Thesis

From CryptoWiki

Basics

  • Based in: San Fransisco
  • Keep SEZC is based in Grand Cayman
  • Started in: 2017
  • Venture studio behind Keep Network, tBTC and Fold.
  • Keep Random Beacon Mainnet launched in 5-2020. After several rounds of security audits and retesting the app on a public testnet, the team relaunched tBTC in Sep. 2020.
  • From Proof of Work #75 (28-9-2019):

"The Keep Network is a privacy layer for public chains, enabling interactivity with private data and interoperability across chains. It does this with keeps, off-chain containers for private data that help smart contracts harness the full power of the public blockchain."

 History

"Keep Network was founded in 2017 by Matt Luongo and Corbin Pon, who both previously started Fold, a bitcoin shopping app. While working on Fold, the two found there was a need for better privacy tooling for Ethereum. Therefore, Matt and Corbin set out to build a new data layer that allows blockchain-based applications to store and access private information.

The first use case for Keep is the tBTC application. tBTC serves as a trust-minimized bridge between the Bitcoin and Ethereum blockchains. Keep Network signers facilitate the exchange and storage tasks of swapping BTC for Ethereum-compatible tBTC tokens so BTC holders can access Ethereum's decentralized finance (DeFi) sector. tBTC launched on the Ethereum and Bitcoin mainnets in May 2020. But a vulnerability discovered in the code a few day post-launch led tBTC's development team, Thesis, to pause user deposits. After several rounds of security audits and retesting the app on a public testnet, the team relaunched tBTC in Sep. 2020."

Keep Audits & Exploits

  • Keep Network has an active Bug Bounty Program that rewards up to 1M $KEEP for the most critical of finds. As of right now, this equates to roughly 300k, with a token price of 0.30$ (21-9-2021).
  • Scored a 85% on DeFi Safety (21-9-2021):

"ConsenSys Diligence published a Keep Network audit report in February 2020, which was before their mainnet launch in April 2021.

Trail of Bits published a Keep Network audit report in June 2020, which was after their mainnet launch in April 2021.

Sergi Delgado published a Keep Network audit report in May 2020, which was after their mainnet launch in April 2021."

With the comment: "Impressive documentation, perfect access controls, and excellent security and documentation. An impressive dedication to Best Practices"

Bugs/Exploits

TBTC Audits & Exploits

  • Bug bounty program can be found [insert here].
  • Got thrice-audited (22-9-2020).
  • From Decrypt (22-9-2020):

"To complement the safety-first theme, there’s also a built-in insurance component [into tBTC]. Insurance provider Nexus Mutual will be onboard at launch, with others invited too. KEEP will be used to incentivize insurance and ensure that users who want cover can get it for a good price, said Luongo."

"According to the Keep team, the Keep Network and tBTC code audit conducted by Trail of Bits came back clean (as in no critical issues were found) as of Aug. 17, 2020. The two teams have no released the details of the audit as of yet. Keep has decided to spend the next one to three weeks doubling down on internal testing and building confidence before it will look to deploy its staking and beacon upgrades on Keep Network's mainnet and tBTC Release Candidate 1 on the Ethereum mainnet."

Bugs/Exploits

  • Threshold tBTC vulnerabilities disclosed, DoS vector and redemption mechanism design flaw (14-10-2023).
  • Just two days (18-5-2020) after mainnet launch, tBTC’s smart contract has been paused, presumably due to risk to depositors.
  • From this article (21-5-2020):

"tBTC’s smart contract employs a 10-day pause mechanism for unanticipated emergencies like the one the token ran into this week. The Keep team activated the emergency pause on May 18th to give themselves a grace period to shield users and identify a suitable bugfix.

That’s precisely what Keep’s done since. In their post-mortem report, Keep noted they’d already secured more than 99 percent of the tBTC supply in the wake of the token system’s emergency pause and were on track to collect the remainder of outstanding tokens.

Moreover, developer James Prestwich has already submitted a potential fix to the redemption bug in Keep Network’s tBTC GitHub repository, which means tests are incoming.

Additionally, Keep confirmed they’d be engaging with the auditing specialists at Trail of Bits to “identify any additional areas of the system that may merit additional scrutiny.” If everything checks out, then tBTC can be brought back online in the not so distant future.

“In addition to the technical and process changes we’ll be making, in the coming days we will also announce how we plan on approaching a redeploy of the tBTC system,” Keep said."

