In this exclusive interview, we sit down with Georgi Koreli, CEO & Co-Founder of Hinkal, to explore how Hinkal is transforming blockchain privacy with groundbreaking features like Shared Privacy and Liquid Privacy Tokens. Koreli shares the vision behind Hinkal’s technology, its unique approach to cross-chain privacy, and how these innovations could reshape the future of DeFi for both individual users and institutions.
Q1. Can you explain what inspired Hinkal to develop the concept of Shared Privacy? What specific challenges in blockchain privacy were you aiming to address with this solution?
Shared privacy aims to tackle two issues: 1) Bootstrapping a sufficient shielded pool and 2) fragmentation of liquidity. This is done through two unique solutions: 1) Anonymity staking and 2) private cross-chain transactions.
Anonymity staking enables building a shielded pool while giving stakers yield from private transactions and allowing them to stay liquid in the broader DeFi. Meanwhile, cross-chain transactions allow users to leverage the shielded pool on the Ethereum mainnet on any chain they desire to use.
Q2. How does Hinkal’s interpretation of Eigenlayer’s Shared Security differ from other privacy solutions on the market? What makes Shared Privacy unique?
- Privacy is a multidimensional problem that needs to resolve various issues, not just one.
- Privacy should be solved in a way that: a) doesn’t fragment liquidity b) is compliant c) doesn’t require sacrificing yield
- Hinkal solution is the first to check all the buckets above and sets the standard for others to follow.
Q3. Could you walk us through how Hinkal’s Shared Privacy framework works across multiple blockchain networks? What technical innovations make this possible?
Hinkal has bootstrapped a large shielded pool on Ethereum which users can leverage cross-chain. Users deposit their funds on Ethereum and can move those funds to other EVM-compatible chains using our integration of cross-chain services. The user’s wallet address is hidden in the bridging transaction which makes it impossible to deanonymize the user even if there isn’t a privacy pool on the destination chain.
Q4. Privacy across different blockchains has traditionally been fragmented. How does Hinkal ensure that Ethereum’s robust privacy protocols can be effectively extended to other chains?
By using private cross-chain transactions; one large privacy pool can be leveraged across any network instead of needing to have sufficient anonymity sets on each chain. This prevents liquidity fragmentation and ensures a superior user experience.
Q5. How does the use of cross-chain services and bridges enhance privacy when transacting between chains?
Cross-chain services are essential for transacting between chains by allowing the funds to be locked on the origin chain and unlocked on the destination chain. Furthermore, these services handle communication between chains to ensure transactions do not get reverted.
Q6. The introduction of Liquid Privacy Tokens (LPTs) seems like a novel concept. How do these tokens work, and how do they incentivize stakers while maintaining privacy within the ecosystem?
For staking ETH, stakers receive hETH which is the first-ever LPT. hETH reflects the yield that stakers earn by increasing the value of hETH relative to ETH, similar to Lido’s wrapped staked ETH. hETH is highly liquid; holders are able to swap it on multiple DEXs and provide liquidity to pools on Curve and Balancer for extra yield.
Q7. Can you elaborate on the role of hETH as a receipt token? How does it enable stakers to participate in DeFi without compromising their privacy?
Stakers and holders of hETH choosing to interact with the larger DeFi ecosystem do not have privacy as their transactions are public by design.
Q8. Anonymity Staking is another exciting innovation. How does this method help to bootstrap the Ethereum shielded pool, and how does it differ from traditional staking models in DeFi?
In Anonymity staking, stakers are incentivized to stake their ETH in exchange for yield from private transactions while also maintaining the ability to stay liquid. In comparison to traditional staking, anonymity staking generates yield from a different source (private transactions), there are no slashing conditions, and unstaking from Hinkal is instantaneous.
Q9. With staking on Hinkal being permissionless and self-custodial, how do you ensure privacy without KYC/AML requirements? What protections are in place to prevent misuse while maintaining user privacy?
To ensure no illicit parties can interact with the Hinkal protocol, users can access Hinkal after passing KYC (B) verification. Users can reuse their KYC (B) attestation, from major CEXs and other KYC (B) protocols, and proceed directly to Access Token minting. Otherwise, they can choose their preferred provider and verify their identity. The process is simple and can be completed in under 3 minutes.
Third-party staking done through dApps integrated with Hinkal has to go through the normal KYC process associated with the platform.
