Onion Mixer：How to build the first decentralized system for cross-chain anonymous transactions in the blockchain
In the traditional Internet field, Onion Network refers to a technology of anonymous communication on computer network. The communication data is first encrypted in multiple layers, and then transmitted on a communication line composed of several routers called The Onion Routers (“TOR”). Each TOR removes one layer of encryption to get the next router information, and then sends the data to the next TOR, a process repeating itself until the data reaches the destination. This prevents people who know the sender and receiver from stealing the data.
Onion Network was first introduced and developed by Michael G. Reed, Paul F. Syverson, and David M. Goldschlag, and then the U.S. Navy applied for the patent. Until 2009, TOR had been a prevalentapplication of Onion Networks.
The original idea of Onion Network is to protect the sender’s and receiver’s communication privacy, and to hide the route of message passing through the network.
The current anonymous transactions in the blockchain field are limited to only several tokens, and does not even exist in any smart contract interaction. So how does Onion Mixer build the first decentralized cross-chain anonymous trading system in the blockchain world?
The “pseudo anonymity” of blockchain
Blockchain exposes user information much more than the traditional financial market, that is, user information is easier to be tracked. Besides, as most exchanges adopt a centralized identity verification mechanism like KYC, if the mapping relationship between the user’s personal information and the anonymous address on the blockchain is recorded, attackers can rely on certain data analysis methods to identify users’ transaction behaviors and identities.
In the past, the way to achieve “anonymous transaction” mainly relies on coin mixing technology, which can solve the problem of transaction privacy leakage on the blockchain to a great extent, but there are still some efficiency bottlenecks and security risks. In order to further improve the efficiency and privacy of coin mixing, Onion Mixer proposes an efficient and secure coin mixing solution.
The solution of Onion Mixer firstly adds “mixers” on the basis of traditional coin mixing model. By setting up the cross-chain mixers, Onion Mixer can support more coin mixing demand for encrypted assets; then, a transaction credential is generated by using the zero-knowledge proof technology, which avoids the risk that the service provider infringes the information of users in the coin mixing agreement, and thereby better protects their privacy.
How to upgrade “anonymous transaction” to “anonymous interaction of smart contract”, like Ethereum’s transformation of Bitcoin?
Onion Mixer is a decentralized protocol for cross-chain private transactions. It follows CoinJoin’s “coin mixing” idea but incoroporates the zero-knowledge proof technology, which can break the connection between the user’s deposit address and withdrawal address, so as to realize the private transaction for the user.
Onion Mixer is a smart contract mixer. When a user with the need for coin mixing sends an encrypted asset to the smart contract, the smart contract will generate a string of zero-knowledge proof codes. The proof then functions as a transaction credential but contains no valid information about the user. When the user wants to withdraw assets from the smart contract, he/she only needs to provide the corresponding zero-knowledge proof code and a new address. The smart contract will automatically transfer the asset to the new address.
Onion mixer also makes modular improvement on the protocol, aiming at solving problems like centralized risk, single asset, lack of anonymity and incentive in the current mainstream privacy agreement. It not only meets the anonymous transaction demand of cross-chain assets, but also bases itself on incentive mechanism in designing its tokenomic which provides both liquidity and depth for the internal and external parts of the protocol, and realizes decentralized autonomy through DAO.
Transform the traditional coin mixing and ushers in the decentralized anonymous trading system
The anonymous set on the Onion Mixer protocol is called “mixer”.
The mixer has three main advantages
(1) More anonymity guaranteed;
(2) Supports transaction privacy for more assets;
(3) The incentive mechanism can be customized based on the characteritisc of the mixer which allows more users to participate in the Onion Mixer protocol.
Compared with other similar projects, what are the core advantages?
Onion Mixer also introduces transaction mining and liquidity mining mechanisms. Users who use Onion Mixer for transactions or liquidity providers who add assets to the mixer can receive Onion Mixer’s token OMT as rewards. In the tokenomics of OMT, 70% of OMT will be used for transaction mining rewards, and 10% for liquid mining rewards. As of transaction fee income, Onion Mixer will only reserve 50% for project maintenance and technology research and development. The rest is returned to the liquidity pool to increase its depth. This distribution mechanism ensures users can truly benefit from the Onion Mixer ecosystem.
As of the Onion Mixer protocol, the more users participating in the mixer, the larger the scale of funds, and the higher the transaction frequency, and the better the anonymity effect. As a result, it will attract more users with private transaction needs and generate more transaction fee income which will be given back to liquidity providers in the form of OMT, forming a positive ecological cycle.
ANTUSDT，CYCLONE and other projects are all explorers specializing in anonymous trading system. But only Onion Mixer adopts DAO across the entire operation process and enables the whole system to create more value and more benefits for users. Through the tokenomics of Onion Mixer, users can participate in the process of ecological construction more directly at the same time share the benefits.
What does Onion Mixer’s future hold for blockchain users?
Coin mixing works as a privacy protector, an coin mixing transactions are difficult to track. By mixing one user’s funds with other users’, a random relationship is created between the existing user’s account system and the new account. This mechanism can realize the anonymity of transactions and other services.