Panther Protocol brings privacy and compliance to institutional DeFi trading

0:01I'm ashon Addison from the cryptocoin show and today on blockchain interviews we have back with us Oliver Gail the CEO of Panther protocol Oliver welcome back to the show and it's great to see you hey Ashton thanks a lot for having me it's a pleasure to be here again I feel like I've done this show with you maybe twice before we've covered Central Bank

0:21digital currencies we've covered Panther before and it's just a pleasure to be reconnecting definitely and I'm excited to hear your insights today on zero knowledge privacy integrating that into blockchain that's a I feel like it's a major narrative that is going to bring a lot of benefits to the people that are using the technology and I feel like how

0:40blockchain started it didn't it is definitely isn't as private as it could be especially as institutions are getting involved in things like that uh moving forward um I would love to start off our conversation by just sort of getting a high level on what you and your team are working on at Panther protocol and from a privacy and ZK perspective and then we can sort of dive

1:02into privacy and and panther as a whole yeah sure so Panther has been working for the last three and a half years now my co-founder and I have been building a team and building this protocol with the vision of enabling compliance and privacy in onchain finance slash the world of Defi and over the the years of development and there's also been a major shift in regulatory

1:30approach and in fact a lot of clarification and moving in the direction that we thought uh at Inception was going to be inevitable and that was that it one privacy is very much needed and important not just for society but particularly for power users in this case financial institutions and secondly that Unstoppable privacy was not going to be received embraced or

1:57even allowed in some cases in multiple markets many markets most markets and today that's played out uh as we forecasted it would and so what Panther builds is a set of these onchain Financial tools that benefit from what is really privacy or confidentiality through the use of ZK snarks but which also essentially partition the protocol into zones and allow for Zone managers

2:26to set their own AML programs and custody data on board us users and interoperate selectively with one another and so the net effect is you end up with like a heterogeneous cloud of Zone managers each with their own jurisdictions user bases use cases compliance programs transaction monitoring or reporting requirements and yet this uh this decentralized cloud of

2:53Zone managers can interoperate and share users or transactions and otherwise engaging business of international finance so that's what the protocol achieves and um yeah we're close to main net so it's been a lot of research and development and some adaptation uh to the change in environment like the early Panther evangelists would have seen that the

3:18protocol was very much focused on Unstoppable privacy surveillance resistance and whilst we still hold those core values now the implementation is very much more focused on this hey if you have a financial institution license and a market and a go to market strategy we could provide you infrastructure essentially in a multi-chain or chain agnostic fing wow no that's really good to know

3:43and especially for institutions and Enterprises I'm guessing you know not that they're doing anything wrong but they want to make sure that their competitors and whoever else aren't knowing every single move that they make so that they can make a move on uh you know first um on on the Privacy perspective perspective can you talk about from somebody who understands

4:04Bitcoin ethereum and the level of transparency that it has you know you can look into a blockchain address or transactions and see everything pretty transparently how would an institution coming into blockchain or decentralized Finance look at that and be like okay I this is like there's a lot of things that are not good for our business in making sure that we have a first mover

4:27Advantage what's the kind of Technology we're looking at at Panther for these specific Technologies to ensure that you know we can protect our personal Insider information in the company yeah well I think if you're an institution and you've been tracking crypto this you know it's been around for well over a decade now so many banks and institutions have been tracking the

4:50technology and we've gone past well past the stage where cryptocurrency or uh onchain Finance defi is something that can be ignored or written off and so now this stands I would say universally for financial institutions and trafi markets is okay this thing is here we need to be part of it it's been growing incredibly well there huge advantages to use in a blockchain so how

5:17do we enter the market and what do we require and so that list is fairly Universal trust is required security forms part of that um you need to have affordability the service needs to be accessible affordable useful something that can generate revenues for these businesses and there's a lot of growth opportunity in the defi space in the blockchain financial markets and then once you

5:45begin to go further this is one of the major stumbling blocks and it's been an impediment to many such privacy protocols which actually focus on private tokens which is not something Panther focuses on Panther focuses on private and compliant Financial infrastructure but they've been delisted from exchanges barred from usage and that really doesn't help adoption and

6:07that's because right near the top of the list after you satisfy is there like commercial value in doing this the next question is is this something I'm allowed to do does the law permit it to my regul does my regulatory license permit is it within scope of my license or within the scope of another license or outside of the scope of all licenses and outside of the scope of all

