https://morse.network/ Implementing ZKSNARK circuits to create Private & Untraceable Transactions On The Ethereum Blockchain --- ABSTRACT Privacy is a necessary property of any robust monetary environment. Public blockchain digital currencies such as Bitcoin have come to dominate the evolving financial landscape for the purpose of value storage & transmission. However, one of the shortcomings in the infrastructure of public monetary systems has notorious been privacy. Recent breakthroughs in cryptography have given rise to advanced privacy mechanisms known as Zero-Knowledge. Morse proposes the implementation of Zero-Knowledge technology in the monetary application level / token layer on the Ethereum Blockchain. By doing so, the inherently positive open primitives of Ethereum are retained & the pseudo-private / personal transaction information can be made private. Morse.Network Whitepaper V0.1 Morse.Network Whitepaper V0.1 Overview - Privacy has become a battleground between establishment & individuals. What was once inherently private is now being taken away through enforcement with regulatory bodies around the world. As the world economy transitions to its decentralized, distributed superstate, individual privacy becomes a focal point in healthy societal development. Public Cryptocurrency & blockchain projects have been heralded as a solution to the woes of central control. However, within the context of open blockchains, whenever a transaction is sent all of the information relating to that transaction becomes public. Creating new or restructuring existing blockchain infrastructure for the purposes of preserving individual privacy is not feasible as it requires an enormous amount of capital & developer mindshare; both of which have already been captured by existing projects. Morse - Morse is a network of liquidity aggregation & decentralized exchange focused on the preservation of privacy. The exchange pricing mechanism operates under the principles of bonding curves present in AMM (automated market making) liquidity provision. The Morse networks decentralized exchange systems are powered & governed by its own token (SOS). Built on the Ethereum Public blockchain, Morse is able to interact with applications sharing the EVM (Ethereum Virtual Machine). One such application is the privacy circuit powered by zkSNARKS which exists as part of the SOS tokens architecture. The smart contract steps in at the moment of a transaction, capturing any ethereum compatible deposits that specify a target withdrawal & owner address; allowing a seemingly random different address to receive the tokens. (Whenever ETH is withdrawn by the new address, there is no way to link the withdrawal to the deposit, ensuring complete privacy.) Deposit gas cost: 1088354 (43381 + 50859 * tree_depth) Withdraw gas cost: 301233 To make a deposit, the user (or in this case token owner) generates a secret and sends its hash along with the deposit amount to the privacy circuit smart contract. The contract accepts the deposit and adds the commitment to its list of deposits. When withdrawing from the contract (sending the token to its final destination), the user provides a proof that he or she possesses the corresponding secret to an unspent commitment from the smart contract’s list of deposits. ZKSNARKS - zkSnark technology allows for the p2c (peer-2-contract) interaction to happen without revealing which exact deposit corresponds to this secret. The circuit contract verifies the proof, and in the event of success, transfers the deposited funds to the address specified for withdrawal. An external observer will be unable to determine which deposit this withdrawal came from. Circuit Constraints = 28271 (1869 + 1325 * tree_depth) Circuit Proof time = 10213ms (1071 + 347 * tree_depth) The circuit which the zkSnark technology allows for p2c (peer-2-contract) interaction to happen obfuscates only one side of the transaction; The sender will select their destination address, the amount & select Morse as their process. The contract takes in the ultimate destination wallet & creates a secret that only that wallet could decrypt. ZKP - At the highest level, Zero-Knowledge-Proofs are a group of privacy preservation mechanisms which allows entities to prove arbitrary information without having to release the information itself. ZKP scenarios are conducted in the presence of a prover & a verifier. The prover’s are entities which look to validate their claims to the verifier. The verifier’s are entities which look to have the validity of a claim proved. A mechanism qualifies as ZK if it satisfies the three following major criteria; Completeness, Soundness & Zero-Knowledge. Completeness if the statement is true, the honest verifier (that is, one following the protocol properly) will be convinced of this fact by an honest prover. Soundness if the statement is false, no cheating prover can convince the honest verifier that it is true, except with some small probability. Zero-Knowledge if the statement is true, no verifier learns anything other than the fact that the statement is true. In other words, just knowing the statement (not the secret) is sufficient to imagine a scenario showing that the prover knows the secret. This is formalized by showing that every verifier has some simulator that, given only the statement to be proved (and no access to the prover), can produce a transcript that "looks like" an interaction between the honest prover and the verifier in question Morse.Network Whitepaper V0.1 Tokenomics - Morse implements its privacy solutions as Ethereum based ERC20 cryptocurrency with the ticker SOS. The currency improves transactional privacy by metaphorically breaking the on-chain link between the recipient and destination addresses. Users will be able to transact to/from any wallet interoperable with the Ethereum Virtual machine & supports ERC20 standard tokens. Token Name: Morse Token Token Ticker: SOS Token Supply: 100,000,000 Blockchain: Ethereum Standard: ERC20 Decimals: 18 Archetype: Governance/Utility TPS: ~15/txps Utility - Briefly mentioned in the Overview, the SOS token is the native token of the Morse decentralized exchange/swap, in turn making it the focal point of extending liquidity. As a reserve asset for the conduction of value transfusion the SOS token fits into two asset archetypes; 1) first and foremost, SOS is a monetary asset (of a unit of account & medium of exchange) with innate privacy preservation on the transactional level. 