Highlights From Bitrue x Iron Fish Twitter Space “Ask Me Anything” Session

18th April 2023 — In another edition of Bitrue’s Twitter Spaces AMA, we invited a special guest from Iron Fish Foundation — Elena Nadolinski, CEO of Iron Fish Foundation. Iron Fish Foundation is one of the most innovative and exciting blockchain projects that prioritize privacy for Web3, decentralization, and community involvement.

Elena used to be a software engineer at Airbnb and as she started learning more about crypto circa 2017, she decided to join crypto as part of the community full-time around 2018. It had been a long, winding journey, but what Iron Fish has been trying to tackle ever since 2018 is how to make Web 3 safer by introducing privacy to cryptocurrency transactions. Little did they know at the time, was how hard it is going to be to actually create a privacy solution for crypto from a technical perspective, regulatory perspective, and user experience perspective. With Iron Fish launching on Mainnet on 20th April 2023, the team has been tirelessly working on getting that going.

Without further ado, let’s deep dive into the main Q&As of the session below.

Q1. To kick things off, can you give us a brief introduction to Iron Fish and how it differs from other Proof-Of-Work (POW) based projects?

Yeah, so Iron Fish is Proof-Of-Work, which I know in the new era of blockchains is kind of a rarity. Most new projects are definitely in the Proof-Of-Stake category. We decided to go with Proof-Of-Work because we really care about decentralization, and Proof-Of-Work, in my opinion, is still the best way to achieve decentralization the fastest. The thing that is different about Iron Fish in terms of other Proof-Of-Work projects is that every single transaction in Iron Fish is fully encrypted, meaning it is fully private. And unlike other layers on-chain that do have a privacy component as well, Iron Fish has something called multi-asset. So Iron Fish does not have a full smart contract language.

However, we do have the ability to allow users to create custom assets, so these are fairly limited in scope. But the reason why we really focus on the multi-asset feature is that we want Iron Fish to be the privacy platform for crypto in Web3 long term, and so we want to work with bridge operators so that Iron Fish can be linked to another chain, let’s say a transparent chain like Ethereum. And people could actually transfer assets from transparent chains over to Iron Fish and have Iron Fish be this generic privacy layer for crypto in general. So that’s the long-term vision for Iron Fish: How do we build a really generic privacy platform that any crypto asset can live on.

But as of today, it’s a fully private chain, and has multi-assets or custom assets, it is Proof-Of-Work, and we worked really hard to make sure that the user experience from even launching a node from the command line tool is really easy for developers to use.

Q2. Can you explain a little bit about the structure of the team behind the projects, as well as any prominent investors or partners that support the project?

Most of our team is engineers, so it’s definitely a heavy engineering team. We are on the smaller side in comparison to other projects. So the team is roughly 20 people, again, mostly engineers. Most of our engineers are senior staff principals above. And our strategy so far has been hiring really amazing people, not necessarily from crypto, and working with really amazing people to get this going. What we found out throughout this journey is that, firstly, there are very few “experts” in blockchain technology. And second of all, the way you become an expert is you actually work with the technology. And so a lot of our engineers come from traditional software engineering companies such as Uber and Facebook and the Silicon Valley kind of SaaS startups.

So our strategy has been to hire really great people from top engineering companies in Silicon Valley and to train them internally to understand this technology. And that has worked really well for us. We do have some crypto-native people as well. Now I can confidently say that most of our engineers are actually world-class blockchain engineers because they have built it from the ground up, and we have Ferberus engineered, Bitcoin, Zcash, Ethereum, you name it, to fully understand how the intricacies of syncing work or the networking layer, or storage, or optimizing processing transactions and blocks. I think at this point, everyone is just a world expert in our team. I’m very proud of the team that we built.

