DeFi: xDai project included in highlights from the ETHDenver hackathon


The transparent nature of cryptocurrencies like Bitcoin, Ether, and Dai means that, with enough time and effort, third parties like Chainalysis, or Coinbase’s recent acquisition, Neutrino, can identify individuals based off of their transaction history. This can lead to uncomfortable consequences, like the revelation of prior purchases, insight into an individual’s personal wealth, or economic attacks through front-running and counter-trading.

Privacy coins like Zcash and Monero attempt to address these concerns by obfuscating transaction data, but their volatility detracts from their utility as a medium of exchange.

Enter zDai, a project that has implemented ZkSNARKS on the xDai burner wallet, providing users with a fast, stable, and private medium of exchange. Users can convert xDai into zDai directly through the burner wallet interface, and then transact in a way that hides the amount and parties involved in the transaction.

The current iteration of zDai has room for improvement — generating zero knowledge proofs can take up to a minute and gas costs can be prohibitively expensive. Nevertheless, zDai deserves recognition and applause as the first digital asset to closely replicate cold hard cash – a trustless, private, fungible bearer asset.