The Tornado Cash Saga — What are the alternatives?
Recently, the United States Department of Treasury’s Office of Asset Control (OFAC) added the tornado cash protocol to the sanctioned entities list. OFAC claims that tornado cash has been used to launder more than $ 7 billion of cryptocurrency assets since its creation, including $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that the U.S. sanctioned in 2019. According to OFAC, the hackers subsequently used Tornado Cash to launder more than $96 million of malicious cyber actors’ funds derived from the June 24, 2022, Harmony Bridge Heist, and at least $7.8 million from the August 2, 2022, Nomad Heist. As a result, OFAC added tornado cash and several related addresses to the special designated nationals list.
Consequently, Infura and Alchemy Platform began blocking Remote Procedure Call (RPC) requests to Tornado Cash, rendering the protocol inoperable from the front-end and to non-technical decentralized finance users.
Circle, the company issuing USDC, in accordance with the OFAC sanctions, froze all USDC tokens held in addresses contained in the sanction list — once again highlighting the dangers of centralized stablecoins as the cornerstone of decentralized finance.
My thoughts regarding the sanction
I feel the sanctions were poorly thought out, considering that tornado cash is a user-agnostic protocol and can be used in good or bad ways depending on the actors involved. Privacy is a fundamental human right, and tornado cash is a tool to enhance privacy. I feel that OFAC sanctioning the tornado cash protocol sets a terrible precedent since it opens a world of possibilities of privacy infringements and the destruction of experimental inventions that could move humanity forward. With that said, I will be making recommendations on privacy services crypto market participants can use in place of Tornado Cash. Consider the tweet below:
Alternatives:
Privacy Enhancing Cryptocurrencies
Some cryptocurrencies prioritize the privacy of their users when making transactions. Some of these cryptocurrencies include Monero and Zcash. Privacy enhancing tokens give the users the option to send and privately receive cryptocurrencies. Essentially third-party observers of transactions made using these privacy-enhancing cryptocurrencies cannot determine the addresses trading the cryptocurrency, the amounts transacted, the balances of the parties involved in the transaction, and the transaction histories of parties involved.
Ergo Mixer
Ergo Mixer is a non-custodial, programmable, non-interactive token mixer that utilizes sigma protocols to enable efficient, trustless mixing of funds while allowing the highest possible degree of privacy and security. Ergo Mixer aims to be a smart contract platform that ensures secure access to decentralized finance tools.
You can download the ergo mixer here and set it up using this simple tutorial. Also, remember the ergo mixer best practices when using the protocol.
Ergo Mixer also has a network token called Ergo; you may want to check it out if you invest in privacy-enabling technologies.
Aztec Network
Aztec Network takes privacy further by allowing users to access decentralized applications privately through private Zero-Knowledge Rollups. Thus, users can trade privately and securely instead of only being able to send funds privately. For example, Zk.money, which is the Aztec network's first product, allows users to trade privately using Zero-Knowledge technology. In addition, Zk.money enables users to access popular decentralized applications like Aave, Compound, liquidity, Uniswap, Tokemak, Set, Cowswap, Mstable, etc. You can see the progress of the Aztec network here.
Final Words
Privacy is a fundamental human right; while I do not endorse criminal activities, I feel there are better ways the government can regulate activities surrounding privacy protocols without blanket banning the entire protocol. The technology is user agnostic, and the government should focus on regulating activities rather than platforms.