In terms of our investors, our strategy has been pretty similar. We’ve only worked with the best investors that we really resonate with, sometimes we would take a lower valuation just to work with the best people. And that again is a strategy that has worked extremely well for us because all of our investors are really supporting the project wholeheartedly. So our first round, our seed round, was led by Electric Capital. If you guys are not aware at this moment in time, they’re managing over a billion dollars started by Mitchell Garg and Curtis Spencer, and they’re amazing. Electric Capital, for instance, is a really unique fund because it was started by engineers and so the entire fund culture is very engineering focused, which is quite amazing.

For our series A, which was led by Andreessen from a16z crypto. We’ve kind of been talking to their team for years before we actually took on their investment. Andreessen is amazing not because of the brand, but also because of how much support they give to the team. So for instance, privacy as a concept is just really hard from a regulatory perspective to push through as a project. Andreessen has been working really hard to even have an entire regulatory team within the fund to help projects like ours, help with messaging, and think about strategy in terms of regulatory restrictions that we’re under. So that’s been amazing.

Some of the other funds that we worked with is Sequoia. Sequoia is not as well known in the crypto space. They’re extremely well known in the non-crypto space. They’re actually probably one of the world’s best investors, especially in Silicon Valley. And so working with them has been extremely great in terms of hiring or getting advice on how to run a company and kind of everything in between. So they’re a great partner as well.

And then we have some really great angel investors who have either built layer-I blockchains themselves, so for instance, one of our angel investors is Juan Bennet who worked on Filecoin. And then we have other angel investors like Jeff Weiner, who is the CEO of LinkedIn, who are just really great supporters again for general company-building advice and stuff like that. You would be surprised that even though you might be working on a crypto project, a lot of the problems that you are facing are not crypto-specific but are company specific. How to hire the best people, what happens if you need to let somebody go? What happens if there’s a problem within the team? What happens if you need help with payroll structure? So having the support of crypto investors as well as non-crypto investors is a really great strategy.

Q3. We’ve heard about Iron Fish’s focus on privacy and decentralization. Can you tell us more about how the network ensures the privacy and security of its users’ transactions?

I guess first, we’re going to talk about the decentralization aspect. We strongly believe that decentralization matters and I think it’s going to matter a lot more in the future. And again, proof-of-work is a mechanism by which people have less friction to join your network. If you look at some of the proof-of-stake networks that have recently launched, the number of validators and the number of full nodes they have is fairly low. So for instance, they might be under 1000, sometimes not more than 200. And that’s for some of the top projects. There are a couple of reasons for that. Some proof-of-stake algorithms literally does not allow quorum above a certain size. So Cosmos, for instance, even caps how many people they might have in terms of their quorum of other projects. Because of the overhead, it’s not feasible to have more full nodes.

And so for Iron Fish, it’s a proof-of-work project, meaning that anyone with a laptop can just join, right? And so for our testnets, we actually ran three testnets, the entire testnet period was a little bit over a year. So we definitely tested it for quite a long time. But in our third and final testnet, we had 60,000 nodes online, which again, was an incentivized testnet. So there’s probably some reward structure that invited people to host more nodes. I’m not going to hide that. But 60,000 versus a couple of hundred nodes, in my opinion, really does matter. If you lessen the friction for people joining, more people are going to join. And the more people that you have, the more decentralized your project is. So for Phase Three, we had 60,000 nodes. Again, I’m going to acknowledge that some people probably tried to game the system and ran more nodes than necessary to get more points. For Phase Two we had roughly 11,000 nodes and we didn’t notice any activity of duplication. 11,000 nodes is a great number. Bitcoin right now is roughly 15,000 nodes online. So getting a testnet that is roughly the size of Bitcoin’s network was quite incredible. And again, it’s because if you lower the friction, people are going to join.

In terms of privacy, when we look at the space, what is crypto missing today to become a truly kind of borderless neutral, unbiased payment system? Privacy is the biggest gap that we have today, in my opinion. If you think about how crypto works today, it’s kind of like a Twilight episode or a Dark Mirror episode to have everything so out in the open. If you imagine that we use crypto today for our payment system with the high transparency it has right now, then everything you do is literally out in the open. So for us, it’s really important to bring about a system that gives people the privacy that they might actually already be used to in the non-crypto world, within the crypto world.

