After a lengthy period of over two years dedicated to research and development, along with 16 months since its roadmap was first introduced, COTI has officially launched version 2 of its mainnet. This new iteration represents a significant evolution from its original Layer 1 (L1) protocol, which utilized a directed acyclic graph (DAG) structure and was initiated in 2018. The updated mainnet transitions to a Layer 2 (L2) chain that is compatible with Ethereum Virtual Machine (EVM) and geared towards enhancing privacy. According to COTI CEO Shahaf Bar-Geffen, the intention is to progressively transfer user activities from the L1 to the L2, with plans to phase out the L1 entirely.
Innovative Privacy Technology
At the core of COTI’s new privacy features within its L2 chain is the implementation of “garbled circuits,” a cryptographic method frequently employed in multi-party computation (MPC). This technology was developed in collaboration with Soda Labs and enables different parties to perform computations on encrypted data inputs without disclosing the actual data. This is akin to the approach taken by zero-knowledge proofs, but according to Bar-Geffen, the existing L1 was not suitable for this technology due to its absence of smart contracts and its DAG framework. He noted that the shift to an EVM-compatible L2 was also motivated by user preference, as many users are already engaging with EVM chains.
Efficiency Over Zero-Knowledge
Although COTI’s decision to forgo zero-knowledge technology may appear unconventional, especially given the widespread adoption of zk technology for privacy applications, Bar-Geffen argues that garbled circuits offer superior efficiency compared to existing solutions. He pointed out that garbled circuits facilitate multi-party computations, contrasting with zero-knowledge proofs, which operate on a one-to-one basis. This distinction is crucial for developing complex applications, such as decentralized exchanges (DEXs), which require interactions among multiple users.
Targeting Enterprise Needs
COTI’s privacy technology is also intended to cater to businesses and institutions that must comply with regulatory standards, a service COTI brands as “privacy-on-demand.” This reflects the broader ambition within the crypto sector to integrate trillions of dollars worth of real-world assets (RWAs) onto blockchain platforms. Currently, many tokenized RWAs lack the ability to interact seamlessly with public blockchains. For example, BlackRock’s USD Institutional Digital Liquidity (BUIDL) Fund employs a KYC whitelist through its tokenization partner Securitize, even though it operates as an ERC-20 token on Ethereum. Only pre-approved investors can hold these tokens, highlighting the compliance challenges that privacy-focused chains like COTI aim to address. By enabling institutions to create smart contracts atop their tokenized RWAs, COTI allows for selective disclosure of asset information, thus balancing transparency and anonymity in accordance with legal requirements.
Launch and Ecosystem Integration
The launch of COTI’s v2 mainnet is accompanied by support from various ecosystem partners that are integrating with the new chain. Notable partners include Bancor, Carbon DeFi, Band Protocol, MyEtherWallet, and PriveX. In celebration of the launch, COTI distributed COTI tokens to approximately 15,000 wallets, as announced on its official blog. COTI is not alone in its focus on privacy; other chains such as Aztec Network L2 and Aleo L1 are also exploring privacy solutions, albeit utilizing zero-knowledge technology instead of garbled circuits.