Anonymity Staking happens publicly on the blockchain and, similar to how staking works across the ecosystem, stakers do not need to pass compliance checks. To ensure there are no illicit funds entering the smart contract, Hinkal uses Hexagate for 24/7 wallet screening.
Q10. Privacy is a critical concern in DeFi. How does Hinkal’s solution help scale privacy horizontally across the ecosystem, and what impact do you foresee this having on the broader blockchain landscape?
Hinkal is developing an open-source privacy infrastructure that any dApp, wallet, or protocol will be able to integrate into their UI. This will make privacy accessible to all parties in the broader DeFi and will have a huge impact on bringing users from TradFi who require privacy on Web3.
Q11. With Hinkal’s institutional-grade privacy solutions, how do you plan to attract more institutional investors and partners? What role does Hinkal play in bridging privacy solutions for larger DeFi applications?
First of all, Hinkal is a product-led solution – every employee of an enterprise or institution can use it and then onboard the corporation. We built it in a way that everyone can onboard themselves.
Second, we work with institutions to create bespoke privacy solutions to meet their individual needs. For example, institutions need different levels of privacy and anonymity to remain compliant than payment facilitators who need different aspects of their transactions to remain private.
Q12. What has been the reception of Shared Privacy and Liquid Privacy Tokens since their launch? Are there any metrics or success stories you’d like to share regarding user adoption?
Anonymity staking has been a major success so far. Within a month $3m worth of ETH has been staked and converted to hETH. The hETH/wETH Curve pool has accumulated $4.3m worth of liquidity and has been selected by Curve’s DAO to bring high-yielding CRV emissions to the ecosystem.
Q13. Hinkal has already processed $140 million in private volume this year. How do you plan to scale this further in the coming years?
Increasing the privacy pool and enabling cross-chain transactions has already attracted more volume to the protocol. The next big step in increasing volumes is making our infrastructure available to the developer community, which will scale privacy even further.
Q14. What’s next for Hinkal in terms of new features or partnerships? Are there any upcoming projects or developments that users should keep an eye on?
Vision for Blockchain Privacy
Currently, we are working on a means to make Hinkal’s privacy solutions available to the wider public so that they can easily be integrated into all major dApps: such as DEXs, lending protocols, and payment protocols.
Additionally, we are prepping to make Hinkal’s privacy technology available to any and all wallet providers and leverage advanced zero-knowledge (ZK) proofs to deliver unmatched capabilities.
Q15. Lastly, what message would you like to send to the broader DeFi community about the importance of privacy and how Hinkal’s innovations can transform the space?
Privacy in DeFi is critical for multiple reasons.
1) For the stablecoin industry with B2B payments and running payroll, the opportunity for scaling and adoption outside of the Web3 space is limited without privacy. It is a feature inherent in traditional finance that many companies use to their advantage and rely on, a feature that isn’t available without Hinkal. Hinkal enables transfers of any ERC-20 token privately for both senders and receivers on the most secure chains and its robust KYC policies ensure only good actors can participate in this privacy-centric ecosystem.
2) Privacy in DeFi has major economic value for institutional investors and firms. Without privacy, their trading strategies are public, meaning they are subject to front-running and copy-trading, removing their competitive advantage and making them lose money on trades. Hinkal acts as a composable ZK private wallet, enabling virtually any strategy to be executed in a private environment, ensuring traders can maximize any market opportunity.
3) The recent attacks on crypto holders in the UK make it clear that holding assets that can be seen by the public is a safety issue. It can lead to large asset holders being targeted by bad actors who are looking to scam these users out of their crypto holdings. Hinkal provides a private store of value where the portfolios of users are hidden from the public, adding an additional level of protection from them from becoming targets of hacks, scams, and violent attacks.
4) The adoption of broader financial services and assets, such as RWAs, by primary drivers in the financial markets requires privacy to be accessible. Hinkal is building the infrastructure for any dApp, wallet, or protocol to enable privacy for their users for any use case, making privacy available and abundant.
With Hinkal pushing the boundaries of privacy in DeFi, Georgi Koreli’s insights highlight a clear path forward for secure and private blockchain ecosystems. As Hinkal continues to expand its offerings and attract widespread adoption, it’s setting a new benchmark for privacy-first solutions in digital finance. Stay tuned as Hinkal prepares to roll out even more impactful features that promise to make privacy a core component of the DeFi landscape.
