It's getting harder and harder to stay anonymous online, and the crypto space is hardly a refuge. Crypto privacy has suffered another blow as LocalMonero, a peer-to-peer exchange for the privacy coin Monero (XMR), has ceased its services with immediate effect.
In April, Kraken terminated support for Monero, forcing users to close their positions. The planned closure of zkSNACKs Coninjoin privacy service for Bitcoin due to compliance reasons is also a major setback for privacy enhancement. In the backdrop of these developments, the Tornado Cash legal saga continues.
The announcement from LocalMonero arrived yesterday, nearly seven years after the platform launched. The company cites "a combination of internal and external factors" as a reason for closure. Registrations have already been disabled but registered users are allowed to trade until May 14. The deadline for accessing accounts and recovering funds has been set for November 7, 2024. This includes all trades and ongoing disputes.
Despite its decision to terminate the service, LocalMonero's team claims optimism about the future of the privacy-focused cryptocurrency, citing the forthcoming launches of Haveno, Serai, and other DEXs, atomic swaps, and the coming addition of Full-Chain Membership Proofs (FCMP) – a privacy-enhancing replacement for rings within the Monero protocol.
Considering "the continuing and rapidly accelerating development of the Monero protocol, we're confident that Monero's future is bright, with or without our platform" – the release reads.
What is Haveno DEX?
Haveno is a currently developed non-custodial decentralized exchange for crypto and fiat currencies built on Tor and Monero – a privacy-maximizing combination. The platform will run all connections between users through the TOR network. It aims to be user-friendly and vows to support Monero development, with part of every fee earmarked for the benefit of the network. The platform is written in Java (back-end) and ReactJS (UI/front-end).
What is Serai DEX?
Serai is another DEX exchange under development aiming to support Monero trading. The platform will enable users to swap Monero for Bitcoin, Ethereum, DAI stablecoin, and more, and earn fees for providing liquidity. The platform is fully decentralized and open to inspection. Serai has been written in Rust to ensure efficient and scalable architecture.
What are atomic swaps?
Atomic swaps are a method DeFi users can use to directly exchange cryptocurrencies from different blockchains without relying on a third-party. Atomic swaps use a smart contract called a hashed timelock contract (HTLC) where each party deposits their cryptocurrency. The exchange is completed by revealing a secret key, allowing users to claim the funds.
This eliminates counterparty risk, enables trading between any cryptocurrencies, provides more privacy, and reduces fees compared to centralized exchange. Drawbacks include technical complexity, limited cryptocurrency support, and slower transaction times.
What are Full-Chain Membership Proofs (FCMP)?
Full-Chain Membership Proofs (FCMPs) is a proposed privacy enhancement for the Monero cryptocurrency that aims to replace the existing ring signature mechanism. Monero rings have supported a high level of privacy for senders since the launch of the cryptocurrency. However, they have proved vulnerable to attacks such as poisoned outputs (EAE attack) and troublesome in chain reorganizations, and enable statistical analysis.
According to its proponents, the Full-Chain Membership Proofs mechanism effectively deals with all the above-mentioned risks, delivering a high level of user anonymity. Roughly speaking, FCMPs prove that the output being spent is one of any output on the entire Monero blockchain rather than just a subset of outputs (as with the current ring signatures), expanding the anonymity set from around 16 to over 100 million outputs, significantly improving sender privacy.
FCMPs are based on Generalized Bulletproofs and Curve Trees, which enable more efficient proofs compared to the current ring signatures. They also introduce additional features like transaction chaining, outgoing view keys, and forward secrecy, improving the overall Monero protocol.
There are two main FCMP proposals: one that integrates with the upcoming Seraphis upgrade and another called FCMP++ that aims to be deployed more quickly without requiring the Seraphis migration. For more information check the original blog post.