6:30licenses is where most defi sits today and that's been I would say the biggest blocker to institutional adoption now if you can solve the compliance questions which is one of the problems Panther tackles then comes this question of but what's the advantage to me as an organization executing my transactions on chain and so then you have a set of tradeoffs you inherit the network

6:54effects the composability The Innovation the inflows of capital and new users uh gen you know Millennials uh gen Z users this type of thing but then on the other side there's a massive tradeoff which is everything you do is transparent and you've got Arkham intelligence and nanson and elliptic and chainalysis and any number of systematic data uh you

7:17know data analytics firms funds adversarially extracting information and trading against you and that really works that really works against the institution so with this emergence of things like real world assets and uh interest in actually adopting defi comes the question of how can we make it compliant and how can we protect our Alpha and panther is addressing two of

7:43those problems no I think that's incredible because as you sort of mentioned there at the beginning the in the infancy of privacy it was like you know Monero was sort of the example of if we could just build a coin itself and have an ecosystem there that it's built into the coin then people will just use that but that's not feasible and it's not practical and it's probably not

8:04lawful for institutions to be like let's just trade in this one specific cryptocurrency they want to use ethereum they want to use defi but they want to have some kind of protections with the major assets for their institution so building a software like this makes much more complete sense than trying to use some coin that is uh you know not exactly it's has nothing to do with Defi

8:28and and financial Trading yeah and I mean further I would say you know those I mean if you were to use an institution could technically accept Monero but they're going to have to do a source of funds check which is equivalent to carrying a big bag of cash to a bank and saying I want to deposit a large sum of money they're obviously going to have questions and it's going

8:49to be highly scrutinized and if you don't provide the tools and the Integrations and you change people's workflow there's really a disincentive to use it and so that's what has happened with privacy native tokens and coins and projects that don't enforce um honest Behavior really and so again Panther takes this approach of saying look there's a shielded pool the

9:14shielded pool is partitioned their Zone managers every Zone Manager can configure and control their own Zone and we found that those discussions and those Business Development uh conversations around integration and usage of P Panther protocol have gone very well well and particularly in the area of tokenized assets so real world assets com in on chain you know billions

9:37hundreds of billions in some cases uh of dollars worth of assets migrating on chain and it's just unacceptable for example for Bob who owns LP shares in you know fund a b and c to have that information disclos to the market uh and there many reasons why and the top of that list is privacy a right um that's that's the first reason but then there

10:04these other much more practical and economic drivers like I might lose money if people counter trade against that or front run my trades entering or exiting a position and we see that in defi every single day whale watchers and uh subscription services that sell user data and analysts that come on chain and break down the wallet and the structure and the portfolio and the fund flows

10:28infer also sorts of sensitive information so if you address that still provide access to composable defy and you can do it in a way where you have assurances around adherent to regulation you get a win-win on the use of PSE Anonymous public blockchains which is where 99 plus per of the liquidity uh and value lies today and so you know and and again we've really been

10:58careful in the architecture of P we take a chain agnostic approach so actually a pseud Anonymous permissioned blockchain say something built on Corda MH is also something that in theory Panther can deploy on and enable those users to have uh a level of statistical privacy and and access within that ecosystem so we don't take bets on long-term bets at

11:22least on one type of blockchain or another our bet fundamentally is student blockchains are the Prevailing standard with the network effects networks like ethereum salana these Network effects are going to be very difficult if not impossible to be overcome which means the reality is the pseud anonymous Ledger is the future of Defi and therefore there's a problem and we can

11:47solve that by being a composable building block within defi no I I I understand that the market is is huge um you know and and the blockchains as they are now will only continue to grow and then the compliance and privacy aspect of that will grow even more exponentially um and with the I I love what you said also there about permissioned blockchains and Enterprises

12:10and institutions uh they might be using different technology but being able to apply that to that as well uh I feel like wherever they are they're going to want to have panthers kind of technology for the Privacy preservation now with the compliance and having a verified user I know sort of the example of you know coming with a bag of cash to the bank and um say it's

12:33an institution that did accept that but they need to go through the compliance or verify their credentials from what I understand with Panther you're able to do the compliance but also have a ZK or privacy aspect to it um and I saw something about a Purify partnership where you're already working on this compliance can you talk about the that compliance aspect and and what benefits

