation (VOLE) to interactive commitments, emphasizing efficiency and reduced computational costs. The blog explains how random VOLE correlations, prepared during a setup phase, facilitate constant round-trip communication and decrease computational expenses during online interactions. The process involves using Oblivious Linear Evaluation (OLE) to generate correlated value tuples for prover and verifier, preserving information hiding and binding properties. The VOLE scheme is extended to support multiple commitments by using a global key across wire values, allowing for efficient batch proofs. The post also describes a packing technique that generates higher-degree VOLE correlations needed for consistency checks, making the scheme more efficient than traditional methods relying on public-key operations. Future discussions will focus on a VOLE implementation grounded in the Learning Parity with Noise (LPN) assumption, aiming to enhance the practical application of these protocols.

Blockchain technology is reshaping the landscape of video games by introducing new paradigms of ownership, connectivity, and player empowerment. Blockchain games utilize crypto wallets, smart contracts, and tokens to redefine the relationship between players and game developers, offering universal player identities, trust-minimized gaming experiences, and true ownership of in-game assets. Players can own, trade, and monetize items using blockchain tokens, and decentralized autonomous organizations (DAOs) enable them to participate in game governance, although challenges remain in balancing creative direction with player involvement. Despite current limitations in scalability, connectivity, and user experience, advancements in blockchain infrastructure, such as wallet account abstraction, layer-2 scalability, and cross-chain interoperability, are paving the way for more seamless and rewarding gaming experiences. Emerging technologies like Chainlink's Verifiable Random Function and smart contract automation further enhance transparency and gameplay, promising a future where Web3 not only enhances but fundamentally transforms digital gaming worlds.

The fourth post in a series by the Chainlink Labs Research Team delves into an interactive variant of commit-and-prove zero-knowledge (CnP-ZK) protocols, focusing on enhancing efficiency and scalability through symmetric-key operations. This protocol utilizes an interactive commitment scheme and an additively homomorphic commitment scheme, allowing for local computation of addition gate outputs and efficient handling of multiplication commitments, emphasizing batch checking to reduce computation costs. The described protocol processes tens of millions of gates per second and manages large circuits with minimal memory requirements, leveraging Vector Oblivious Linear Evaluation (VOLE) for efficient commitments. The post also introduces the Quicksilver protocol, which represents statements as Boolean circuits and allows a prover to demonstrate knowledge of a private vector without revealing it. The protocol incorporates IT-MAC-based commitments and a consistency check inspired by previous protocols, enabling effective batch consistency checks for AND gates. Recent extensions of the protocol include various VOLE enhancements that offer additional features such as improved communication efficiency and the ability to handle more complex statements, including those involving RAM access and integer-based statements.

Chainlink has solidified its role as a critical Web3 infrastructure provider, supporting the decentralized finance (DeFi) ecosystem through its secure and reliable oracle services, which facilitated over $6.9 trillion in transaction value and delivered billions of data points on-chain last year. The network is rapidly expanding, with over 1,600 projects utilizing its services and more than 1,000 oracle networks launched. The introduction of Chainlink Economics 2.0, including the launch of staking and the expansion of its monetization model, aims to increase oracle security and capture sustainable value. Chainlink is also enhancing its payment model to ease fee collection from decentralized applications (dApps) and protocols. The network is focusing on expanding on-chain markets through initiatives like the Cross-Chain Interoperability Protocol (CCIP) and proof of reserves, which are becoming increasingly crucial as more assets are tokenized and moved on-chain. Chainlink's adaptability in addressing shifting market demands positions it as a key player in the transition to a cryptographic truth-based economy, with its infrastructure enabling a new era of trust-minimized applications and driving the future of Web3.

Blockchain-based gaming is revolutionizing the gaming industry, offering developers opportunities to create and expand innovative Web3 games. The integration of NFTs, decentralized marketplaces, and Web3 wallets has transformed gaming experiences by introducing property rights, enabling peer-to-peer transactions, and giving users complete control over their assets. In 2023, gameplay improvements, such as dynamic NFTs, are expected to be crucial in driving adoption. Web3 developers can leverage various tools, services, and platforms to enhance their projects, including development environments like Moralis and Alchemy, infrastructure solutions like NFT.Storage and Chainlink, and developer shops such as Argon Studios and Orange Comet. Launchpads and accelerators like Seedify and Catheon Gaming offer essential support for marketing, growth, and distribution. These resources collectively empower developers to create captivating blockchain-based games with the potential for wide-scale adoption and community engagement.

