The First: Understanding Web3 Privacy Solution Threshold Network
On October 14th, The First announced that it will launch T (Threshold) in the spot area at 16:00 on October 15th, 2024 (UTC + 8). It is a product of the merger of two decentralized protocols, NuCypher (NU) and Keep Network (Keep), in 2022. The aim is to become an encrypted network for blockchain applications through the privacy of user information and digital assets.
In the process of rapid evolution of blockchain, privacy and security have become important areas of research for current staff. The Threshold encryption service provided by Threshold Network can empower blockchain users with sovereignty, enabling them to effectively protect their own information security and digital asset privacy while experiencing public blockchain. How does Threshold achieve all of this, and what is its core operation? If we want to invest in it, how can we purchase its tokens? This article will explain it in detail.
What is Threshold Network ?
Threshold Network (T) was launched in January 2022 and is the product of the first blockchain merger between two existing decentralized networks (Keep Network and Nucypher). Both technologies involve building sustainable, blockchain-driven privacy solutions for users. Although both networks already have their own native generations, the purpose of the network is to allow smart contracts to access
The creation of Threshold Network is to ensure users' sovereignty over their digital assets, including simple wallets and cryptocurrencies, as well as company information contained in user data, smart contracts, and decentralized applications (DApps), as well as irreplaceable tokens (NFTs) and other digital assets. Its launch is also to address data and privacy issues, to combat various hacker attacks on the blockchain, and to make the decentralized digital finance industry more mainstream.
Due to the combination of Nucypher and Keep Networks, Threshold network also has the following features:
- Keep Network: The structural elements of the Threshold Network are taken from Keep Network, which uses off-chain containers to encrypt, store, and transmit private data. This chain container is called "keeps", and developers' smart contracts can access it without compromising user privacy or network transparency. This technology has been actively tested before for tBTC, which is considered one of the most trusted Bitcoin (BTC) bridges in DeFi, connecting BTC to Ethereum.
- Nucypher: Nucypher's privacy tools are located on top of "reservation", including its management of secret or sensitive information, so that processed and encrypted data will not be leaked. The network can also grant and revoke access permissions to sensitive information, thus protecting it when any abnormal activity is discovered. In addition, the Threshold network also uses Nucypher's proxy re-encryption tool, which can securely and reliably delegate decryption permissions.
How Threshold Network Works
Although the blockchain revolution has unleashed the power of decentralized apps, Web3 platforms built on public blockchains may pose great risks to user privacy. By using threshold cryptography, Threshold Network provides an exclusive solution to the user privacy challenges of Web3 platforms.
Relying on decentralized network nodes and threshold cryptography, sensitive operations are distributed among multiple independent entities (such as network nodes) in the Threshold ecosystem. In order to successfully execute these operations, a certain minimum threshold or number of entities cooperating with each other is required. This mechanism ensures that the system can continue to operate safely and normally even if there are a few malicious individuals.
Under the framework of Threshold, sensitive operations no longer rely on a single trusted party, effectively reducing the risk of system damage. Even if there are a few malicious individuals or bad actors, as long as the minimum number of participants continue to comply with the rules, the system can still operate safely and correctly. This distributed collaboration mechanism has brought revolutionary changes to the field of information security.
Taking a centralized custodian as an example, under the traditional model, once a bad actor appears among the custodians, user funds may face huge risks. However, under the protection of the Threshold password system, this single point of failure is effectively prevented. Even if a node or entity has a problem, other nodes can still continue to work together to ensure the overall security and stability of the system.
Threshold Network technology core?
The Threshold Network ecosystem combines privacy protection services such as Threshold cryptography and PRE, as well as the advantages of the decentralized Bitcoin-to-Ethereum bridge through tBTCv2. It aims to enhance user privacy, control, and accessibility in the web3 environment. It provides a set of encryption services for web3 applications through a decentralized node network, including the Proxy Re-Encryption Service (PRE) for user-controlled confidentiality management and dynamic bear access control, as well as tBTCv2 (a decentralized and permissionless Bitcoin-to-Ethereum asset bridge).
