Empyreal Enclave: The Covert Path to Yield and Privacy

Originally published on Medium

At the heart of financial sovereignty lies privacy, a cornerstone of the evolving decentralized finance (DeFi) landscape. Embarking on an ambitious path, Empyreal introduces an inventive solution to this challenge — the Enclave.

Empyreal wants to flip the typical understanding of blockchain transactions as “transparent and traceable” on its head. We’ve devised a novel method to encrypt transactions while earning yield simultaneously. This approach reinvents the concept of financial privacy by introducing capital efficiency.

Built using the first confidential EVM, Empyreal has built a layer on top of Arbitrum Oasis Sapphire to create encrypted state. This allows token holders to wrap into the enclave, make transactions, and unwrap their tokens back to any wallet using end to end encryption. Not even Empyreal will be able to determine the transactions happening inside the enclave. For this reason the user will need to generate their own private key for encryption.

This second private key can be updated at any time so there’s no risk in losing it. A user is able to sign a message with their existing wallet to approve a new private key, and this invalidates the previous one. Losing this private key is also not a high risk, it just allows people to see your account balance so it’s not as big of a security risk as the private key used for your wallet address. Users should protect this, but they can delete it after each use or store it in a secure location if they are concerned with people being able to see their current account balances.

How does the Enclave work?

Typically, each blockchain transaction leaves a trail, open to analysis and interpretation. Empyreal alters this landscape by enabling a trustless yet private transactional environment within the Enclave. This introduces an entirely new dynamic — you can now control, transfer, and manage your assets while maintaining privacy.

Envision a system where typical transactions can be conducted under a veil of confidentiality. From deposit to withdrawal, your financial activities remain shrouded from prying eyes, secure within the Enclave. But this cloak of secrecy doesn’t come at the expense of productivity. In the coming weeks we will be rolling out yield bearing opportunities inside the enclave, so users will be able to keep their funds in a secure, encrypted environment, but not sacrifice any yield opportunities.

Opening the door to such possibilities, Empyreal spearheads a new wave of innovation and value creation in DeFi. This is the beginning of a new meta, one where DeFi doesn’t always have to be synonymous only with transparency, but embraces the benefits of privacy too.

Being able to privately transact with tokens is the first step in building a layer on top of the existing DeFi ecosystem that is entirely MEV resistant. By preserving the privacy of a user’s transactions, they are able to interact with a protocol without the risk of frontrunning or being targeted by copytraders. There is still a lot of work to do to bring these features to more users and protocols, but the token is the first step.