So, how we think about privacy in Iron Fish? Again, every single transaction is encrypted, meaning that it is private. And every single account has something called a View Key (ovk). A View Key (ovk) is kind of what it sounds like. Using the View Key (ovk), you can actually see the entire transactional history for that account. So, you can see all the money that has been going in and everyone who has ever sent you money. And likewise, when you send money to somebody else, the View Key (ovk) will show the entire transactional history, kind of similar to a bank statement that you might be used to. With the View Key (ovk), you can stay compliant if you’re a regulated entity by providing an audit. If you need to provide an audit yourself to someone, you can give them the View Key (ovk). We think about privacy in terms of a balance of how do we provide really good privacy to users and how do we provide the tools to regulated entities in order to stay compliant. That’s what the View Key (ovk) is all about.

Q4. What kind of utilities and tokenomics can we expect for Iron Fish’s native token IRON? Are there any noteworthy potential use cases for the token in the future that the community should be aware of and how do you see it being adopted in the future?

We kind of think of Iron Fish in steps. The first step is to launch Mainnet. We think of that as a very foundational step for how we launch Iron Fish as this fundamental layer where transactions are fully private, where we can represent custom assets. And then the next step is, we want to work on bridges, either through partnerships or building bridges ourselves from Iron Fish and to other chains, specifically transparent chains so that Iron Fish can be this privacy platform. The utility of Iron Fish is really how do we provide privacy to the crypto ecosystem. We don’t see Iron Fish as competitive with other projects. It is a collaborative part of a collaborative project to other projects. If you have an asset on Ethereum or if you have an asset on any other chain, we see Iron Fish adding more value to existing assets and not necessarily competing with other chains. I want to focus on that we’re a very collaborative project. We’re not trying to say we’re better than anyone else. We’re actually trying to say looks like crypto is amazing. Here’s a layer that actually makes it even better.

In terms of utility, every single transaction for Iron Fish is going to require a fee. The fee is going to be paid in the native token IRON, kind of like for Ethereum, gas is paid in Ether. If the network provides more value, then the price of Ether goes up because the demand for Ether goes up. In order to pay the transaction fees, we see IRON as the same thing. The Iron Fish network provides privacy for other assets. All transaction fees need to be paid in IRON. With that property, that’s the utility of the IRON token, is basically how do you provide privacy to other assets in terms of tokenomics. We did publish a full paper explaining its tokenomics. Our Tokenomics are a bit different than other proof-of-stake projects. We are more similar to a proof-of-work project where the inflation in the first couple of years is going to be much higher and then the inflation is going to go down drastically after four years. The way we think about that is because of the inflation, the network, actually is distributing more circular supply to the community, meaning miners, than insiders, over the course of four years. To kind of wrap it up, we do see Iron Fish again as a privacy platform. And the token has the utility of providing that feature.

Q5. What steps are Iron Fish taking to ensure that the network remains decentralized over time?

I think about decentralization in several ways. One is how decentralized is the actual network, how decentralized is the actual community, and how decentralized is the repository or, who’s contributing the code and features. Firstly, how do we keep the network decentralized? That one is pretty easy. Throughout our testnets, for instance, we personally have run very few nodes. The Iron Fish team practically ran like zero nodes in comparison to how many nodes the community ran. And again, for Phase two and for Phase three, we had between 11,000 to 60,000 nodes, even though we did not contribute any or very few full nodes ourselves. So I think for network decentralization because we’re proof-of-work, especially in the time that most new projects are shifting to proof-of-stake and a lot of miners are looking for a new home to mine a proof-of-work project. I think we actually have a really healthy community around mining, hosting full nodes, and keeping the network actually decentralized.