12:54the technology has that you guys are bringing into that yeah sure so the purify partnership uh was completed at Q3 Q4 Q3 maybe last year and the purpose of that was to enable the first compliance layer for access to what will be version one of Panther which as I mentioned earlier is slated for q1 launch if all goes well but I'd say q1 Q2 quite comfortable in

13:23that timeline so Panther V1 has one zone and the zone is Dow controlled and it has or required strict kyc AML limits and so things like transaction monitoring limits as well as the requirement that the user go through some form of verification from an AML perspective and what pfy does is it Aggregates uh what I'd say you know trafi compliance tools and then provides

13:51them onchain through its protocol and DOW to other Dows and protocols and so um so we can access all of that bleeding edge compliance technology or rather the Dow can and actually the user can access that technology in order to get a verified credential and so there's a few Innovations there one is the deployment of one of the first CK AML or kyc uh onchain schemes so we we built

14:22circuits uh for the purify team the ZK circuits to be able to prove and verify that a user for example was over 18 that their ID that was submitted and the selfie that was done were verified and we use ZK snarks to uh enable that Prov and verifier mechanism to happen without actually needing to disclose the underlying data uh and in this case that data is self verified because the user

14:51is interacting with the Dow and it's a decentralized Zone what the user is really doing is going through an on boarding flow and self verifying they're directly interacting with purify to have their verifications checked and a zero knowledge proof generated that proof generation component happens through the panther protocol and once it's generated the user now has this mechanism to

15:19access the panther Zone by essentially submitting their there Zer knowledge proof that's verified and they're given access to the protocol so in the default scenario the protocol actually hasn't collected any information because the user self verified with pufy purify doesn't collect and store that information that information is stored in a data safe and that data safe is

15:44controlled by the Dow and so in the event that there was a enforcement action or licenses are required at some point to run this type of system all that data is securely stored in an NPC multi computation multiparty computation um secured Vault Data Vault and the user uh can have that data disclosed in order to remain compliant and um business as usual can continue so that's what the

16:13purify integration was about and the way to think about purifying the scope of Panther is purify is one kyc AML vender and integration service and Panthers in discussions with many other digital identity provid ERS and onchain compliance providers and also in discussion with institutions that have no onchain compliance tools and actually don't wish to change their compliance

16:39systems at all and so then it becomes a case of checking their offchain compliance and again if the institution that has the license says that Alice and Bob are verified and they're able to access a panther Zone and through that zone they can access a set of financial services then then that's sufficient what Panther will do is generate a credential and those users will be able

17:05to come to the panther Hub and access defi Services by essentially submitting their credential that will be verified in a zero knowledge fashion and so again they have access to Defi and in the normal course of business operations no information is essentially disclosed about them and in the case of an institution that institution already has that data it was likely stored

17:31offchain in any event if it's stored onchain Panther integrates so there's this integration layer and an ecosystem of did providers that Panther is building out looking again looking ahead and seeing a world where dii consists of a number of different verification methods or digital IDs and a user has a menu that they can select from and say oh yeah okay okay well to access this D5

18:00protocol um digital identity service provider one two or three's credentials can be used there are a number of Institutions that I have verified with instead of me resubmitting all of this information and going through the kyc process from scratch what I can do is connect my digital identity to the to the protocol in question and if there's missing information and queries are made

18:25that information submitted and that can significantly reduce the overhead for compliance on board which is going to make you know defi 2.0 if you will um a very smooth composable and seamless experience cheaper faster more secure more flexible so that's the that's that's where we firmly believe we're going that's great and yeah no it's it's nice to you know it has to be done but it's

18:52nice to do it in a way that um you can preserve as much privacy as possible uh for institutions and for personal uh reasons to get into the system and now once you're into the system I want to get a if you could paint a a nice picture of how exactly um we you obviously you want to have all the Privacy Technologies but you also want to make it easy for institutions to not

19:17have to go through all these steps and understand the convoluted nature of it all um in that say I have some ether and I want to go into uh Panther Zone and do some borrowing Lending from what I understand you can deposit assets and then they turn into some kind of Z assets uh where ZK snarks aren't involved with them and then you can make trades and then you can bring that out

