DERO: The Formula 1 Privacy Coin is Just Starting its Engines
A slightly altered version of this article was first released in the CryptoBirb Monthly Bulletin Series as our “Gem” for July. For more information on further analysis of DERO, as well as future “Gems”, visit our Discord at discord.gg/emw5Npb.
It can be difficult to capture the imagination of the common market with “a mere privacy coin” when we are already dripping with them. It’s too easy to copy and paste vaporware without building meaningful value, and not for a lack of effort. Unimaginative coders and programmers scrap along with the best intentions, only to stay in the middle of the pack.
This is woeful when, especially in privacy centered products, a project cannot afford to coast on its tech development. More than network connections, political leverage, and first mover advantage, in the realm of privacy, underlying tech alone either provides secure and efficient private transactions, or it doesn’t. There is nothing Justin Sun, Mike Novogratz, or any other noteworthy personalities in the space can say or do to change that.
The code, concept, architecture, and delivery either mesh to provide a cohesive and impermeable construct that behaves and performs as advertised, or you become an embarrassing headline that leaves the market scratching its head as to why you are the most capitalized privacy coin (latest XMR bug).
DERO- the unsung hero of the privacy coin space, has quietly been building on a base of underlying tech par excellence, and is reaching a critical mass where its achievement and vision can no longer be ignored by the market.
Dero is coming, and when its price catches up to its value, neglectful investors will regard that, true to its origins of obfuscation, it was the privacy juggernaut that was hiding painfully in plain sight.
Over the course of this paper, we will be looking at various aspects of Dero’s conceptualization and properties, and many elements will overlap as is intentionally leveraged by design.
Although it may seem redundant at times, the value presented here bears repeating.
Dero was designed with the tandem heads of privacy and functionality first and foremost. Everything else is meant to augment these primary pillars.
Straight from the source at Dero.io:
“Dero is the first crypto project to combine a Proof of Work blockchain with a DAG block structure and wholly anonymous transactions. The fully distributed ledger processes transactions with a twelve-second average block time and is secure against majority hashrate attacks. Dero will be the first CryptoNote blockchain to have smart contracts on its native chain without any extra layers or secondary blockchains”.
The interwoven thread of PoW CryptoNote blockchain and DAG block structure is the atomic core that exponentially heightens the potential of Dero’s value proposition.
Why Blockchain and DAG?
Many of us can spout the inherent benefits of blockchain in our sleep by now.
Theoretically speaking, once recorded, data may not be tampered with, processing the chain takes place across a decentralized network of nodes, and the chain is updated with near real-time data as blocks are processed.
In a perfect world, even when all of these things run as designed, (which various hacks, and 51% attacks have shown cannot be taken for granted), there is a central blemish to the efficiency of blockchain.
Much like the classic game of “Snake” (for those among us are old enough to remember) on Nokia cell phones in the early 2000’s, assimilating new blocks and moving the chain from one transaction to the next becomes more resource intensive to validate, just as the snake becomes more difficult to navigate as it grows from bite to bite.
DAG structure, however, does not require former blocks to be fully ‘swallowed and digested’ before verifying the next bite.
Where blockchain is structured similar to linear links of a chain, DAG is formed similar to a tree, allowing for new branches to be formed for new transactions. Using this structure, DAG only requires the validation of the previous transaction for a new transaction to be processed, where instead, blockchain would require an author to re-pen the entire journal before he even can quill, “When Verify?”.
Obviously, DAG structure is not without its own shortcomings, mainly in the form of security. As witnessed in IOTA’s 34% vulnerability, a mere 34% of network hash is necessary to commandeer the network, causing IOTA to form a temporary ‘coordinator node’ to manually approve transactions. Not ideal, and a far cry from ‘decentralized’.
While I could say it, DERO’s site can speak for itself far better.
“ DERO Atlantis combines the CryptoNote protocol with directed acyclic graph and Bulletproofs. DERO-DAG is mineable, POW based, fully linear with same level of security as blockchain. No orphans, or scalability limits defined by resources…
DERO DAG implementation builds outs a main chain from the DAG network of blocks which refers to main blocks (100% reward) and side blocks, (8% rewards). Side blocks contribute to chain PoW security, therefore traditional 51% attacks are not possible on DERO network…
Traditional Blockchains process blocks as single unit of computation, (if a double-spend tx occurs within the block, entire block is rejected). However DERO network accepts such blocks since DERO blockchain considers transaction as a single unit of computation.
DERO blocks may contain duplicate or double-spend transactions which are filtered by client protocol and ignored by the network. DERO DAG processes transactions atomically one transaction at a time.”
Takeaway- DERO DAG enables DERO to enjoy the security and decentralization of blockchain, and benefit from the scalability and transaction speed of DAG, while simultaneously addressing the known issues inherent to both.
