Coti Transitions to Ethereum Layer-2 for Enhanced Privacy Features

Blockchain platform Coti is moving forward with its strategic plan to, within three years, turn its protocol into a layer-2 oriented solution for the Ethereum network. An announcement made in confidence, which was recently disclosed, highlights Coti’s continued zeal to increase its privacy functions in the Ethereum space.

The upcoming Coti v2 will leverage a cryptographic methodology known as garbled circuits to facilitate transactions while maintaining the confidentiality of sensitive information and data. Garbled circuits, rooted in multi-party computation (MPC) principles, enable multiple parties to collaboratively compute a function while safeguarding their inputs and intermediate variables from exposure.

Garbling protocols were first proposed in the 1980s as an initial implementation. Since then, privacy-preserving technologies have effectively used this technique in practice, particularly in applications that need to process sensitive data while hiding the actual content of the input. According to the CEO of Coti, Shahaf Bar-Geffen, this approach to privacy would be a key selling point of the token. According to Bar-Geffen, sending sentient data as public information over a blockchain is a bug, not a feature.

Coti’s Garbling Protocol for Enhanced Privacy in DeFi

Bar-Geffen pointed out the advantage of garbling protocols, stressing their capability to enable transactions’ concurrent execution of smart contracts. This is achieved while preserving the privacy of information lying between parties and contractors. He said, “This level of privacy is especially important in decentralized finance applications where transaction confidentiality can be as critical as transaction integrity.”

Bar-Geffen said Coti’s use of garbling protocols emphasizes concerns about potential regulatory oversight over privacy-focused platforms. This approach tries to build a compliant platform for the rest of the ecosystem. He said that platforms based around anonymity often face issues attempting to keep on the beat of regulatory compliance.

The platforms based on anonymity must get to the front of regulatory issues. This is necessary to align appropriately with the broader enterprise environment requirements. Therefore, it is imperative that such a proactive approach would assure effectiveness. It would also ensure conformity to the regulatory requirements posed by the business environment.

Coti deems the fitting of its improved protocol in use cases needing advanced privacy. This is mostly for the finance and healthcare sector applications where embedding of strong privacy is critical. Enterprise applications currently utilize the design of the Coti protocol. It manages blockchain-based products, including custom-branded tokens, wallets, website integrations, and fiat on/off-ramps.

The developers plan to release Coti v2 on the net in the second quarter of 2024. Coti develops digital infrastructure for Web3 applications, focusing on the level-1 level. The company offers various tools, from wallets tokens, and payment modules. Coti’s layer-1 protocol currently boasts a total value of $31 million, reflecting its place in the developing blockchain landscape.

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