What Is Shade Protocol?
Shade is DeFi with privacy - powering a more fair and secure future for finance.
Feb 9, 2023
Fundamentally, DeFi without privacy is incomplete.
Imagine you drive to your local grocery store and swipe your credit card to purchase food. During this transaction, the cashier does not see your entire bank balance, nor do they have ability to see every single transaction you have made since the beginning of time.
Contrast this to Bitcoin or Ethereum. Interacting with merchants on a transparent blockchain is a security risk. When you bought the product, how much you spent, your history of transactions, and how much cryptocurrency you hold. Your lending positions. Your trading history.
All publicly visible.
An inescapable transparent panopticon.
Enter Shade Protocol - a suite of DeFi applications with privacy intimately integrated into each app.
All built to have auditable privacy - empowering users to share their encrypted smart contract and app interactions with external entities as needed.
Shade is the governance and treasury token of Shade Protocol. As fees accrue to the ShadeDAO, SHD stakers will be able to vote how these fees are used - this could be for staking rewards, R&D, grants, liquidity rewards, and more.
Overtime, as new Shade Apps are launched there are no new tokens launched with it. Instead, the Shade umbrella of apps continues to grow and accrue fees and value from each new application launched. All of these apps are unified in a single simplified UI/UX, without fracturing liquidity.
The flagship product of Shade Protocol is Silk - a private stablecoin pegged to a basket of global currencies and commodities. Silk is an overcollateralized stablecoin, utilizing various forms of decentralized collateral. Silk is well positioned to function as an interrogability hub between currencies and commodities - acting as a perpetual hedge against inflation and volatility.
ShadeSwap, the privacy-preserving decentralized exchange built by Shade Protocol, is just around the corner. ShadeSwap is designed to deliver unmatched security, performance, and interoperability for the decentralized trading experience.
Trade private tokens
Leveraging the world's first asymmetric concentrated liquidity, trades on ShadeSwap not only involve private tokens, but are also capital efficient.
Rewards are distributed across various categories on ShadeSwap, with a special focus on Silk, stablecoins, and derivatives.
The bridge interface allows you to seamlessly bridge assets between different blockchains using the power of IBC. Additionally, you can use Axelar + Shade Wrap to give your ERC-20s privacy and the ability to interact with Shade DeFi.
Lend is a privacy-preserving borrowing platform that allows users to use various assets as collateral to borrow Silk. This system of overcollateralization and liquidations ensures that Silk maintains its target peg.
Additionally, the unique relationship between Lend & Swap allows users to be one click away from trading their minted Silk with a variety of assets.
Bonds are a powerful and efficient DeFi primitive that will help bootstrap, scale, and grow the ShadeDAO, and if balanced properly, can be the protocol’s primary tool for gathering protocol owned liquidity, yield, and stability for Silk and other key primitives. Users can interact with bonds by depositing certain assets to earn discounted assets from the ShadeDAO.
In the future, bond issuance could use other uncorrelated assets from the treasury to rebalance and modify the existing portfolio composition of the ShadeDAO. Shade Bonds also provide another revenue stream for the ShadeDAO, as certain assets such as LP tokens and staking derivatives generate income, which ultimately gets distributed to SHD stakers.
Shade staking derivatives are fungible tokens that represent a yield bearing staked position on a proof-of-stake network. Staking derivatives on Shade empower the following:
Automatic reward compounding
Shade Protocol applications are built on top of Secret Network. To achieve data privacy, the Secret Network protocol leverages the following:
TEEs are part of the hardware specification for all validator nodes of the network, guaranteeing that nodes are unable to view computations that occur within the trusted environment - preserving the privacy of the underlying data during the computation. Shade Protocol implements programmable privacy, which is defined as arbitrarily complex data privacy controls within Shade Apps.
Shade Protocol leverages the Secret Token standard for Silk and SHD. The SNIP standard is a specification for private fungible tokens based on CosmWasm on the Secret Network. The name and design is loosely based on Ethereum’s ERC-20 & ERC-777 standards, and a superset of CosmWasm’s CW-20. Key additions to this spec over the CW-20 specification are mostly for privacy-focused features, and as such will strive to maintain compatibility. Features of SNIP tokens are as follows:
Private smart contract interactions
Rust enforces memory safety—that is, that all references point to valid memory—without requiring the use of a garbage collector or reference counting present in other memory-safe languages. To simultaneously enforce memory safety and prevent concurrent data races, Rust's borrow checker tracks the object lifetime and variable scope of all references in a program during compilation. Shade Protocol smart contract uses the SecretWasm contract framework which adds a private computation module to the well-known CosmWasm contract framework - which was built with a specific focus on security and testing:
Shade Protocol is an ambitious array of application-layer products focused on a simple end user experience that involves the incorporation of privacy by default. These interconnected privacy-preserving DeFi products built on Secret Network will change DeFi as we know it — empowering the next generation of value creation and exchange. Shade Protocol is launching Silk: a privacy-preserving collateralized, reflexive stablecoin built on Secret Network.
Without privacy, DeFi is incomplete. Traditional financial markets offer a degree of privacy for users, and as a result offer up greater protections in some capacity than existing DeFi markets. Shade Protocol will be the world’s first truly cohesive decentralized and privacy-preserving financial applications — ushering in a golden era for Web3. Shade Protocol will always push for privacy by default, privacy as an expectation, and privacy as the key to unlocking the full value of a decentralized future.
But we can’t do this without community. We need you to join our community and help make Silk and Shade Protocol a reality.