19:40maybe you could paint a picture of of how exactly that would look like for an institution that's putting a large amount of capital in yeah sure so for an institution to put a large amount of capital in they would either have had to set up their own Zone and operate that zone under their licenses or they will have had to uh become a customer of someone else's

20:02zone so I mean like let's assume that's an asset manager a platform like coinbase someone who or bro any broker someone has a brokerage license and custody licenses and so the institution is already a client of that uh of that financial institution that financial institution has a Zone that's path a path B is they're running their own Zone they set up and manage their

20:24own infrastructure they already have their licenses and they're interested in their own assets and those of their clientele so one way or the other there has to be some kyc the kyc can be done in advance from pre-existing customers or uh Zone Manager going through enhanced due diligence to get a Zone um or they will have to do the uh kyc checks or KYB

20:50checks uh as they connect their wallet so Step One is connect the wallet step two is select your verification method and again verify that you are authorized to access the protocol that can be done like a sign on process you know connect the wallet those checks are done in the background either you're prompted to begin kyc KYB on boarding or you're already kyc and on boarded so nothing

21:16really changes in that framework for what AML compliance looks like in web to finance today so once you're within Panther you get a a beautiful uh interface that allows you to essentially deposit your assets and once you deposit them they're self- custo with the protocol those assets are under the control of the institution not in control of the uh protocol in any way

21:42and there's no third party custodian and the user the the institution deposits those assets they get a onetoone representation called a c asset what's happening there is there is a subledger which is managed by Panther protocol and that essentially every user has a z account the account has balances and a transaction history essentially a transaction graph attached to it and

22:08that graph is is protected by ZK snar so it's a zero knowledge infrastructure so when you come to essentially say hey I am I want to withdraw assets so you deposit the eth you want to borrow against your eth that would require an adapter being built into a protocol such as a now Panthers built adapters into Unis swap par swap curve we're really focused on dexes because we see that as

22:34the first use case really swapping assets and the nice thing about building into these existing protocols is you can tap into all of the existing liquidity which is one of the core features we think is important and and crucial here institutions need liquidity before they're even interested in the conversation so we're providing them access to the liquidity um so if it were like let's

22:59say a we build an adapter into a and and then once the wallet is connected the institution will see that a is an interface that they can connect to and interact with as normal what's happening is Panther protocol is doing all of the interacting onchain on behalf of the institution and so from an onchain perspective what you see is Panther protocol contracts interacting with a

23:27contracts you see from a gas perspective the institution is not required to pay gas fees gas fees are paid by bundlers and those bundlers essentially will finance the the cost of execution which would de anonymize an actor in the first place and so the institution borrows the assets that they wish they secure the collateral directly onto the third party protocol that interaction is

23:52manage through Panther and then if the institution wishes to take those assets back uh into the their native wallet you can withdraw those assets through a clean address uh and so all transaction linkages between the deposit address and the withdrawal address will have been broken and at the same time it's not to say that that information is lost all of

24:14that transaction information is managed by the uh the panther Zone Manager and so they will have access to that transaction information and they can carry out AML transaction monitoring again it might be an institution's broker or their asset manager or it may be the institution himself so the information is not lost it's just confidentially and securely custodi with

24:39a regulated institution yeah that's very cool um and and that's great to hear about the gas and yeah you don't want to De you have to make sure all of the steps are are you're not de anonymizing Yourself by having to pay the gas out of your wallet that you just shielded that doesn't make any sense but what yeah and it's very easy to do mind you I mean true privacy

25:03is exceptionally difficult to enforce and it's not something Panther is not a comprehensive solution to avoid any onchain tracking but what we really do focus on is this onchain transaction linkages but there's like IP address linkages device leakages all sorts of other factors that provide information on who you are I think the most important one and the biggest is the

25:28fact that these student Anonymous ledes track every single transaction in a publicly searchable fashion immutably forever and so it's unprecedented it's unprecedented the amount of data and access one has and you can literally look at any wallet and see what it's ever done and every other wallet is interacted with and if you have enough resources you can just data

25:52craw all of them and so pick up information ones as well so very SC scary thing from the perspective of what bad can do with this amount of data definitely but I love that the focus is on liquidity of course if you're an institution you're not going to go into somewhere that sure there's extra privacy but it's a liquid because you're going to be losing a lot