2) Second, the SOS tokens are centerpoints for providing liquidity throughout all tradeable pairings. Using SOS token to provide liquidity entitles the liquidity provider with a proportionate share of daily reward emissions. Rewards - The SOS token distribution model falls into the category of DEX governance tokens issued as a rewards for providing liquidity through what is known as AMM. Whenever the SOS tokens are locked into the exchange protocol they begin accruing rewards in the form of SOS tokens. The exact size of the token reward depends on two factors: the amount of stake & the amount of stakers. Rewards are proportionate to the total contribution of stake. Simulation: There is a total circulating supply of 70,000,000sos tokens. They are distributed throughout 70,000 addresses; bringing the average wallet balance to 10,000sos tokens. 35,000,000 tokens are being used to provide liquidity across 35,000 different users. If all users are providing equal amounts of liquidity, the daily 5,000 token reward will be distributed 0.7sos each every 24 hours; If a new participant decides to join & stakes 35,000,000 tokens alone, then the previous users will receive 0.35sos daily & the majority staker by token amount will receive 2,500 tokens. Tokens that are obtained through the rewards mechanism remain immovable for 7 days. After the 7th day Liquidity providers can sell, stake, or provide more liquidity with their rewards. However, if within the 7day time period a user stops providing liquidity they will not be entitled to receiving their reward in full. Governance - Fair governance is the cornerstone of any burgeoning crypto project. Given than 50% of the entire supply will be distributed over the course of 27 years on a per-block basis, Morse falls into the progressive decentralized category of projects.With every progression of the Ethereum network the Morse protocol becomes more decentralized. Whenever any major changes to the Morse protocol must take place, the system undergoes a process of proposal issuance. In order for a governance processes to be engaged, radical changes that impact the overall operations of the protocol as well as the token economics must be proposed; including changes such as (but not limited to) data feeds sourcing, emission rate adjustment, governance thresholds correction, and so on. Proposal Process: +Alteration is Suggested +Proposer must write up alteration +Write Up is posted in Forum +Voting occurs for up to 30 days or +Until 87% threshold is met +Proposal is finalized +Proposal is Implemented MORSE governance is weighted by the stake, based on a 1-token-1-vote policy. Morse.Network Whitepaper V0.1 Distribution & Emission - The Morse token has been allocated according to the following distribution parameters: 5% - 5,000,000sos - Presale 15% - 15,000,000sos - Liquidity 20% - 20,000,000sos - Marketing 10% - 10,000,000sos - Team Fund 50% - 50,000,000sos - Rewards Half (50%) of the SOS token supply is allocated to rewards for liquidity providers on the dex. Schedule: Total Emission: 50,000,000 sos PerETH Block Emission: 0.032 sos Hourly Emission: 208.33 sos Daily Emission: 0.01% / 5,000 sos Monthly Emission: 0.30% /150,000 sos Future Work - Morse is intent on supplanting the demands of a global economy as it relates to transactional privacy, security & sustainability. Privacy is a highly nuanced subject matter with an ever evolving moving target as its end goal. Constant breakthroughs in mathematics or computer processing coupled with the new faults constantly discovered in algorithms cause extreme innovation. One such innovation has been established by insurance giant ING called ZK-R-P’s, Zero Knowledge-Range-Proofs; as well as one by MicroSoft called Spartan. Novel solutions such as ZKRollups hold the promise of increasing systemic efficiencies relating to the preservation of privacy while scaling throughput by >3 orders of magnitude (>7,000tps vs ~15tps) Moreover, as a dex Morse is always looking for new approaches to market making outside of AMM. Efficiencies in the pure decentralization of on-chain order books will be explored (as in the case with loopring; as well on-chain aggregators across protocols (names Kyber network & 0x) ~ References & Citations ~ [1] Julian Grigo, Patrick Hansen, Dr. Anika Patz, & Victor von Wachter, July, 2020, “Decentralized Finance (DeFi) – A new Fintech Revolution? The Blockchain Trend explained”, BitKom https://www.bitkom.org/sites/default/files/2020-07/200729_whitep aper_decentralized-finance.pdf [2] Archives, October 31, 2019, “IDEX 2.0: The Next Generation of Non-Custodial Trading”, IDEX https://idex.io/document/IDEX-2-0-Whitepaper-2019-10-31.pdf [3] Medium September 20, 2020, “ ZKSwap Whitepaper: a Layer-2 Token Swap Protocol based on ZK-Rollups Technology ”, L2Labs https://zkswapofficial.medium.com/zkswap-whitepaper-a-layer-2-t oken-swap-protocol-based-on-zk-rollup-113671ef3e6d [4] Hayden Adams, Noah Zinsmeister & Dan Robinson, March 2020, “Uniswap v2 Core”, UniSwap https://uniswap.org/whitepaper.pdf [5] Srinath Setty, Archives accessed January 11, 2021, “Spartan: Efficient and general-purpose zkSNARKs without trusted setup”, Microsoft Research https://eprint.iacr.org/2019/550.pdf [6] Tommy Koens, Coen Ramaekers & Cees van Wijk, Archives accessed January 11, 2021, “Efficient Zero-Knowledge Range Proofs in Ethereum”, Blockchain ING, ING https://www.ingwb.com/media/2667860/zero-knowledge-range-pr oofs.pdf