Governance

Admin Keys

"15-30 people who are able to collude at any time to steal, freeze or otherwise manipulate the BTC in custody. tBTC’s Bitcoin collateral is in the hands of 40 Threshold node operators and can be manipulated with a consensus of around 15-30 nodes. These node operators are allowlisted by Threshold, potentially known to one another, but are unknown to tBTC holders. They are likely all together in a Discord chat room and could collude to do just about anything they want. If a government declares Threshold to be doing something illegal, it’s possible for these node operators to collude to get themselves out of hot water. If they did collude to lock up or steal the Bitcoin, their T stake would be slashed, however the net effect of this punishment is totally dependent on the value of T. tBTC plans to fix this vulnerability as the product matures with a feature called “sweeping”. This feature will automatically and trustlessly mint tBTC for any deposit if a minter has not acted upon it within 8 hours. Until then, your minting is at the mercy of the human minters."

"There is a "Governance" section in their documentation which is clearly labelled and accessible to all users at https://docs.keep.network/tbtc/index.pdf (p.33)." All contracts are described as immutable on p.34 of the Keep Network documentation, as well as in their mainnet launch Medium article. Contracts are immutable, but Keep Network still implemented a emergency pause function which is documented."

"Keep members that hold KEEP must “approve” any app on the network in order to be considered for work within that app. Keep follows an "opt-in" governance model, requiring consent from stakers and users before any new code is run. The network is built around the keep registry, a registry of contracts stakers and users can choose to trust.

Stakers authorize new contracts in the registry, opting to follow the rules of the contract, and earn rewards for operating by those rules. Users authorize contracts via direct interaction, or by using a dApp based off one of the contracts.

The registry owner account can propose new code by publishing to the registry. Today, the proposer account is held by Keep SEZC (the corporation behind the Keep Network), though the team expects it to be replaced with a more formal process as the project further decentralizes.

The tBTC system, built atop Keep, has no mechanism for code improvements on mainnet. Governance of the contracts is limited to an emergency lever to pause operations for a fixed period of time in case of an exploit, as well as fee parameters. All are governed by the contract owner, currently Keep SEZC, rather than token holders. Any meaningful changes to tBTC will require a social upgrade, akin to a hard fork."

DAO

  • According to Messari as of 12-11-2020 there is 'No-On Chain Governance'

Treasury

  • According to Messari as of 12-11-2020 there is no decentralized treasury.

Keep Token

Launch

"The Keep team sold a total of 322,882,336 KEEP in its two private staker sales. Purchasers received the option to collect bonus tokens, ranging from 20%-50% more tokens depending on the lockup period selected (six months to two years). The longer the lock, the greater the bonus. The second sale came with a one-year lockup in addition to a 20% bonus. To date, Keep has sold approximately $20 million worth of KEEP tokens. One covenant of the SAFT agreements that was included was the requirement that purchasers support the network by staking their KEEP tokens."

Token allocation

  • From Messari (12-11-2020):
  1. Private sale: 35%
  2. Early team: 10%
  3. Advisors: 5%
  4. Keep SEZC: 25%
  5. Staking & Protocol Incentives: 25%

Among the total distributed through these [private] sales:

  1. 50,638,076 KEEP will unlock after six months
  2. 47,168,287 KEEP will unlock one year after distribution
  3. 225,075,973 KEEP will unlock two years after distribution"

Keep allocated 390,598,594 KEEP to early team members and advisors, associates and vendors, and Keep SEZC (the Keep project corporate entity).

  1. Vendors and Associates received 851,917 KEEP, which will vest anywhere from six months to two years (most at the two-year mark)
  2. Early Team & Advisors received 139,746,677, which will vest after two years and come with a four-year restriction on use
  3. Keep SEZC received 250,000,000 with no associated vesting or lockup schedule

Keep plans to distributed up to 20% of the KEEP supply (200 million KEEP) during its public stakedrop event, which launched on Jun. 8, 2020. A stakedrop allows users with ETH, but no KEEP, to stake their ETH in exchange for KEEP token rewards (alongside signer fees). After 6 months, participants will also need to stake KEEP to continue earning rewards. This event could last for up to 24 months with most of the rewards handed out during the first six months.

