Zero-knowledge 🤝 KYC = zkKYC

The regulatory agencies and the crypto ecosystem has been constantly in a tussle that is growing stronger with every passing year. On one hand, the crypto ecosystem believes in data privacy and self-sovereignty. Whereas, the regulatory agencies, in order to limit criminals from leveraging crypto tools for malicious intent, are trying hard to regulate the crypto space and make it compliant with current regulatory requirements such as KYC & AML.

Well, according to a paper by Pieter Pauwels, we can finally find a middle ground here using zero-knowledge technology. This paper ​​presents a unique solution concept for where a DeFi protocol is required or finds it desirable to implement KYC policies.

zkKYC in DeFi requires no personally identifiable information to be shared with DeFi protocols for the purpose of regulatory transparency. The presented approach extends the zkKYC solution concept (which leverages self-sovereign identity and zero-knowledge proofs) with the introduction of KYC Issuers and Decentralized Oracle Networks (DONs) as key solution components.

I believe the concept of zkKYC to be very intriguing and if implemented, could solve some major hurdles for DeFi protocols, considering the regulatory issues after the Tornado ban. If it tickles your curious bones too, read the paper here.

This week in web3 Wednesday:

• Coinbase Cloud launches Platform for web3 developers
  
• NASDAQ to launch institutional crypto custody services
  
• House Committee drafts bill to put a two-year ban on algorithmic stablecoins
  
• 80% of Ethereum miners pull the plug after the merge
  
• A blockchain analyst alleges the Wintermute hack to be an inside job

Coinbase Cloud launches Platform for web3 developers

In a bid to attract web3 developers, Coinbase Cloud jumps onto the fray alongside Infura, Alchemy, Quicknode, and others to cater to web3 developers. The developer platform is called Node which will enable web3 developers to build their web3 applications with instant and reliable read/write blockchain access.

Node is already available around the world. Head to Coinbase Cloud to build and launch your web3 application.

NASDAQ to launch institutional crypto custody services

The world’s second-largest exchange by market capitalization NASDAQ is set to enter the crowded market of institutional bitcoin custody as it aims to become a service provider in the cryptocurrency space.

The move would mark a new chapter for the company that has so far chosen to not compete in a market currently dominated by the likes of Coinbase, BitGo, and Gemini. Overall, it’s good news for the crypto ecosystem as it keeps attracting large traditional financial institutions and gains legitimacy.

House Committee drafts bill to put a two-year ban on algorithmic stablecoins

As per a report by Bloomberg, legislation to regulate stablecoins is being drafted in the House. As seen by Bloomberg, the bill, if passed, would place a two-year ban on coins similar to TerraUSD, the algorithmic stablecoin that collapsed earlier this year.

Under the current draft of the bill, it would be illegal to issue or create new “endogenously collateralized stablecoins.”

80% of Ethereum miners pull the plug after the merge

According to data from 2miners, around 80% of Ethereum miners appear to have gone offline after The Merge. Data shows that many miners are opting to turn off their hardware after soaring hash rates rendering many networks supporting EtHash miners unprofitable.

Earlier last week, we also heard about Ethermine, the world's largest Ethereum mining pool shutting down its servers for miners after the merge.

With the Ethereum miners moving away, the hash rate for Ethereum Classic has plunged over 48% since the Merge. To remind you, Ethereum Classic is the fork of the Ethereum mainnet that came out of the 2018 DAO hack.

A blockchain analyst alleges the Wintermute hack to be an inside job

Last week, Wintermute, a DeFi market maker protocol was hacked for $160 million, becoming the latest crypto firm to suffer a breach. Wintermute's CEO and founder, Evgeny Gaevoy, revealed in a series of tweets that the firm's decentralized finance operations were compromised on Sept. 20.

The hacker, apparently, leveraged a vulnerability in the vanity address Wintermute has used to save on gas fees. Now, blockchain analyst James Edwards alleges the $160M Wintermute hack was an inside job.

As per the Medium blog by the analyst, the author argues that the knowledge required to execute this hack precludes the possibility that the hacker was a random, external entity that simply recovered the private key to an unsafe EOA that the team failed to revoke admin permissions for.

Check out the full blog here.