How do privacy protocols like Tornado Cash work? 🧵 👇
1/ A tumbler/mixer is a service in which you can mix traceable coins with other “clean” tokens in an effort to make it harder to trace the original source.
Think of it like a blender.
Think of it like a blender.
2/ You input the coin in which you wish to anonymize, it gets chopped up into pieces and mixed with a bunch of other coins, and then it’s sent to a new address.
To make it even harder to trace, most tumblers also randomize the amount that they pay you back.
To make it even harder to trace, most tumblers also randomize the amount that they pay you back.
3/ You’ll get your full value back (minus the transaction fee), but instead of being one ETH, it might be four or five fractions of ETH in separate transactions.
Because these mixers work by distributing coins at random, there’s no telling where your coin actually came from.
Because these mixers work by distributing coins at random, there’s no telling where your coin actually came from.
4/ The efficacy of a privacy protocol is dependent on the number of users, the anonymity set.
Think of a ballpark crowd: If the stands are full of fans, it’s hard to pick out a singular person in the upper deck. Conversely, an empty stadium only helps frame the lone fanatic
Think of a ballpark crowd: If the stands are full of fans, it’s hard to pick out a singular person in the upper deck. Conversely, an empty stadium only helps frame the lone fanatic
5/ If you enjoyed this thread, tune in to our latest episode, where we explore the US sanctions on Tornado Cash, the USDC blacklisting and KYC DeFi.
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🎧 Spotify: tinyurl.com/yc7hsfps
📺 YouTube:
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