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Crypto Review: The Enigma Protocol

From CoinPowR

Backdrop:

The Enigma project was born in MIT in 2015 initially as an academic project. The team has since expanded its scope and ambition. 

Enigma's value proposition is essentially data privacy on the blockchain, which also enables private smart contract functions. It also emphasizes on scalability. In a way, it is trying to create a data-heavy smart contract platform (like Ethereum), but more scalable, and can maintain privacy of the data (like Monero or Zcash). It proposes to do as an off-chain solution where data is kept private off-chain but can be executed on-chain.

This is an ambitious project that requires mass adoption within the crypto space and also involves the team's own unique encryption. 

Let's take a look at the history and some technical features of this project, the team and community behind the project, and the current stage of development as of 4/13/2018.

History and Development:

  • The Enigma project was founded by former MIT grad students Guy Zyskind and Can Kisagun (cool names!).
  • Guy has a technical background with a focus on blockchain while Can's background is in the intersection of business and technology.

  • According to Enigma's roadmap, it has been developing the concept since 2015, with its first whitepaper released in Q2 of 2015. (see their roadmap below)
  • Enigma White Paper (PDF)

Enigma's first application, Catalyst, was released in Q4 2017

  • Catalyst 0.4 Release (Dec. 2017) - For proof of concept, there has to be operational applications built on top of the Enigma project (think cryptokitties and other apps built on top of Ethereum). The Catalyst is a "platform for data-driven cryptoasset trading and investing"(Medium.com)
    • Basically, Catalyst allows the user to create trading algorithms with cryptoassets. (installation instruction video)
    • In the same vein, Enigma is partnering or planning partnerships with AION, KyberNetwork, EtherDelta and Investfeed as well as dozens of exchanges. 
    • Being Enigma's first application, the success or failure of Catalyst adoption can be critical Enigma's outlook in 2018. 

Data Market Place

  • In Q1 2018, Enigma released its second major release, the Data Market Place. Think decentralized Bloomberg Terminal. 
  • This is built on top of the Ethereum mainnet, and is operated by its native token - ENG.
  • You can read more about this product/application on Enigma's website on the Data Market Place release.
  • The Data Market Place essentially complements the Catalyst as the source of data sets from which to build trading algorithms. 

Road Map:

(click to enlarge)

Features and Specifications:

  • At this stage (2018), Enigma is an off-chain solution.
  • Architecture: From the Enigma Data Marketplace documentation website:
  • "The data itself, its storage and transmission, lives off-chain. In that sense, the blockchain acts as the controller of the network (as was illustrated in the Enigma whitepaper), while the off-chain network handles everything else. In particular, the off-chain component handles everything from routing requests, verifying permissions, parsing and forwarding queries to the source (e.g. a database, a CSV file), and finally — routing the result back in the peer-to-peer network to the requesting client (encrypted with the client’s private key)."

From the white paper: https://enigma.co/enigma_full.pdf

  • Storage: Basically Enigma is the off-chain storage solution for all the data sets and smart contracts using a Distributed Hash Table (DHT) instead of a blockchain
  • Scalability: The structure of its data sets allow for Secure Multi-Party Computation(sMPC). Unlike a blockchain where computation is decentralized (and run on every node), Enigma's structure allows only a small set of the nodes to make computations.

From the whitepaper: https://enigma.co/enigma_full.pdf

  • Enigma claims that it has an improvement on this MPC structure that allows for even more efficiency:
  • Privacy: The data and some code is kept private on the Enigma protocol later. But audit and verification is done on a blockchain protocol layer such as Ethereum. But the data and code being verified is all encrypted so nodes on Ethereum will not see the original data but can audit the veracity of the data and smart contract.

Supply and Distribution

  • There will be nodes and masternodes, using a Proof-of-stake consensus. In the above video, Guy explained that he exact amount needed for nodes/masternodes will be "dynamic".

"
There will now be 150M total tokens in the supply, broken down as follows:

  • 75M tokens to be distributed in our token sale (including our presale for accredited investors)
  • 37.5M tokens to be distributed as community incentives (trading competitions, data licensing, etc.)
  • 37.5M tokens to be retained by the Enigma team.
    "
    (https://blog.enigma.co/enigmas-token-sale-full-details-4d70c56510ba)
     
  • Enigma had a contentious presale because hackers managed to spoof the teams administrative rights, and were able to run a fake presale that collected almost $500,000 in Ether at the time.
  • A review of this hack suggests that the team missed some very basic cybersecurity implementations like a 2FA verification. (https://www.wired.com/story/enigma-ico-ethereum-heist/)
  • Also, if you look at the 37.5M to be retained by the Enigma team ON TOP of the 75M already distributed in the presale, the distribution of the rest, 37.5M, is essentially only 25% for the public. 

Final Thoughts:

Vision:

  • At first glance, Enigma's value proposition appears great. It claims to solve some key issues that every blockchain and smart contract protocols have to deal with (scalability and privacy). 
  • The team's focus seem to be evolving, so Enigma might continue to evolve based on demands and constraints of the blockchain space. 

Community Engagement:

  • Enigma engages with regular updates and does make an effort to be visible in social media.
  • As far as I have seen, communication has been fair - flowery words are expected, but they don't shill too hard and try to provide communication with substance even if that content is self-promoting and thus biased. 

Governance Structure and Crypto-Economics:

  • Guy Zyskind is the CEO of Enigma. You usually don't see a CEO of a decentralized public protocol.
  • This implies that Enigma's governance structure will likely evolve into a hybrid permission-based-distributed protocol. 
  • While the technology might be clever, there will be continuing questions about Enigma's incentive structure and whether it fosters honest behavior and discourages bad actors. 
  • The security of this protocol should be monitored. Cryptography does not equate security especially if the network is NOT an open blockchain like Bitcoin's. We have to place some trust in the team.
  • The team already bungled its ICO, so it is reasonable to question if they have a holistic grasp of cybersecurity, which I think is necessary to successfully execute an inter-network protocol like Enigma. 

  • The economics of the Enigma coin is still in development (for example, node and masternode requirements are not clear yet). We should expect lots of changes in this regard.
  • Finally, I think the skewed distribution structure adds another wrinkle to the economic complexity or uncertainty of this project. 
  • All in all, the Enigma project is an ambitious goal with possibly a qualified team in terms of cryptography and technical engineering. BUT it is too early to assess whether the governance structure and crypto-economics of this project is appropriate. 

Resouces: