Why decentralize secret computing?

Hello everyone,

After finally getting through the whitepaper on my 5th try, and reading other summaries of this very impressive project, I still find myself confused as to precisely why the Enigma TOKEN needs to exist. I try to observe the market and justify my investments based on new developments which seem unlikely to be priced in given the largely retail nature of the space, hoping to somewhat insulate myself from Fud and Fomo. (Though still concentrating my buys during crashes etc.)

Enigma does seem like a promising project, early stage but also potentially hugely undervalued. I have 3 main questions that I hope to frame my reasoning process going forward.

  1. What is Enigma’s economic value-add over existing secret MPC solutions? 1. Alternatively, if Enigma gets traction, what’s to prevent IBM or Amazon from steamrolling it with a centralized or pseudo-centralized solution? Obv looking for the tipping point where Amazon is trusted less than blockchain
  2. If decentralization does add value / captures significant % of the market, how will that value be shared between Enigma investors vs. Node operators vs. Ethereum vs. Sector specific platforms e.g. 8 launch partners vs. Smart contract shops/auditors vs. Clients? I can imagine many of these creating choke points due to their being difficult to recreate
  3. [Most important] Even if a significant % of secret computing and data transfer and storage took place on ENG clusters, wouldn’t it be in the interests of all the parties listed but especially clients (estimating costs / not having to hedge against speculation) to be paid in fiat or something else whose value is relatively fixed? In that case, how is it a competitive advantage for the system to require use of this token for payments or security deposits?
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Appreciate any informed opinions on these subjects.

Hey Joe,

You bring up some great questions. I will attempt to answer them realizing that in doing so it involves a huge amount of “speculation.” These are just my opinions.

  1. What existing MPC solutions are you speaking of in particular? To my knowledge there are very few out there whatsoever, and even fewer that are actually functional at any type of scale. It’s very hard to implement in practice with any kind of strong performance.

Centralized solutions will always exist, and they will always be a different product than what Enigma is seeking to become. Each have advantages and disadvantages. With decentralization you gain fault tolerance, attack resistance, collusion resistance. and open transparent contribution, but you may sacrifice things like speed and control. I think the key here is that, especially when entrusting private data, you do NOT want a centralized entity in control. This is why Enigma, and a decentralized secure computation protocol is absolutely necessary.

  1. I understand you’re talking about value capture, but don’t fully understand the question. Node operators will capture value by validating computations on the network. The more network traffic, the more value they will capture. The network traffic is dependent on launch partners/dAPP creators/developers. Those using the protocol to create useful dAPPs attract more users to the ecosystem, collect more fees or whatever profit based on their individual model, which in turn benefits node runners through increasing network traffic. If you want to get into token price I can expand upon why a token is necessary, why I think incentivization is key, and why the velocity of the token is an important factor. What are the choke points envisioned?

  2. In my mind these kinds of systems can only work with a native token contrary to some claims. The whole concept of Proof-of-Stake relies upon a meaningful “stake” being at risk to validate a block/computation. If you were to use fiat or something else other than the token to reward node runners the velocity of the token changes dramatically, the incentives to reduce velocity diminish, and the system could fall apart. I do however understand the need for relatively fixed costs for users. I think this is remedied by things such as atomic swaps and fiat gateways. In the future I think these things will happen in a much more seamless manner. A user could use a dAPP at a fixed cost of $1, and behind the scenes this is converted to ENG tokens and sent through the network accordingly. Another option is that dAPP creators can maintain certain reserves of ENG through the use of smart contracts that automate the process.

These thoughts aren’t fully flushed out. I’m at work and am happy to expand upon these or discuss further when I have a bit of free time. I like these kinds of discussions!

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