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76 lines
3.2 KiB
TeX
76 lines
3.2 KiB
TeX
\section{Conclusion}
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\label{sec:conclusion}
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%----------------------------------------------------------------------
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DeFi's transparency is both its strength and its fatal flaw. The same public mempool that enables permissionless participation also enables systematic value extraction. \MEV{} is not a bug in DeFi---it is a consequence of plaintext orderflow on a public ledger.
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Confidential DeFi on \Zoo{} Network eliminates this problem at the cryptographic level. Orders are encrypted before they enter the mempool. Matching happens on ciphertexts. Only matched pairs are decrypted. The result is a trading system where the fastest extractor has no advantage because there is nothing to extract.
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The overhead is real: 490$\times$ for a single encrypted match compared to plaintext. But this comparison misses the point. The relevant comparison is not against a platonic frictionless market; it is against the actual DeFi market where users lose \$1.5 billion annually to \MEV{}. Against that baseline, a 2.8-second settlement with zero \MEV{} is an improvement.
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Three open problems remain:
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\begin{enumerate}
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\item \textbf{Cross-Chain Confidential DeFi.} Extending encrypted orderflow to atomic swaps across chains, where each chain holds a different \FHE{} key.
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\item \textbf{Encrypted Derivatives.} Applying \FHE{} to options and futures, where payoff calculations are more complex than spot matching.
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\item \textbf{Recursive FHE.} Using recursive bootstrapping to support unbounded-depth circuits, enabling complex matching algorithms (e.g., pro-rata allocation) without noise budget exhaustion.
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\end{enumerate}
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Front-running dies when there is nothing to see.
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\begin{thebibliography}{20}
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\bibitem{flashbots2024mev}
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Flashbots,
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``MEV-Explore: Quantifying Maximal Extractable Value,''
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\url{https://explore.flashbots.net}, 2024.
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\bibitem{chillotti2020tfhe}
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I.~Chillotti, N.~Gama, M.~Georgieva, and M.~Izabach\`{e}ne,
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``TFHE: Fast Fully Homomorphic Encryption over the Torus,''
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\textit{J.\ Cryptology}, vol.~33, pp.~34--91, 2020.
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\bibitem{cheon2017ckks}
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J.~H.~Cheon, A.~Kim, M.~Kim, and Y.~Song,
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``Homomorphic Encryption for Arithmetic of Approximate Numbers,''
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\textit{Proc.\ ASIACRYPT}, Springer, 2017.
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\bibitem{daian2020flash}
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P.~Daian, S.~Goldfeder, T.~Kell, Y.~Li, X.~Zhao, I.~Bentov, L.~Breidenbach, and A.~Juels,
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``Flash Boys 2.0: Frontrunning in Decentralized Exchanges, Miner Extractable Value, and Consensus Instability,''
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\textit{Proc.\ IEEE S\&P}, 2020.
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\bibitem{zoo-dex}
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Z.~Kelling,
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``Zoo DEX: Decentralized Exchange on Zoo Network,''
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Zoo Labs Foundation, 2026.
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\bibitem{zoo-fhe}
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Z.~Kelling,
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``Threshold Fully Homomorphic Encryption on Zoo Network: GPU-Accelerated Confidential Computation,''
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Zoo Labs Foundation, 2026.
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\bibitem{zoo-threshold-signatures}
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Z.~Kelling,
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``Threshold Signatures on Zoo T-Chain,''
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Zoo Labs Foundation, 2026.
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\bibitem{penumbra2023}
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Penumbra Labs,
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``Penumbra Protocol Specification,''
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\url{https://protocol.penumbra.zone}, 2023.
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\bibitem{renegade2023}
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Renegade,
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``Renegade: On-Chain Dark Pool Protocol,''
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\url{https://renegade.fi/whitepaper.pdf}, 2023.
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\bibitem{vickrey1961}
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W.~Vickrey,
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``Counterspeculation, Auctions, and Competitive Sealed Tenders,''
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\textit{J.\ Finance}, vol.~16, no.~1, pp.~8--37, 1961.
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\end{thebibliography}
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