Another 5% of the KEEP supply (50 million KEEP) will be rewarded to tBTC liquidity providers on-chain to help incentivize the growth of the tBTC ecosystem. Keep has not released details on when it will start issuing these liquidity rewards

The exact timing of public KEEP distribution will be variable. Therefore, the Liquid Supply Curve here is based on the rewards model created by Bison Trails.

All of the KEEP supply was minted when the Keep team deployed the token contract to the Ethereum mainnet. Therefore, KEEPs do not have an inflation model that results from the creation of new tokens (as with Bitcoin or Ethereum via block rewards). But the max supply of KEEPs can decrease over time through slashing."

Utility

  • From Messari (12-11-2020):

"The KEEP token is a work token. Work across the network is distributed to KEEP stakers, in proportion to their staked amount, by a random beacon. Misbehaving stakers have their KEEP slashed and are removed from the network, similar to other proof of stake mechanisms.

According to the Keep team, the random beacon (the core of the system used for work selection) cannot function without a network-specific token that grows and shrinks with the utilization of the network. Using a network-specific token makes attacks from outsiders with large pools of capital much more expensive.

Staked KEEP holders earn revenue from operating the beacon and participating in work across the network, in the form of keeps. Keeps are multi-party computation setups that offer services to other smart contracts, including decentralized signing, encryption, and data storage.

Any dApps built on top of the Keep Network, such as tBTC, require operational keeps in order to function and thus staked KEEP. No other existing digital asset can serve as a replacement to the KEEP Token in the tBTC ecosystem."

Token Details

Stablecoin 

TBTC Token

 Launch

Token allocation

Utility

Token Details

Keep Tech

  • Whitepaper can be found here (not online as of 12-11-2020).
  • Code can be viewed here (4-5-2020).

How it works

"The Keep Network is a privacy layer for blockchains that allows users and applications to store data privately. The network randomly assigns keeps to a system of participants, called signers, that help store and manage these data containers. Keep's core application, the Random Beacon, provides this source of randomness and aims to ensure an individual signer cannot decode the information stored in the network. Each participant stakes KEEP tokens to act as a signer in exchange for a service fee.

The Keep Network features off-chain containers for private data called keeps that allow smart contracts to interact with this data while aiming to maintain transparency and transaction auditability. Keeps encrypt private data and keep it protected through multi-party computation (sMPC).

The network consists of node operators called signers that stake KEEP tokens to store and manage private data in exchange for a service fee. The token and staking mechanism discourage Sybil attacks as well as dishonest behavior (malicious acts can lead to signer losing a part of their stake). Signers are selected at random to store a given data submission through Keep's core application, the Random Beacon. As a whole, the Keep system aims to ensure signers cannot co-opt and exploit the system or decode the private data stored in the protocol.

Keep’s protocol-specific token (KEEP) powers the network and supports all the apps built on it. KEEP is required in order for someone to become a member of the Keep network; members are eligible to earn rewards by performing work on the platform. This work is the computation and availability required to select and pull the network’s off-chain “keeps” together and to read the associated data. Members are randomly selected to coordinate a distributed key generation protocol that results in a public ECDSA key for the group, which is used to produce a wallet address that is then published to the host chain."

Mining

Staking

  • According to their website they have the following companies as stakers (12-11-2020):

Paradigm, Polychain Capital, Fenbushi Capital, Andreessen Horowitz, Draper Associates, Fabric Ventures and Distributed Capital Partners.

Liquidity Mining

Layer Two

Different Implementations

Interoperability

Other Details 

tBTC Tech

  • Whitepaper can be found [insert here].
  • Code can be viewed [insert here].
  • Built on: Bitcoin and Ethereum

How it works

"In the tBTC system, allowing for obscured BTC private keys within a keep, which is only accessible through a Keep threshold signature."

