Enigma

  • Cryptoasset Report
  • December 5, 2018

Enigma is privacy focused protocol enabling ‘secret contracts’, smart contracts that can execute and validate computations while hiding states from network nodes.

Overview

Enigma is a privacy focused protocol enabling ‘secret contracts’, which are smart contracts that can execute and validate computations while hiding states from network nodes. The project’s aim is to significantly expand the scope of blockchain based applications by allowing blockchains to work with private and sensitive data. The protocol is designed to act as second layer on top of existing blockchains, and to permit Enigma’s nodes to perform private computations off-chain without needing to access users’ underlying data. Formerly Enigma Catalyst, the project rebranded in May 2018, and Catalyst, an algorithmic trading library for cryptoasset investing, released as Enigma’s first major application. Enigma reached a settlement with the SEC over ENG token issuance early 2020, and subsequently launched its mainnet in February. Enigma is co-founded by Guy Zyskind and Can Kisagun, both whom attended MIT, and is based off Zyskind’s master’s thesis.

Protocol Details

Enigma uses proof-of-stake (PoS) for consensus. The Enigma network utilizes two types of nodes, secret and consensus, both of whom stake the project’s token, ENG, to increase their odds of performing compensated network calculations. Secret nodes are network participants that ensure secret contracts are executed in a privacy preserving manner. Consensus nodes will be nodes that validate computations and set the final ordering of state changes on the future Enigma blockchain.

Enigma serves as a privacy layer for the decentralized web, with ‘secret contracts’ representing the project’s main innovation. Secret contracts are smart contracts that take input data from other blockchains, hide the input data from the Enigma secret nodes executing the code, and then run the contract by using secure computation, which computes over encrypted data using techniques such as secure multi-party computation (MPC), deterministic and order-preserving encryption (OPE), zero-knowledge proofs (ZKP) and fully homomorphic encryption (FHE). Specifically, Enigma splits encrypted user data fragments among different network nodes and uses MPC to compute functions over those fragments without leaking information to other nodes. By executing smart contracts in this manner, user data that would typically be made public through traditional smart contract usage can be kept private.

Enigma’s first major applications include a Data Marketplace, a platform that matches data providers and curators with data consumers, and Catalyst, an algorithmic trading library for cryptoasset investing. The Marketplace allows data, such as proprietary data sets, personal information, trading algorithms, and order books to be decentrally stored in a distributed database using a modified Kademila DHT, the same distributed hash table (DHT) used by BitTorrent and Storj.

Asset Details

Enigma’s token is used in both the Enigma secret contract protocol and the Catalyst algorithmic trading library. Within the Enigma protocol, end users spend ENG to pay for privacy-preserving computations. Both secret and consensus nodes can stake ENG to improve their odds at being chosen for performing ENG compensated computations. The token’s role is largely analogous to Ethereum’s ETH, although the two platforms have different purposes—Enigma is designed to work alongside other blockchains to provide a privacy layer and is less of a general purpose smart contract platform—and there are variations in the two project’s proof of stake models.

For Catalyst, traders and data providers transact in ENG. Traders subscribe to data sets or incorporate data into their trading algorithms, and data providers are compensated in ENG for making data available. Trade algorithm developers can monetize their strategies, either through participating in periodic competitions, or through placing strategies on the open market to attract investment capital.