Chainlink releases privacy-focused white paper for DeFi smart contracts

Chainlink, a service that provides tamper-proof I/O for smart contracts, recently published its ‘Mixicles’ white paper. According to Chainlink, Mixicles are DeFi instruments embedded with oracles, which mediate between data both on and off the blockchain, and include mixers for the promotion of financial instruments’ privacy.

Decentralized Finance or DeFi on Ethereum has been a big hit with the cryptocurrency community. The general idea behind it is to enable people to be completely free from the fiat system by using decentralized applications catering to financial requirements like investing, loans, etc.

An issue that seems to be crippling the platform however, is privacy. And giving up privacy shouldn’t be a valid consequence for achieving decentralization.

In the world of traditional finance, it isn’t possible to find out how much a bank loaned your neighbour so he/she could buy a house, and it shouldn’t be. But in the decentralized digital ledger that is blockchain, this is all to much of a reality. All transactions are public data and anyone on the network can see them.

And this is only one of the ways through which DeFi apps can defy financial privacy.

A quote from Chainlink’s recent white paper stated,

“Smart contracts naively implementing financial instruments on blockchains can leak critical business intelligence: Monetary amounts, instrument terms, and participating counterparties. In today’s complex capital and derivatives markets, privacy is both a given and a legal requirement of most contracts.”

It seems inevitable that privacy will become increasingly demanded as use cases of DeFi applications become more numerous.

In other news, the Ethereum-based Callisto Network has integrated Chainlink’s Oracles into their Callisto-based applications.