Fee Mechanisms

Upgrades

Staking

Liquidity Mining

Scaling

Different Implementations

Interoperability

Other Details 

  • Expected (2-4-2020) to begin on 27-4-2020.
  • Got relaunched after earlier bugs on 22-9-2020.
  1. "User who wants to deposit BTC will request “signers” to create a deposit address to deposit their BTC. They can deposit lots of .1, .25 or 1 BTC. In order to create a request users need to provide a small deposit up-front to cover costs of initiating the transaction. 
  2. Keep Network will use a multi-party computation to select 3 random signers from the group. These signers will be chosen to create a Bitcoin deposit address and an Ethereum smart contract owned by the same private key. The smart contract will also create an empty TDT (ERC721 token).
  3. Signers are required to deposit 150% of the value of the BTC denominated in ETH. This collateralisation ratio needs to be maintained at all times.
  4. After enough confirmations, a simple payment verification (SPV) proof can be generated and submitted to the Ethereum deposit address. Upon success, the TDT will have the SPV attached to it and link the user’s UTXO to that particular TDT. You can read more about SPVs over here.
  5. The TDT with a valid SPV proof can now be used to mint a valid TBTC token on Ethereum mainnet.
  6. In order to redeem the tBTC they can relinquish their TDT, pay signer fees, broadcast their transaction and signers can then receive their funds back."

Oracle Method

Privacy Method

Keep Network

"A keep is an off-chain container for private data. Keeps help contracts harness the full power of the public blockchain — enabling deep interactivity with private data."

"Keeps encrypt private data and keep it protected through multi-party computation (sMPC)."

Their Other Projects

Fold

KEANU

"Both NuCypher and Keep polls received unanimous support from their respective community and passed with 100% of votes cast in favor of the proposals. Now, NuCypher and Keep Network teams will collaborate to implement the KEANU merge proposal. The development teams will move now forward with the integration plan, which consists of four phases:

  1. A new staking contract, supporting both NU and KEEP as work tokens
  2. A DAO, managed by stakers in the new contract
  3. Deploying the random beacon and tBTC v2 on KEANU
  4. Integrating the client networks"

Saddle

Tally

Roadmap

  • Can be found [Insert link here].

Usage

TBTC

"Since relaunching on September 17, Keep’s first cross-chain bridge has facilitated 4,761 BTC (~$53M USD) in cumulative deposit volume by 205 unique addresses, with daily deposit volumes reaching up to ~$4M USD. 10-BTC lot sizes for deposits were enabled shortly after launch, quickly becoming the most popular deposit sizing with 399 10-BTC deposits and counting. 4,068 tBTC, or ~85% of all deposits, have been redeemed back for the underlying Bitcoin."

Projects that use or built on it

Pros and Cons

Keep Network

Pros

Cons

TBTC

Pros

  1. "Users can link a TDT to the exact UTXO it was claimed for. This property means that you can get the *exact* Bitcoin(s) that you deposited. Use case could be ensuring you don’t get blacklisted UTXOs.
  2. Depositors need to have 150% of the value of BTC in ETH at all times. You can be assured that collusion isn’t in their best interest.
  3. You can reason about the security of the system by weighing the total amount of ETH collateral held by signers versus BTC in custody."

Cons

"15-30 people who are able to collude at any time to steal, freeze or otherwise manipulate the BTC in custody. tBTC’s Bitcoin collateral is in the hands of 40 Threshold node operators and can be manipulated with a consensus of around 15-30 nodes. These node operators are allowlisted by Threshold, potentially known to one another, but are unknown to tBTC holders. They are likely all together in a Discord chat room and could collude to do just about anything they want. If a government declares Threshold to be doing something illegal, it’s possible for these node operators to collude to get themselves out of hot water. If they did collude to lock up or steal the Bitcoin, their T stake would be slashed, however the net effect of this punishment is totally dependent on the value of T. tBTC plans to fix this vulnerability as the product matures with a feature called “sweeping”. This feature will automatically and trustlessly mint tBTC for any deposit if a minter has not acted upon it within 8 hours. Until then, your minting is at the mercy of the human minters."

  1. "You need 150% of collateral. If it goes down you lose your ETH, if it goes up you get a small amount of fees. The risk pay-off isn’t the best. It’ll be questionable who will sign up for this risk/reward equation.
  2. Users need to specify lot sizes and can’t use custom amounts"

Competition

Keep Competition

  • From their FAQ (6-2-2019):

Enigma:

“Rather than build a grand approach to "private smart contracts", we're focused on the machinery that will get us there. As far as development approaches go, especially in this space, it's less organizationally risky- and means a smaller attack surface. In the same vein, we're exposing the details of keeps to contract developers, rather than hand-waving. Enigma (and other MPC systems) suffer from Sybil risks. Rather than ignore them, our entire system is designed to mitigate threats. Finally, on the pure tech side- we're building on-chain RNG that will be novel on Ethereum, as well as an MPC protocol that fixes many of the issues a system like theirs has (by anchoring zk-proofs on the blockchain for fairness and performance improvements). Whether we compete depends on how each project progresses. As it stands, keeps are lower level than what I've seen from Enigma- we're focusing on the infrastructure first, rather than launching a dApp / particular use case first”

