When web3 started its journey, one of the earliest use cases was decentralized finance (DeFi), and it quickly earned popularity among crypto enthusiasts. Over the years, DeFi has evolved in its scope and impact, and is still the best use case of web3 that invites adoption. However, DeFi has not been an unmitigated success and has its own set of challenges that frustrate users and discourage wider adoption.
The dark side of DeFi
The biggest pain point in DeFi is MEV, or maximal extractable value. For a long time, users had to accept MEV as an invisible tax, although by definition, it is an oversimplification to call it bad. Yet many veteran users cannot escape the clutches of MEV's ugly side, and inexperienced users fall prey to it unwittingly as they navigate the world of DeFi.
Here are the most prevalent MEV exploits.
- In a sandwich attack, bots profit like this: notice the user awaiting a swap, buy the token, push the price up, then execute the user's trade at a worse price, and immediately sell so that the user gets fewer tokens.
- In frontrunning, when bots notice a pending transaction, they copy and submit the same trade with higher gas fees, thus jumping the queue at the user's disadvantage.
- In back-running, bots execute transactions immediately after a large trade to cash in on the arbitrage opportunity.
Researchers have noted how users lose hundreds of millions of their funds due to poor defence against such attacks.
It is not that solutions don't exist. But protection against MEV is still optional, and if users don't know exactly what to do or how, the bots will collect their dues. Public mempools and lack of privacy are the other side of the coin.
Enter private DeFi
Oasis, which has been perfecting its privacy-first infrastructure, has joined the fray in offering an alternative to old, flawed DeFi with a new application - Privana.
In tech-savvy speak, it combines Sapphire (only production-ready confidential EVM), secure enclaves as in TEEs, encrypted mempools, liquefaction, key encumbrance, and smart privacy to create a consumer-facing, user-friendly private DeFi solution. Let's unpack the user benefits instead of decoding jargon or justifying technical excellence.
What is Privana
Simply stated, Privana offers private swaps, automated yields, and zero MEV in multi-chain operations (Ethereum, Base, HyperEVM).
USPs:
Privacy-first - All user transactions are TEE-protected, and as they never hit the public mempools, bots can neither see nor target the trades. Result: protection from the adversarial effects that MEV inevitably causes.
Automation - Users can set the operational rules and let everything execute in auto-mode. Their keys remain private, so no sharing, no exposure, no exploit risks - all in 3 steps.
Deposit into the vault - Users send their tokens to the Privana vault, a secure enclave.
Set preferences - Users choose their swap conditions, yield settings, and app permissions.
Activate strategy - Once users approve, they can sit back and forget about manual intervention. Swaps, yield allocation, and rebalancing all run in the background without exposing any of the activity.
Self-custody - Applying the concept of key encumbrance, self-custody design is achieved through non-extractable keys, so no one can access or move the key outside the policy set by the users, not even by Privana developers in the backend. This also redefines self-custody as it empowers users to govern the keys instead of holding them.
Multi-chain - Users don't need the expertise or headache of hopping between chains as one interface, no bridges, no wallet-switching leads to a seamless experience.
A quick overview of Privana's capabilities and what other major protocols offer, showcasing its versatile advantages with structural privacy design.
Why Privana
Privana does not claim to be the only solution in the DeFi space. So, when we do a deep dive into comparing what is available right now, it clearly indicates that no one else combines everything. It is particularly interesting to see the trade-offs, even when tools have baked-in privacy.
Privana checks all the boxes.
No decentralized exchange (DEX) so far has been immune to MEV attacks, and Privana aims to counter this with the idea of encrypted mempools. When transactions are on-chain and public, they sit exposed in the mempool, and any malicious bot on the network can take advantage and undercut even a simple swap. Private RPCs and relays do work with limitations. They successfully hide transactions from the network, but reveal full swap intent to the relay operators.
A centralized exchange (CEX) solves this particular trust gap of the DEX with internal books, but as the users' keys are in their custody, it opens a new can of worms. In truth, both DEXes and CEXes offer partial solutions with trade-offs. If there is some degree of MEV protection, then on-chain full transparency becomes an issue. If private swaps are possible, they don't come with automation and self-custody. Users usually get either cross-chain swaps or privacy-focused swaps, but not both.
As a trading interface, Privana does the serious legwork with its privacy-first approach - designed specifically to be private by default and automated without giving up control. This is a long-awaited solution that promises to plug the holes while delivering the optimal DeFi experience for users.
Privana is coming
The Privana roadmap comprehensively lists what users can expect from the product in the coming days.
The impending launch of Privana is also in sync with the new strategic direction adopted by Oasis. The protocol already has the underlying infrastructure for implementation. So, instead of solely relying on ecosystem partners to build the dApps, it is now focusing on shipping products that directly bring the benefits of the tech stack to the users.
Privana promises to be the vanguard. For users, this is a new opportunity as well to transform their DeFi experience for the better.
There are already several incentives announced for early joiners of Privana:
- Zero fees for 90 days
- Founding Member status
- Priority queue at launch
Do not miss out.
Let's discuss in the comments your take on Privana and private DeFi, and what aspects you like the best, and what else you want to be incorporated down the line.
