Decentralized Protocol Hinkal Launches Privacy-Focused ETH Derivatives

Ethereum Privacy

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Tanzeel Akhtar

Journalist

Tanzeel Akhtar

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Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

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September 16, 2024 12:00 EDT

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Hinkal Protocol, a multi-chain privacy layer for confidential on-chain transactions, said it is launching “hETH” 一 an ETH liquid privacy derivative.

In an announcement, Hinkal said the product is designed to address privacy concerns in decentralized finance (DeFi) while also giving yield opportunities to participants.

The protocol said it is introducing a new concept that allows Ethereum stakers to stay liquid and earn yield while contributing to on-chain privacy.

What’s the Concept Behind hETH?

The team explains that the hETH is a liquid privacy derivative, and is an Ethereum-based asset that allows users to stake ETH in Hinkal’s “Shielded Pool” while maintaining liquidity.

The Shielded Pool acts as a layer of anonymity for users who want to carry out transactions without revealing their identity. Traditionally, anonymity and privacy in DeFi have been difficult to achieve without sacrificing capital efficiency or yield opportunities, but Hinkal said it aims to change this.

Hinkal Protocol will allow users to stake their ETH into a Shielded Pool in exchange for hETH, a privacy derivative that can be used for various decentralized applications, including trading, lending, or serving as collateral across DeFi platforms.

This provides users the ability to maintain their privacy while benefiting from the liquidity and versatility of the derivative.

Anonymity Staking?

Hinkal’s latest launch, introduced by CTO and co-founder Nika Koreli during the presentation of Hinkal V.2 at the Blockchain and Social Systems (BASS) conference at Stanford, is the concept of “anonymity staking”.

Through anonymity staking, users can contribute their Ethereum to the Shielded Pool and receive hETH in return, said Koreli in a release.

The liquid privacy derivative allows permissionless participation, meaning that even users who do not require privacy for their transactions can still benefit from the system by earning yield. The more participants there are, the larger the Shielded Pool becomes, thereby improving privacy for all.

In July, during EthCC 7, Hinkal launched the Shared Privacy Protocol which allows cross-chain privacy through anonymous staking.

Hinkal said the privacy protocol offers several benefits. These include allowing stakers to deploy native and staked assets to the protocol, generating additional yield while maintaining the flexibility to trade yield tokens on other dApps.