26:16of money um to tie into Unis swap Paras swap these top decks is um it makes it like you need to be at the place where the best that's the most important privacy is is a a secondary you can't sacrifice a huge spread and and the cost of trading for a bit of privacy so that's great to hear and now with 2024 so far you know the the ETF approvals we're seeing billions of dollars of trading

26:43volume uh from institutions and and trafi into Bitcoin I feel like that's a big Catalyst for institutions to now once they it's it's almost like that that trigger that happens in your head once you have Bitcoin then you're looking for hey this blockchain thing is is awesome and let's go deeper into it and that's where defi comes in as well I'm curious on you know what your what

27:07are your thoughts on the success so far of the ETF and and how that may translate into more institutions being ready to trade in Defi and using Panthers technology for it well I think first and foremost this Bitcoin spot ETF approval in US markets is a massive achievement that has been something that was really a dream and a fantasy of bitcoiners a decade ago and

27:34even less than you know much more recently than that even so how far we've come is is astonishing because really the thesis behind Bitcoin has always been that uh it will be adopted as a global monetary system and the ETF approval is the biggest signal yet that that is uh successfully happening and it happened with the staunch opposition position of the SEC which you know again

28:01is a double Victory here because if anything that was hugely opposed on a political level and basis with complete disregard for the fundamentals of the technology and the fundamentals of adoption and the value ad that Bitcoin has really created for hundreds of millions of people that's far and that will continue in the decades to come so I think there's a

28:26huge achievement and I and I agree you know you swallow the Bitcoin pill whether it's directly in a wallet or through an ETF and you know uh many people don't come back out of that they fall down the rabbit hole and end up investigating and exploring what this thing blockchain which really is the technology Bitcoin is a brand and a network of users that network of users

28:52is powered by the technology and so once institutions experience Bitcoin and see equally importantly that there is a regulatory path to adoption and that the trend and precedent is being set the Bitcoin spot ETF is very likely going to be followed by an eat spot ETF and applications have already gone in for salana spot ETF and again these are just the early steps

29:16so institutions then and and again we have these discussions all the time so this is now in practice it's not hypothetically what would it look like if we were to do something with a blockchain it is we are in the middle of a tokenization effort for real world assets and our infrastructure and we plan to bring it to Market or we have come to Market and we have a problem and

29:39the problem is the compliance systems or the Privacy systems are lacking on this chain and so there there are two solutions one is migrate to another chain that's not going to have the same liquidity and services that you're interested in and hope you can build a network effect which is what all permission chains uh run by banks have attempted to do and they've had no

30:04success in gaining network uh effects in an open you know in in an open network manner they they've tokenized assets and they can do institution institution transfers and that becomes this question of well what's the efficiency this database is difficult to it reaches consensus that's expensive it's between trusted parties anyway there's no outside access there Network effects

30:28that we're actually tapping into and so those experiments have really been a lot of hype and and and some experimentation but no real traction and so where the market is today is hey there's so much traction whether it's stable coins or defi or the advancement of New Primitives in this space compliance systems are emerging we a real real world assets are being

30:54tokenized and we really can benefit from these networking effects so great now I want to do that but I don't want to be on the whale watchers x.com account every time I move assets I don't want my ultra high net worth individuals and client based Footprints to be inferred and then sold for $12.99 a month for subscription fee to anyone who's willing to pay for it so this is where Panther

31:21is now coming into the conversation and what are what protocol essentially enable it's a pitch that looks like you can keep your compliance systems nothing has to change you can keep your data storage nothing has to change you can keep your user Journey nothing has to change what is going to change is what that linkage looks like on chain we're going to break that

31:42transaction linkage you'll be able to maintain your licenses and do all of your reporting and uh we're going to do this on any blockchain that it makes sense to deploy on so pick your chain I show us the use case and the value and we will assist deploy that for you and the longer term vision is go to the open source Foundation Page look at the good GitHub read the documentation and do

32:08what you want all the tools are there there's there's Community a Vibrant Community it's all free you don't even have to own the governance token to use Panther protocol but if you want to there's some benefits there very cool and uh you mentioned the ethereum ETF next in Salon as well I feel like once that ethereum one gets approved people are really going to wake up to to defi

