The Dusk Network's innovation is in its layered approach to privacy and compliance:
1. Confidentiality Core: Zero-Knowledge Proofs (ZKPs)
· The network uses a proprietary zero-knowledge proof circuit called Plonky2 (later "Jellyfish"), which is optimized for speed and verification. This allows transactions to be completely private—amounts, asset types, and counterparties are hidden—while still being provably valid.
2. The Consensus Mechanism: SBA (Secure Proof of Blab)
· This is Dusk's novel consensus algorithm. It combines Proof of Stake (PoS) principles with obfuscated voting.
· How it works: Block generators ("Provisioners") are secretly selected for each round. They propose blocks and then vote on them in a hidden manner. This prevents collusion and front-running, making the network secure and fair—a critical feature for financial markets.
3. Compliance Layer: "Piecrust" Virtual Machine & Smart Contracts
· Dusk's smart contract VM, Piecrust, is designed to run ZKP-enabled confidential smart contracts (XSCs - Confidential Smart Contracts).
· Crucially, it integrates compliance modules. An issuer (e.g., a company issuing a digital bond) can embed restrictions directly into the token's contract. For example:
· Accredited Investors Only: Only wallets that have passed KYC can hold the token.
· Geographical Restrictions: Tokens cannot be transferred to wallets in sanctioned jurisdictions.
· Transfer Approvals: An issuer or regulator can have oversight on transfers.
· This happens on-chain and confidentially. The regulator can see what they need to verify compliance, while the general public sees nothing.
4. Native Token: DUSK
· Utility: Used for staking, paying gas fees for confidential contracts, and governance.
· Role: Secures the network via staking in the SBA consensus and powers the ecosystem's confidential operations.
