Earlier in the Ethereum Network Privacy Protection Practical Guide , Chain Wen taught you how to use Tornado.Cash and other techniques to increase anonymity for your Ethereum account.
Written by: Pan Zhixiong
The Ethereum platform’s largest privacy solution, Tornado.Cash, the currency mixing platform, finally announced its token model and solicited feedback from the community. The plan proposes that 5% of the total governance tokens will be directly airdropped to the users of the previous agreement, and the remaining 10% will be distributed through a new mechanism called “Anonymity Mining”.
In Tornado.Cash’s entire solution, many new concepts and methods have been invented, but two of them are worth paying attention to. They are how to remain anonymous while participating in liquidity mining , and through the new AMM and double-layer tokens. The form takes into account the speed of token distribution and market fluctuations .
However, Tornado.Cash’s financing process actually encountered some setbacks before. In July of this year, Tornado.Cash planned to cooperate with OpenLaw to launch the Tornado Fund, financing through qualified investor subscription to comply with U.S. laws, but in September the two parties stated that they were only available to qualified investors, which led to potential DAO participants The number was limited, so the fund was stopped.
Judging from the results of subsequent financing, Tornado.Cash’s token distribution plan reserved a total of 30% of tokens for early investors and teams, which may be regarded as a highly decentralized distribution plan in recent projects. However, it is certainly not comparable to community projects that are completely fair distribution and mining.
The distribution plan of Tornado.Cash will issue a fixed total of 10 million TORN governance tokens, which will be fully circulated in 5 years. The official stated that TORN is not a financing method or investment opportunity, and tokens cannot be transferred without confirmation by the community. In addition to 5% airdrops, 10% mining, and 30% to the team and investors, 55% will be allocated to the management of the treasury composed of decentralized autonomous organizations (DAO), which will be unlocked linearly in 5 years. Officials did not specify which uses.
Token distribution details
TORN has a total of 10 million tokens, and the specific distribution is:
- 5% (500,000 TORN): Early users of the ETH fund pool airdropped to Tornado.Cash;
- 10% (1,000,000 TORN): The anonymous mining activity of the ETH fund pool allocated to Tornado.Cash will be linearly allocated in 1 year;
- 55% (5,500,000 TORN): DAO fund library reserved, will be linearly unlocked in 5 years;
- 30% (3,000,000 TORN): Developers and early supporters will be unlocked linearly in 3 years.
The details of the monthly allocation are:
How to receive the airdrop?
Tornado.Cash will airdrop 5% (500,000) TORN tokens to addresses that have recharged Tornado.Cash before the Ethereum block height of 11,400,000. The specific amount will be calculated based on the time and amount of recharged assets. According to official statistics, a total of 7,514 addresses have obtained empty investment grids. You can also check the list details here .
Officials have begun to gradually distribute vTORN voucher tokens to these more than 7,000 addresses in batches. vTORN holders can exchange them for TORN at a 1:1 ratio within a year, and expired unconverted tokens will be distributed back to the DAO fund library. At present, the front-end interface of the vTORN and TORN exchange process has not been officially provided, and it may be provided on the official page in the future.
What is “anonymous mining”?
Tornado.Cash provides an anonymous privacy service, which can also be called a “coin mixing” tool. When the number of users participating in the pool increases, the amount of funds is larger, and the transaction volume is larger, the anonymity will continue to increase. Therefore, Tornado.Cash calls their liquidity mining scheme “anonymous mining” in order to inspire more people to participate in the ETH fund pool.
But unlike other liquid mining projects, Tornado.Cash provides an anonymous service, so they also designed a layered privacy protection mechanism for mining and claiming tokens, which can be achieved by using zero-knowledge proof .
In addition, Tornado.Cash also designed a new AMM mechanism in order to maintain the balance of the speed of token mining, which will allocate TORN at a constant speed, creating a middle-tier secondary market fluctuation mechanism.
How to distribute governance tokens anonymously?
Tornado.Cash designed a two-layer token model to improve the privacy of the entire process. When users participate in “anonymous mining” activities, they will not directly obtain TORN, but first obtain an intermediate asset called “Anonymity Points” (Anonymity Points). The direct amount of this part of the asset will not be recorded on the chain. It is calculated through zero-knowledge proof.
For external observers, they can only see that a user has claimed an unknown number of AP assets on the chain, and this AP will be stored in a newly generated key. Of course, this key is encrypted by the user’s Ethereum public key, so if the user’s new key is lost, it can also be restored with the Ethereum address.
If you want to improve privacy, users can also submit an application for AP through a third party or a trusted relay node without having to associate their own address.
Can AMM be used for token mining?
In addition, Tornado.Cash also designed a special AMM (Automatic Market Maker) mechanism to solve the exchange rate problem of AP and TORN exchange, taking into account the relative stability of the exchange rate but allowing secondary market fluctuations.
This is to solve the problem of the distribution speed of “anonymous mining” tokens. For the TORN tokens of the agreement, they will be distributed at a constant speed, that is, 1 million TORN will be unlocked linearly within 1 year. This logic will not change. However, the method of obtaining AP varies according to the number and time of the assets participating in anonymous mining in the market, so there are exchange rates between the two. Tornado.Cash believes that AMM can solve this problem.
That is, if the demand for AP to exchange TORN in a short period of time increases sharply, the exchange rate will rise sharply, otherwise, the exchange rate will fall sharply, but overall it should be relatively stable. But for Tornado.Cash system, the rate of outflow of TORN is unchanged.
Other: governance, audit
There are two other points worth noting. In the governance system of Tornado.Cash, at least 1000 TORN tokens are required to create a proposal, and all proposals must be smart contracts, which must contain verified executable code and logic. After the vote is passed, the smart contract of the governance proposal will be executed by the agreed governance contract.
Tornado.Cash stated that their smart contracts have passed the audits of the ABDK, Pessimistic and ZeroPool teams. In addition, transaction aggregators 1inch and Scott Bigelow also helped audit smart contracts. The ZeroPool team also developed Ethereum anonymous solutions before, and they are also one of the experts in such products.