- Matt Luongo, Project Lead

NuCypher:

“NuCypher can do file sharing, Keep does private computation. They are doing something similar but different. NuCypher uses proxy re-encryption which is a form of public key encryption (where each party has a public and private key, if I want to send you a message I would encrypt it with your public key so you can decrypt it with your private key) whereas Keep uses Secure Multi-Party Computation, which is where a group of computers do a handshake to access private data."

- Matt Luongo, Project Lead

"In particular, they're specifically looking at delegated access, whereas we're also looking at allowing operations with the encrypted data. So if your encrypted data is an ECDSA key, allowing a contract with access to the Keep to (e.g.) sign a transaction with that key. Without having to expose the key”

- Antonio Salazar Cardozo, Head of Engineering

TBTC Competition

WBTC vs tBTC

"Trustless BTC on Ethereum. tBTC is just like WBTC, but doesn't require any centralizing, censorable features (aside from having only one oracle for the price-feed for now). So in reality, it's nothing like WBTC, as it is also fully redeemable in a trustless way."

WBTC TBTC
Ecosystem Actors Merchants, Custodians, WBTC DAO Bonded Signers
Model Consortium Decentralised
Fully Collateralized Yes Yes
Verification On-chain On-chain (Keep is Of-Chain)
Deposit Size Requirement N/A 1 BTC
Censorship Resistant Maybe Yes
Lock-up Period None 6 months
KYC/AML Yes No
Fees Custodian + Merchant + Network Fees Custodian + Network fees
"WBTC Benefits

Given that TBTC spec was only released last week (8-2019), WBTC’s biggest benefit is the first-mover advantage. WBTC has already amassed nearly 600 BTC along with its recent integration into Compound Finance. With this, investors can now borrow or lend WBTC in an entirely trustless manner. In addition, unlike TBTC, the WBTC system is rather robust allowing any deposit size with minimal lock-up periods.

WBTC Drawbacks

First and foremost, users looking to mint or redeem WBTC must pass KYC/AML. While KYC/AML is not a bad thing, having this requirement does add friction to the system and can draw some critiques from the crypto community. It is important to note that while users who wish to mint or burn WBTC through merchants and custodians must pass KYC/AML, users are still able to transact and hold WBTC without KYC/AML once it is in circulation.

The last major drawback is the system’s reliance on the consortium model. Users will have to trust a handful of crypto institutions to mint, burn, and custody the tokens. While no single institution controls the entire system, the consortium model does not completely fill the core values of crypto and decentralized architectures.

TBTC Benefits

The biggest benefit to TBTC over WBTC is the elimination of trust within the overarching system. Rather than relying on merchants and custodians, TBTC relies on math and game theory (i.e. incentives) to drive the ecosystem. With this, users looking to mint TBTC or redeem BTC do not have to complete KYC and AML as the entire process is executed in a trustless and pseudonymous manner.

TBTC Drawbacks

The TBTC spec was released early last week and is still in the early phases of development. As such, many of these drawbacks generally derive from the fact that the system is untested and hasn’t had the opportunity to mature yet.

Regardless, the biggest drawback for TBTC is the 6-month lock-up requirement and the strict limitations on Bitcoin deposit sizes. As it stands today, users who wish to mint TBTC by locking BTC can only do so in intervals of 1 BTC. Therefore, anyone looking to mint multiple BTC must go through the minting process multiple times. Moreover, this strict deposit requirement creates fairly high capital requirements as anyone with <1BTC is unable to participate.

Conclusion

While both TBTC and WBTC both offer highly transparent systems with verifiable on-chain reserves, each system has its trade-offs. It is important to note that TBTC is not live yet (8-2019) and is still in testing phases, but it will be interesting to see how these two assets continue to evolve over the coming years.

If you’re interested in getting a full understanding of the TBTC or WBTC system, you can review the official tBTC spec here and the wBTC website and whitepaper here."

Again, all the above came from DeFi Rate.

Coin Distribution

Team, investors, Partners

Team

Funding

"To date, Keep has sold approximately $20 million worth of KEEP tokens."

Partners

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