32:33um because you know Bitcoin is is the orange pillow you swallow and then once you get in ethereum you definitely never go back so I'm very excited for that um and I and hopefully the the timing is divine with the launch of Panther's mainnet as well I know you and your team have been working on the protocol already for for many years I understand right now in the test net it's possible

32:54to use uh most of the functions and try it out and you know in crypto time moves fast um the maintenance just around the corner as well yeah so I mean we we have regretted in the past putting timelines on when we're going to deliver things because inevitably other things dependencies come up I mean stage three test net was delayed because there were missing

33:18libraries on uh and there were there were bugs in libraries that our development team had to find which which takes time also the scope of work you know optimizations of circuits can then require reconfiguration of Prior work so stage three was a really it really was a heavy lift and um we were wrong on when we thought we would release stage three but that's behind us now our test Net's

33:41broken into nine phases and uh each phase stage three from uh from my discussions with the tech team is more or less the heaviest lift so stages four through nine will be faster in terms of delivery uh the team is working ferociously to deliver as I mentioned last year there was a lot of re architecture there was a lot of research and development we published some very

34:08interesting papers on uh sort of the use of monomial snarks to make proving times 140 uh 140 times faster for cross-chain messaging so there's some things that we're doing which are really future projections and then there's the implementation of B1 and sure that architecture is right um q1 is the target i' say q1 Q2 is a is a reasonable time frame what we've been doing as the

34:38foundation and development team is really focusing on our communication and so it's really more about hey what did we do last week what are we doing this week what is coming up next week as opposed to you can get this on this date or you can get that on another date it's and so that's been an ongoing area for us of really investment and recruitment uh to improve our

35:02Communications and marketing and again I think with tech you know the test net which is an incentivized test net by the way I.E testers are rewarded in zkp ultimately for contributing and helping us to identify process improvements and bugs so you know the way to get involved right now is to jump into the community join the conversation ask questions

35:27begin testing and uh we're working on a couple of other exciting uh Innovations and processes around the zkp governance token as well which is something that powers the the ecosystem and it's it's an important instrument in the scalability and growth of of Panther protocol incredible well I appreciate all of your insights into zero knowledge and the Privacy aspect of Defi and and

35:57and panther um I have been following up the updates it seems like the team yeah you're right is very um they're very consistent and like okay every week There's an update much more than uh many other blockchains that I've seen so Props to you and the team for keeping everyone updated and it's nice to hear of the incentivized test it's always nice when you're able to to test

36:18something and you're also incentivized in getting some of the zkp before the main net launches that's always a usually a very promising thing so I'm looking forward following along those updates to Leading towards the main net and um you know nothing is ever Concrete in uh in startups and business of like especially something so Innovative as this that it's like you you can plan a

36:41the day of six months before when you know what's going to happen so um the weekly updates are are more than enough I would say I really appreciate all all the insights you brought today Oliver and I'm definitely going to follow along with the weekly updates leading towards the main net and I'll also leave in the show notes a link to the community as

37:01you mentioned um the test net and the protocol site everything down for the viewers to check it out below um let's definitely follow up closer to the main net launcher or just after in the near future yeah man thank you very much Ashton and uh looking forward to the next followup and I would say again I mean you put in the work you're going to see the output we have a growing

37:26pipeline of announcements and improvements and Innovation and we were lucky in some sense you know there was it's like half planning and half luck but when when we began Panther protocol we were very early in the ZK space you know it was like June 20 and 20 when this thing started and so in that sense we created our own luck and we were able to get healthy you know we raised 30

37:52million we actually raised 32 million and returned 2 million because it didn't pass AML check so we raised 30 million net uh over the course of 2021 we had a very successful public sale and that Community is very important to us so those you know the timing of the public sale was maybe fortuitous to some degree but we set ourselves up to be successful

38:14in that way and the objective and when we geared the financials it was really for us to be able to build with our heads down regardless of what the market condition was through the bare Market which was inevitable with the 2020 to 2022 early 2022 bull market so the thesis was get Capital put your heads down do the R&D build a product be ready for the next adoption cycle that's where

38:42we are and so the timing is good and we're going to see exactly what that means in terms of performance when we release this uh you know retail and Enterprise enabled multi-chain privacy produ call to the web3 space and um the team at Panther Ventures is very energized and the foundation so lots more to come thank you so much for having us having me really representing

39:10Panther and I'm looking forward to the next one