The Chainlink Labs Research Team discusses a commit-and-prove (CnP) approach to zero-knowledge proofs (ZK), which enhances memory efficiency by allowing certain data to be forgotten during computation. This post outlines the basics of CnP, which involves a commitment scheme where a message is locked in a "virtual box" that prevents alteration and premature access. This method allows for memory recycling in ZK protocols by committing and verifying wire values at each gate of a computation circuit. While CnP can be computationally expensive, the flexibility it offers in deciding which values to retain or discard is a significant advantage. The blog also presents a more advanced CnP-ZK approach based on bilinear maps, which streamlines the process further by leveraging homomorphic commitments and binary checks for NAND gates. Despite its benefits, the advanced method incurs a higher computational cost, prompting future discussions on more efficient interactive CnP-ZK protocols. The research traces the origins of CnP-ZKP to foundational works and highlights various practical implementations that have emerged in cryptographic literature.

The text explores the concept of creating a decentralized, resilient, and censorship-resistant website akin to smart contracts, using various decentralized storage solutions. It begins with the development of a static website devoid of centralized points of failure, followed by an exploration of hosting options such as Ethereum, Arweave, Sia, IPFS, and Filecoin. The Ethereum option was deemed impractical due to high costs, while Arweave was used with a centralized tool to store data. Sia offered a secure, encrypted storage solution but required trust in third-party nodes for public access, whereas IPFS provided a distributed data storage method, albeit without data persistence. Filecoin added economic incentives for data storage, complementing IPFS, though it presented challenges in managing nodes. The site was made more robust through redundancy across multiple storage platforms and mapped to a human-readable name using the Ethereum Name Service. Additionally, the potential integration with the Tor network was mentioned as a further step towards creating an "unstoppable" website. The project illustrates the complexities and learning opportunities in leveraging decentralized technologies for web development.

NFTs, or non-fungible tokens, are increasingly becoming a significant form of digital asset, highlighting the evolution of blockchain technology beyond its traditional uses in cryptocurrencies and tokens to areas like media, entertainment, and sports. This text serves as a guide for creators and collectors interested in minting their first NFT, emphasizing the importance of understanding NFTs as unique digital identifiers. The process of minting can be done through platforms like OpenSea, which involves connecting a wallet and creating the NFT, or directly via blockchain smart contracts for those seeking a more technical approach. The cost of minting varies based on the method and network conditions, and selling NFTs is facilitated by various marketplaces such as OpenSea and Rarible. The guide also briefly touches on the potential for NFTs across different blockchains and suggests further resources for those interested in developing NFT projects.

The blog post, part of a Chainlink Labs Research Team series on zero-knowledge (ZK) proofs, explores the complexity of computational circuits, emphasizing their significance in designing scalable ZK protocols. It compares circuits and Turing machines, highlighting circuits' simplicity and their limitation to bounded computation, unlike Turing machines' ability to run indefinitely. The post delves into computational complexity metrics, particularly representation and runtime space complexities, noting that uniformity in computation can reduce resource requirements. It uses examples, such as a basic circuit and an ℓ-bit adder, to illustrate how uniformity leads to better runtime space complexity by allowing the reuse of computation patterns. The discussion extends to how these complexities impact ZK protocols, particularly noting that interactive ZK proofs can benefit from the ability to discard unnecessary values, unlike succinct ZK proofs, which typically require memory linear to the number of gates. The post suggests that interactive proofs using the commit-and-prove paradigm offer more memory-efficient approaches in ZK protocol applications.

Proof-of-solvency systems are crucial for centralized exchanges (CEXs) to demonstrate their financial stability by showing their total liabilities and assets held in reserve. While cryptographic techniques like "proof of liabilities" (PoL) enable CEXs to pledge their total liabilities without exposing individual user data, deploying these systems poses challenges related to privacy, trust, and operational complexity. Centralized intermediaries find it difficult to prove solvency without lengthy audits, and the involvement of external parties introduces additional trust issues. However, decentralized oracle networks offer potential solutions by facilitating off-chain proof systems, minimizing trust, and coordinating tasks without centralized control. These oracles can store commitments, orchestrate user self-checks, and automate the triggering of checks, thus preventing manipulation and ensuring regular updates. Despite the benefits, challenges such as data freshness, completeness, and privacy must be addressed to make the proof-of-solvency systems robust and reliable. The role of oracles is pivotal in creating transparency around liabilities and could pave the way for industry standards, enhancing the integrity and trust in CEXs.

This blog post, authored by Xiao Wang and contributed to by several researchers, is the first in a series exploring zero-knowledge proofs (ZKPs) from Chainlink Labs Research Team, focusing on their applications in blockchain and oracle technologies. The post distinguishes between non-interactive zero-knowledge proofs (NIZKs), which are valued for their transferability and use in blockchain due to their succinct nature, and interactive zero-knowledge proofs (IR-ZKPs), which involve communication between prover and verifier and are more suited for oracle technologies. While NIZKs are efficient for verification, they can be resource-intensive for the prover, whereas IR-ZKPs offer scalability, cheap computation, and minimal memory use, making them ideal for scenarios involving small, known parties. The series aims to delve into the complexities of memory use in zero-knowledge protocols, explore small memory NIZKs, and discuss recent advancements in interactive commitments, ultimately addressing the engineering challenges and future research directions in interactive ZKPs.