The second step is how we keep the community decentralized. I think we actually have done a really good job there as well. Our Discord is almost 50,000 people speaking over 20 languages from all over the world. When we did our testnet, we asked people to self-identify what country they’re from and we have a really great breakdown of people from Hong Kong, Singapore, Russia, Ukraine, China, Japan, Vietnam, Philippines, etc. We have people all over the place and we have different channels with different languages for all of them. We’ve had Telegram communities for those specific languages being formed and that was all organic. It was pretty incredible to see this huge Russian community form a Telegram without us really even doing anything about it, and seeing people help one another in different languages and answer questions about how do I host the node, how do I fix this installation issue, and so on. So I think our community is actually really decentralized and it happened organically and honestly, I’m not sure how that happened (chuckles). I feel very humbled and very grateful for the community that we have because it’s actually a very healthy one. If you go into our Discord channel, most of the questions that you’re going to see are very much about the tech, like how do I run a full node, please help me, and so on. And we have a lot of long-term community members who have been actively helping people for almost a year. We have some community members that have been in our Discord channel helping the community for literally over a year. And that is just, again, incredible to see. And I’m very grateful for it.

The third step is how we keep the repository decentralized. So right now, the Iron Fish engineering team is by far the biggest contributor to the code base. We do have some open-source contributors and we actually even have a pretty good amount. We have roughly 50, I believe, which in comparison to other projects like contributing to the core blockchain, is a lot harder than just writing a smart contract on top of the system. The fact that we even have that menu is again, a really great sign. Post-mainet, we are actually going to be splitting into Iron Fish Company and Iron Fish Foundation. The role of the foundation is going to be to increase the ecosystem of Iron Fish, promote more open source developers, promote more projects building on top of Iron Fish, promote bridges and partnerships and all that good stuff. That is probably the area that we need to work on the most. And it’s probably the hardest area because writing code is definitely way more friction than any of the other steps. But I think we’ve done a really good job with decentralization on the other two that I talked about.

Q6. Can you tell us more about Iron Fish’s focus on community involvement and how the project is engaging with its user base to drive development and adoption?

That’s a great question. The way we view community is, again, how healthy is the network and how much we can build with Iron Fish. So how healthy is the network? The way you can contribute today is by figuring out how to run a full node. We have made it, in my opinion, pretty easy, but we are always learning how to make it easier. So if you want to run an Iron Fish full node right now on your computer, all you have to do is open up a terminal command window, type npm install -g ironfish. Wait for that to download. Now you have Iron Fish, the full node. You open up another window, you do Iron Fish Start, and you have a node that’s already syncing and ready to go. It also comes with a built-in miner.

It’s not the best miner, it’s more of a proof-of-concept. But if you want to start that, you open up another terminal tab and you just do ironfish miners; start, and now you have a miner that’s fully connected to your full node and you’re ready to go. So this is obviously one way that you can kind of contribute to Iron Fish, by making the ecosystem healthier, by contributing your computer to participate in the Iron Fish network. What we’re seeing right now is people are actually actively building new features that we haven’t even asked them to do to make the Iron Fish ecosystem better.

One example of that is in our second and third testnet, what we saw is that some professional miners who have started to contribute to the testnet have developed a closed source, meaning that it’s not a shared implementation of Blake3 for the GPU. To give you a little bit more context, the hashing algorithm is Blake3, and we chose Blake3 because it’s not ASIC-resistant, it’s actually ASIC-friendly, but there is no ASIC for it yet, and there is no other layer, one, that is using Blake3, to our knowledge, as their main hashing algorithm. So, what that means is if there is an ASIC that is developed for Blake3, it’ll be fairly loyal to Iron Fish. As we are the only chain that is currently using Blake3. If I’m wrong, please let me know. When the community saw that there were mining pools that were using closed-source GPU implementation of Blake3, independently, there were actually some community members that are working on their own version of an open-source Blake3 implementation. And even if it’ll be slower than, let’s say, a closed source when it’s coming from the mining pool, at least we have an open-source implementation that we can work off of as a starting point. So, that’s pretty amazing to see as well. So if you’re curious about GPU implementations of different hashing algorithms, that is definitely one way you can contribute.

