1. Introduction
The current DEX is completely transparent, and anyone can see the user's balance and transaction history. In order to meet the needs of cryptocurrency investors for transaction anonymity and privacy, Renegade is developing a new type of decentralized exchange (DEX) based on multi-party computing (MPC) and zero-knowledge proof - an on-chain version of the dark pool, thereby providing users with comprehensive transaction privacy, that is, decentralized dark pool transactions, which aims to improve price execution in DeFi by preventing front-running, sandwiches, and statistical arbitrage.
2. Crypto markets need dark pools
Dark pool trading has long existed in traditional finance. In traditional exchanges, information about large orders will be detected or detected by high-frequency trading companies (High frequency trading (HFT) is a strategy that executes transactions through programmed algorithms. In simple terms, it provides extremely high liquidity in the market and charges tolls from providing liquidity). Then, high-frequency trading companies will rely on special order types or hardware/software that is superior to large institutions/banks to buy and sell positions first, and finally sell them to large institutional traders to make profits, while large institutional traders face losses. In order to protect large institutional traders from being "fleeced" by high-frequency trading companies (HFT), dark pools have continued to develop, and dark pool trading has accounted for nearly one-third of the total trading volume in the US stock market.
In dark pool trading, buyers and sellers are paired anonymously to conduct large transactions. This kind of trading operation is opaque. The bid and offer prices and the identity of the quoter will not be displayed, so that the trading strategy and position will not be disclosed, and the executed transactions will not be disclosed to the public. details, which is very beneficial to institutional investors.
Advantages of Dark Pool Trading
1. Large investment institutions can reduce the impact of market sentiment through dark pool trading and hide their intentions from the general public.
2. The transaction price is more optimized, and both buyers and sellers can get a more satisfactory transaction price than in the open market (buyers buy lower and sellers sell higher).
3. There will be no slippage. Most dark pool transactions complete large transactions at preset prices, so traders can complete the entire transaction at the expected price.
Due to the above advantages of dark pools, and with the continuous development of the crypto market, institutional investors and high net crypto asset holders account for an increasing proportion in the market, and investors have an increasing demand for transaction anonymity and liquidity. To meet the above needs, decentralized dark pool trading, as a new crypto asset bulk trading protocol, will surely flourish in the future. In fact, there are now several centralized exchanges that provide customers with paid dark pool trading tools. Dark pool trading is a new path beyond aggregate trading and AMM: it not only provides a suitable place for large institutional investors to trade, but also helps to improve the liquidity of the exchange.
3. Renegade’s MPC-ZKP Architecture
The core difference between Renegade and all other exchanges (centralized and decentralized) is that state is kept locally. Instead of having balances and orders maintained by a central server (like Binance) or thousands of distributed servers (like Uniswap), all Renegade state is maintained by individual traders.
When a trader wants to perform an action on their wallet (deposit tokens, settle a competition, etc.), they must know their old and new wallets and send three pieces of information to the smart contract:
1. Commitment to a new wallet.
2. Two “invalidators” of their old wallets to prevent double spending of old wallets.
3. Zero-knowledge proof: the commitment was computed correctly, the invalidator was computed correctly, the old commitment exists somewhere in the global Merkle tree, and the change from the old wallet to the new wallet is valid (e.g., the user did not arbitrarily increase their balance).
The smart contract maintains a global Merkle tree of all previous commitments, as well as a set of invalidators for displaying previous wallets.
Commit-Reveal Mechanism
By using a commit-reveal mechanism, the protocol allows complete wallet privacy (i.e., no information about the wallet is leaked on-chain) while maintaining full state consistency and preventing double-spending attacks.
Fundamentally, Renegade is just a p2p network of many independent relayers that are constantly communicating and executing MPC with each other as new orders come into the system. Relays never take custody of the assets and are simply granted access to wallets to calculate pairwise MPCs.
Therefore, by implementing this MPC-ZKP framework through collaborative SNARKs, the protocol creates a DEX that is both fully atomic (i.e., neither party can exit after the MPC is executed) and fully private, both pre- and post-trade.
For more details, please refer to Renegade’s full whitepaper:
https://docs.renegade.fi/getting-started/whitepaper/
4. Features of Renegade
In addition to avoiding the counterparty risk that exists in centralized exchanges and OTC desks, Renegade’s dark pool trading service also solves many problems in the current DEX spot market, ultimately providing users with better prices and best execution:
1. Pre-trade privacy. Before the user's transaction is matched, no one can see any details of the user's order. For large transactions that have a greater impact on the market, Renegade can hide the user's order details (price, quantity, direction, etc.), and the user is also anonymous.
2. Post-trade privacy. After the order is executed, only the counterparty knows which assets were exchanged. This prevents third parties from tracking and copying users' trading strategies.
3. Minimum MEV. Since validators can only see zero-knowledge proofs of valid transactions, block producers cannot pre-run, re-run, or sandwich your transaction.
By default, Renegade trades at the best middle price calculated based on the anonymous order book theory, without market makers for spread trading. However, Renegade can also selectively execute matching orders to achieve complete price discovery and better liquidity provision.
5. Potential users of Renegade
Given the widespread information leakage issues in the current DeFi system, many different types of traders could see price improvements with Renegade:
1. Market Makers. If one market maker is long an asset and another is short the same asset, the trading desk can anonymously offset the two positions against each other, thereby balancing the positions without having to bear the spread of publicly traded currencies.
2. OTC takers. Takers can place orders directly in the dark pool at the middle price without having to bear the OTC spread fee.
3. AMM takers. Traders who transfer more than $5,000 at a time through the on-chain DEX often have a significant price impact and are sandwiched between MEV watchers, resulting in losses due to arbitrage. With Renegade, trades are always guaranteed to be executed at the middle price.
4. Privacy-conscious crypto natives. Renegade remains completely anonymous, meaning no third party can see any details about transactions or payment history.
6. Tokens and Project Progress
There is currently no token information for the Renegade project. Renegade is currently in the internal testnet, and the public testnet is scheduled to be released in the second quarter of 2023.
7. Core Team
Christopher Bender: Founder of Renegade.
Studied pure mathematics and computer science at Berkeley, USA. I am involved in machine learning, Accel Scholars, and Berkeley AI research at Berkeley. Worked at Nuro and Tesla Autopilot. Tried to align political incentives by making markets on city assets: CityStocks. Linked a port of Tornado Cash to Solana, the first zero-knowledge application on the Solana network: Otter Cash. Email: chris@renegade.fi
Joseph Kraut: Founder of Renegade.
Studying computer science at Berkeley, USA, Email: joey@renegade.fi
Development experience of multiple projects on Github: https://github.com/joeykraut
8. Financing Information
Public information on February 20, 2023 showed that Renegade announced the completion of a US$3.4 million seed round of financing, led by Dragonfly Capital and former AngelList CEO Naval Ravikant, with participation from Balaji Srinivasan and Lily Liu, Tarun Chitra from Robot Ventures, Marc Bhargava from Tagomi, and Lev Livnev from Symbolic Capital Partners.
IX. Related links
Official website: https://renegade.fi/
Twitter：https://twitter.com/renegade_fi
substack：https://renegadefi.substack.com/
Github: https://github.com/renegade-fi
White paper: https://renegade.fi/whitepaper.pdf
Discord：https://discord.com/invite/renegade-fi
Email: chris@renegade.fi