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The blockchain space is looking to scale into Web3 with DApps and solutions ready for the next generation of the internet. However, there is a real issue around digital privacy that exists in blockchain with this move to Web3.
Privacy of personal and sensitive information, confidentiality, and individual data control, as well as data sovereignty, are core facets of Web3, but public blockchains, like Ethereum, cannot provide even basic levels of privacy.
For example, If you want to use a decentralized ID on Ethereum and interact with a DApp that needs to verify what country you live in, this is possible, and makes sense as a use case in some regards. However, you also have to accept that all your other personal information would be available publicly on the chain, if you want to maintain on-chain integrity, because of that smart contract execution.
Other sensitive and personal data would have to be public if blockchain was used in other sectors, such as healthcare. If a healthcare DApp was built on a public chain, all your personally-identifiable data would have to be public if the data wasn’t stored off-chain, not to mention information usually reserved only for your doctor; totally destroying client confidentiality.
This is why we have created Sapphire, the industry’s first & only confidential EVM-compatible runtime. With Sapphire, confidential smart contracts can be built to keep sensitive health data, financial information, or any identifiable information private, enabling a new set of use cases perfectly suited to Web3.
Additionally, we can welcome a large cohort of blockchain builders into Web3 by allowing them the chance to build confidential DApps in Solidity.
But the question remains, what can be built with Sapphire?
Below we will outline some of the use cases for a confidential runtime that is familiar and popular to many blockchain developers. From DeFi to Gaming, NFTs, DID and Social.
Expanding Web3 DApps
At its core, Sapphire enables developers to build smart contracts that keep private aspects of state. Depending on which aspects a developer chooses to keep private, the contracts can be built to range the entire spectrum of confidentiality, from fully public to fully confidential.
Sapphire is a potent new tool for Solidity developers and can greatly expand what kinds of Web3 DApps can be built.
Some areas we think have great potential include:
Adding confidentiality to DeFi enables novel features that have been requested in the Web3 community for a long time.
On current EVMs, anyone who wishes can open their block explorer and see that a specific wallet interacted with the DEX Smart Contract and made a trade — and see what was traded.
In a DEX on Sapphire, it’s possible to keep certain aspects of transactions private. You could conceal the slippage parameters set and make an MEV-resistant DEX since there would be no way for sandwich attacks to take place.
DeFi also mixes well with another key Sapphire use case — Decentralized ID (DID). By enabling DID information, such as credit scores, to the blockchain, decentralized lending becomes much more viable and appealing to the mass market. With current public blockchains, this kind of lending is not ideal as people do not want to publish private credit score data about themselves onto the blockchain for all to see.
With Sapphire, decentralized lending becomes far more practical as data can be entirely confidential and thus enable unique lending protocols that offer undercollateralized loans. We believe that Sapphire enables DeFi to grow to the next level and penetrate.
There is a lot of value to be added to the Web3 gaming sector by incorporating confidentiality, as most popular Web2 games have some private components. Even something as simple as a card game assumes that one player can not see the other player’s cards.
Blockchain has been seen as a way to make card games and games of chance fairer thanks to its transparency. However, that same transparency can be used to give an unfair advantage to other players if the card game remains on-chain.
To maintain transparency, and keep secrecy in gaming and games of chance, a lot of the game has to move to off-chain environments. This has trade-offs as once the confidential aspects are moved to off-chain environments, they lose the high integrity that blockchain offers.
There are decentralization, and composability benefits that come with having Web3 games on-chain. With Sapphire, Web3 games will not have to make these trade-offs as the data can be stored privately on-chain.
NFTs have come to establish themselves as an important cog in the blockchain and crypto ecosystem, as well as a part of our mainstream digital lives. However, as with any new Web3 sector, there has been some friction in the user experience. One of these frictions for the NFT space has been the minting process.
When a popular NFT collection is minted, there is often a lot of congestion on the blockchain and, therefore, gas is wasted as people have to compete to mint the collection.
This was seen recently in the Yuga Labs land sale for their “Otherside” Metaverse game. This minting created some of the highest gas fees in the history of the Ethereum network: Investors spent over $176 million on fees alone in the first 24 hours.
As it stands, there is still no good way to do an NFT mint on EVM chains that are fair and don’t result in gas wars.
Sapphire’s confidentiality features could help with this. By enabling confidentiality, more sophisticated auction mechanisms could be deployed, such as second price auctions or candlestick auctions, allowing for a much less chaotic and more fair minting and auction mechanism for NFT sales.
Oasis also offers Confidential NFTs on Sapphire. These NFTs provide added functionality and use cases for NFTs towards a Web3 world. For example, Confidential NFTs have also been showcased by artist and mathematician bishop, in his Confidential NFT collection: Army of Minions. In this NFT collection, owners of the NFTs also have access to the underlying mathematical function that created their Minions, stored as private data.
Decentralized identity can revolutionize the Web3 space as people’s identities can be used across the internet without fear of an invasion of their privacy.
With DID, DApps can whitelist and credentialize users without risking any user privacy. Currently, with public blockchains, it is very tough to implement DID as often the data necessary is very sensitive in nature. It can include names, ages, addresses, finances, etc., which users would likely not like to associate with their wallets for all to see.
A robust and secure DID system allows the advancement of Web3, especially when paired with confidential EVM compatibility.
Social applications can benefit massively from Web3, but we have yet to see meaningful adoption. A lot of this is due to issues with building a truly decentralized Web3 social platform.
Sapphire’s confidentiality can solve some of those problems. With applications like Facebook or Twitter, one core feature is the ability to make your content viewable only to certain people. This is currently not possible on a public blockchain — users can not choose who can and cannot see their profile or content.
With Sapphire and confidential smart contracts, it becomes possible as these smart contracts can keep certain aspects hidden depending on set parameters.
It is not just limited to social media. It also becomes possible to replicate pay-walled content platforms such as Patreon via these same principles.
Creating Web3 EVM developers
The potential use cases for confidential DApps are still being discovered, and we are just scratching the surface. What is clear is there is a real need for confidentiality in Web3 technology. The current state of public blockchains, especially EVM chains where many developers build, does not lend itself to Web3.
With Sapphire, we are opening up a new world of possibilities for blockchain to scale to Web3, but we are doing it with the backing of Solidity developers. If you would like to be one of the first to build a confidential DApp in Solidity, head over to our Keep it Confidential Hackathon page here!