And then ultimately, we want Iron Fish to be the privacy platform for crypto. And what that means is we need integrations with other chains. So how do we build bridge support? We were already kind of talking to some people who are managing a bridge from Bitcoin to Ethereum, and they are super excited to work with Iron Fish because there’s no actual private Bitcoin today. And if we can bridge Bitcoin to Iron Fish, you could actually, for the first time ever, have fully private Bitcoin and Iron Fish, which is super exciting. So if you’re excited to work on bridges or have any experience working on bridges, we welcome you with open arms, please come to our Discord or email us or ping us or tweet at us. We’re definitely looking for anyone with that experience or knowledge for sure. And then lastly, we want Iron Fish to be seamlessly integrated into a lot of the tool stacks that people use in crypto today. So wallets are definitely a big one. Our vision for Iron Fish in the long-term future is kind of like how you use HTTPS today. Most people don’t even realize that they use the strongest encryption available to them right now just to view a cat photo. We kind of view Iron Fish as that in the future as well. We want Iron Fish to be the plumbing for crypto, where people use Iron Fish without even realizing that they’re using it to gain the privacy that they might want. So, obviously that’s a much longer-term vision, but we need help from everyone to make that happen today in terms of integrating it into Wallets and other tool stacks that people might use.

Q7. We’re curious to hear more about Iron Fish’s roadmap for 2023. Can you share any updates on the project’s advancement and the team’s resolution to accomplish its goals? What is Iron Fish’s roadmap for 2023, and what milestones can we expect to see achieved?

For sure, yeah. And I do want to preface that this is not a guarantee or a promise that these things will happen. But yeah, I can talk about some of the things that the team is going to be working on post-mainnet. There’s going to be mostly three efforts. The first effort is what we call Integration. So, bridging is definitely going to be in that category. How do we bridge Iron Fish to some of the transparent chains (probably starting with Ethereum or Bitcoin) to bring those assets over to Iron Fish so that those assets can live on a fully private layer. That’s definitely going to be one huge effort.

The other effort that we’re going to be working on is how do we increase programmability for Iron Fish. If you think about any privacy project, the holy grail of any privacy project is how do you have privacy plus programmability. And there are different projects that are going about it in many different ways. So the strategy that we are planning to go with is how do we have a Layer Two that is probably powered by zero-knowledge proofs because every single transaction for Iron Fish is already based on zero-knowledge proofs that would validate the state of layer two. The way we’re thinking about programmability is the base layer, meaning layer one for Iron Fish is fully private, it does not have smart contracts, it’s kind of very rigid in how it works and Layer Two will provide more programmability but lose some of the privacy. And the reason why we kind of went with that strategy is most of the use cases that we’re seeing that have been really working in crypto actually require some transparency. What people really want is actually privacy on the base layer and not necessarily on the programming kind of layer. And so it’s going to be a fairly large project that we’re just now starting to kind of scope out. I’m not even sure how long it’s going to take us, but it’s definitely something that we’re going to be focusing on how do you basically add programmability to Iron Fish as a layer two solution.

The third category of things we want to work on is maintenance, continuously making iron fish better. Again, every single Iron Fish transaction is based on zero-knowledge proofs. We already have a ton of ideas for how to actually make transaction generation faster. How do we swap out a different hashing algorithm, for instance, to make transaction generation faster? How do we introduce more features such that integration with Wallets might be easier? How do we continuously make optimizations to Iron Fish cores so that syncing works better, storage works faster, and so on.

So it’s kind of like three buckets, two buckets are more future forward-looking of how do we increase more participation with Iron Fish through bridges. The second one is how do we introduce programmability to Iron Fish. And the third one is how do we continuously make the poor project better. Because you can’t forget about that. I think a lot of teams in crypto kind of shoot for the moon and they kind of overpromise and underdeliver. And for us, it’s really important that we kind of take things step-by-step and make sure that we continuously make the core project better as well.

Q8. What are some challenges that Iron Fish may face in the coming years, and how does the team plan to address them?