Threshold Network's Proxy Re-Encryption (PRE) is an encryption Middleware that supports user privacy protection applications. It uses an extensible end-to-end encryption protocol, where nodes on the network act as proxy entities. These nodes securely and collaboratively re-encrypt data for recipients based on access conditions defined by the data owner. PRE is particularly useful for maintaining data ownership while achieving data sharing, such as paid subscriptions for encrypted content or encrypted NFT transmission. Data remains private and encrypted, and data owners can implement access control through encryption.
Another component of the Threshold ecosystem is tBTCv2, a decentralized and permissionless bridge between Bitcoin and Ethereum assets. Unlike existing centralized solutions, tBTCv2 allows Bitcoin holders to access DeFi and web3 universes without relying on intermediaries. It replaces centralized intermediaries with a randomly selected group of operators running nodes on the Threshold dead end. These operators jointly use Threshold encryption technology to protect users' stored Bitcoin. User funds are controlled by the majority consensus of these operators, preventing individuals or groups from controlling tBTCv2, which is permissionless and ensures that everyone can access it.
IV. Threshold DAO
The DAO (Decentralized Autonomous Organization) of Threshold Network is the core of its decentralization mechanism. They not only provide a platform for community-driven projects, but also provide a framework for democracy and decentralized voting, which is crucial for the operation of the entire network. The achievement of this goal is due to the dual-track governance system of Threshold DAO. Threshold DAO mainly includes the following two aspects.
StakerDAO：
DAO holds the core decision-making power in the Threshold network because it represents the collateral holders who run decentralized nodes. These nodes are responsible for verifying transactions to ensure the continuous operation of the network.
Each member of StakerDAO must hold stock in the Threshold network, and their voting rights are proportional to the size of the stock they hold.
It ensures that those who directly contribute to the network (through running nodes) have greater say.
TokenHolderDAO：
DAO members manage finances, token publishing, and network governance through decentralized voting and community-driven decision-making.
In order to maintain accountability, TokenHolderDAO has the right to veto StakerDAO's proposals. This provides a check and balance mechanism to ensure that no single group can unilaterally control the network.
Each member of TokenHolderDAO must hold tokens from the Threshold network (assuming T tokens), which ensures that only those who have an economic investment in the network can participate in decision-making at this level.
Keep and Nucypher represent the Council: This elected member committee decides on collateral rewards to incentivize token holders to become collateral in the network. The committee also has the power to veto proposals to ensure that the network's route remains decentralized, in line with the spirit of the Threshold network, and retains accountability
V. Threshold Token Economics
$T is the upgraded native token of the Threshold Network network, which can be used as both a practical token for the network and a governance token for the Threshold DAo. $T allows the operation of the network and has the following functions and uses:
Staking Rewards: Like all Proof of Stake (Pos) consensus algorithms, users must stake their tokens to become validators and receive rewards. Honest behavior is rewarded, while dishonest behavior is rewarded. The amount of $T staked by each node affects the amount of rewards validators will receive and their voting rights in the DAO. The more $T staked, the more likely they are to be selected to validate the block.
Liquidity Pool (LP): Keep Network proposes to provide incentives for users to transfer their liquidity from the available KEEP-ETH pool on Uniswap to the T-ETH pool. This will increase the available profit rewards, thereby increasing the number of possible Threshold token holders and increasing the network DAO's collaboration with new community members.
T holders can help run the Threshold network by staking and running decentralized nodes to verify activity on the network. They are incentivized to do so without using any centralized institutions. In addition, by becoming active members of the DAO and participating in voting and discussions, T token holders can ensure the network, keep the community active and decentralized
The total amount of $T is 10 billion, and according to its distribution method, 90% of the initial token supply is exclusively held by the initial owners of NU and KEEP tokens, and the remaining 10% of the total supply is held by the Ministry of Finance.