Privacy, and Security++
DERO ROCKET BULLETPROOFS
Another privacy workhorse in Dero’s stable is the Dero Rocket Bulletproofs, which are a full 10x faster than regular bulletproofs. A typical bulletproof takes about 15 ms to verify, Dero’s Rocket Bulletproofs only take approximately 1.5 ms.
The Dero engineers achieved this dramatic reduction in processing time by “optimizing the double-base double-scalar multiplications that are necessary for validating bulletproofs”.
Other improvements not currently detailed in their whitepaper are reportedly in development, and if the devs maintain their rabid hunt for coding inefficiencies, there will be many more to come.
TLS-Secured P2P Network
Dero is building a network that they anticipate will be used by a vast array of businesses and individuals around the world, and have taken unprecedented measures to secure the network accordingly.
“Dero is the first blockchain project to use TLS encryption for its network communication, which protects the network participants from eavesdropping and tampering of network data.”
It should bolster investors to know that such measures show the Dero team is embracing the ‘if you build it, they will come’ mantra, opting to build out enterprise solutions worthy of attracting partners, as opposed to addressing demand after the fact. In addition to other factors to be addressed later on, it shows their commitment to building a globally viable vision.
Dero Virtual Machine
Among other features like ring signatures and the aforementioned rocket bulletproofs, private smart contracts to come on Dero’s DVM are the real point that should be keeping Monero up at night.
The DVM is the decentralized platform containing the entire smart contract eco-system, both public and private, that run on the DERO block chain.
DVM smart contracts will enable applications to operate exactly as programmed, free from tampering, fraud, or other forms of malicious interference. In addition to public smart contracts, the DVM is designed to support private smart contracts where, you guessed it, all data and parties involved in the contract are obfuscated to anyone not directly involved in the contract.
As per the Dero DVM Wiki:
“[the] current version of DVM is an interpreter based system to avoid security vulnerabilities, issues and compiler back-doors. This also allows easy audits of Smart Contracts for quality,bug-testing and security assurances… This enables developers to create voting, markets, store registries of debts or promises, move funds in accordance with instructions given long in the past, (like a will or a futures contract), and many other ideas/things that have not been invented yet, all without a middleman or counterparty risk.”
Atomic Swaps, Sub Addresses, and other Road Map Objectives
As shown below, this is quite a busy year for the Dero dev team, especially after already having delivered so much progress. After speaking with some of the team, I learned that this reference is to be updated in the coming weeks, so I am standing by.
Some of the major points I am most anticipating are the smart contracts on the mainnet, the sub addresses (which will allow for one address to flow into another, much in the same way that business and personal cell numbers can be forwarded to the same device), Android/iOS wallets, and of course, the atomic swaps.
When cross-referenced against the roadmap in their whitepaper, there are certainly some elements which have seen delays. I am not discouraged by such short term delays, although I would be remiss not to acknowledge them.
I would greatly prefer a team that pushes itself with bold promises with occasional modest delays, to a team that only whose aim is to achieve that which can only be attained comfortably.
Dero’s Blockchain-Rockefeller Vision of the Future
Dero has astutely taken an array of the best parts of Monero, Ethereum, Nano, and even Beam, (in the form of opt-in auditablity), and is building a project that makes most others look plain lazy.
It reminds me of Chainlink, which diligently labored along without the self congratulating fanfare of so many projects heavy on marketing, but light on tech. Once the behind-the-scenes work started to be unveiled, the chart responded with a sustained rally that has made every other top-100 chart look on in envy.
The main point of consideration that I would like to see addressed by Dero’s team is that of optics. Where Monero is widely known as the crypto poster-child for “dark money”, this is neither useful for mass global adoption, nor supportive of the necessary acceptance by governments.
Dero has a tremendous opportunity to bolster its station as the first stop for enterprises in need of private smart contract solutions, of which there are many.
There is no reason to assume that cryptographic privacy is only useful for nefarious purposes, just as we do not mistakenly assume that our neighbors close their front doors only to commit felonious acts behind them.
Additionally, other legitimate needs that require privacy such as voting services, escrow services, address certification/ verification, are just a few legitimate purposes to be served by such private smart contracts, with many others to be built.
If Dero can brand themselves effectively (or perhaps even undergo a re-branding, as has been rumored), they can be part of the solution to address the unfounded fear that has so many around the globe skeptical of cryptocurrencies, and in so doing, control their own destiny.
With the tech, vision, and progress Dero has shown so far, they have already earned a rightful seat at the table of future cryptocurrency big boys, and if they play the long game as well as many have come to anticipate, their rise will also be the center of the conversation.