I think there are two categories of challenges. One is on the technical side and the usability side and I’ll be very honest, the second one is going to be on the regulatory side. Iron Fish is a US-based project and as such, we have to comply with US regulations. And I don’t know if you’ve been paying attention to the news, but people don’t fully understand what the US regulation currently is and I’ll be very open, the SEC is a body of the government that tries to protect the consumer. So for instance, the SEC is responsible for making sure that crypto projects don’t scam users. That’s a pretty good goal. But the way they’re kind of going about regulating this space is through enforcement, not through regulation. So what I mean by that is right now Coinbase basically got what’s called a Wells Notice from the SEC, meaning that they are about to be sued even though Coinbase has traditionally always tried to do right by the customer and always tried to do follow all the rules as they understand them so far. So as a US company, especially in crypto, especially dealing with privacy, a lot of our efforts are going to be on the regulatory side to make sure that regulators and policymakers understand what Iron Fish is actually trying to do. We are not trying to make it so that bad actors have access to untraceable money. Our goal is how do we protect the average consumer from leaking all of their financial data out in the open for everyone to see.

And so just having that education and explaining what Iron Fish is actually attempting to do is closer to the non-crypto financial paradigm we have today than the crypto paradigm we have currently. That’s going to be a lot of effort and so definitely one of the challenges that we are kind of seeing ahead of us. And honestly, I’m kind of excited about that challenge because we need privacy for us to have a healthy society in general. It’s also a very pragmatic way to approach crypto. So definitely excited about that challenge but it is going to be a challenge for sure.

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Community Questions

Q9. Could you please explain a little bit more about the incentivized testnet program on your website?

The incentivized testnet has officially ended. It ended roughly a month ago. The reason why we ended the program is that the team right now is fully focused on the mainnet launch. We ended that program as part of that focus. But the incentivized testnet was a program that ran throughout three phases of our testnet to basically reward participants in order to help us test Iron Fish.

We had three phases. The first phase tested out whether or not miners had a good experience mining Iron Fish. The second testnet really stress-tested the system. We incentivized people to spin up more full nodes and send us more transactions. So for the second best testnet, because we incentivize transactions, we processed almost 40 million transactions in Iron Fish. Again, every single transaction has multiple zero-knowledge proofs associated with it. In our second test net, we actually processed more zero-knowledge proofs than pretty much any other chain combined, which was pretty cool to see.

And then the third test net, we really wanted to test out the multi-asset feature. So every single kind of testnet phase had a goal associated with it. And then we rewarded the participants who helped us test out those features. But yes, it is unfortunately closed as we’re getting ready for maintenance, which is in two days. The team is definitely hyper-focused to make sure that goes well.

Q10. How does the multi-asset feature of Iron Fish provide advantages to both users and bridge providers when engaging in private transactions involving different types of cryptocurrency assets?

The multi-asset feature lets a user create a custom asset. You can think of it as a very limited ERC-20 alternative to Iron Fish. The reason why we did that is primarily so that bridge operators could work with the Iron Fish to provide wrapped assets on Iron Fish of the asset that they’re working with.

To give you more context, most bridges work in three steps. The first step is you escrow the asset on the origin chain. The second step is that the bridge operator somehow proves or observes that the user did indeed either freeze or escrow their assets on the origin chain. And the third step is that the bridge operator mints a wrapped asset of that asset on the destination chain. The multi-asset feature lets a bridge operator mint a wrapped asset on Iron Fish that represents the asset on the origin chain. So that’s partly why we build that feature is to kind of achieve this vision that Iron Fish is going to be the privacy platform for Web 3, but it also allows people to do custom native assets as well. For instance, if we do work with something like a non-algorithmic stablecoin provider like USDC for instance, you could have a native USDC on Iron Fish because you could just mint that asset. Unfortunately, we cannot do anything like an algorithmic stablecoin because again, Iron Fish does not currently support smart contracts. It just kind of supports the concept of an asset. So kind of a very limited scope, ERC-20, but we again are working on programmability in the long-term future to address those cases as well.