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How Mirage Compares

Mirage differs from other privacy tools in fundamental ways. While other solutions, mostly mixers and privacy coins, rely on consolidating various users' funds in a shielded pool or smart contract and rely on the size of deposits and number of users to enhance their privacy guarantees, Mirage makes all stabelcoin activity be the anonymity set for each private transaction while providing usage privacy that protects the users against stigma.

On Privacy Coins

Privacy coins such as ZCash ($ZEC) and Monero ($XMR) offer transactional privacy through their own volatile assets. While crypto circles generally accept their privacy guarantees, they have failed to capture the larger crypto market for several reasons:

  • Different networks and trust assumptions make interoperability harder and add another loop users must navigate. This challenges the UX and turns off users who don't trust the isolated blockchains behind these coins. Users typically purchase these coins from sketchy websites with opaque processes, or from centralized exchanges.
  • Volatile prices bring instability for real world payments and are less reliable than stablecoins.
  • No built-in forced exclusion and compliance is a good trait for a blockchain network, but combined with a privacy protocol, these networks become ideal spaces for money laundering by criminals and sanctioned entities. This taints everyone who interacts with the network. Even CEXs that don't require KYC specifically restrict purchases of these tokens to KYCed users.
  • The UX is difficult to navigate for non-technical and non-crypto-native users.

These concerns make privacy coins unattractive to users who simply want easier payments and financial sovereignty. It's unrealistic to expect a remote business owner to buy these coins and take on these challenges for payroll or daily transactions, even if they're already familiar with blockchains and comfortable on Ethereum. Privacy coins don't serve normal people who prefer regulated exchanges or banks over jumping through hoops.

On Mixers

Mixers such as Tornado Cash offer unlinkability, which is an upgrade over the transparent nature of public blockchains. However, the user experience and risks far outweigh the benefits for most users, who can simply use CEXs to achieve better privacy guarantees.

  • The sanctioning of Tornado Cash set a bad precedent for mixers and introduced legitimate compliance concerns for innocent users worried about having their funds tainted because they benefit from and help maintain an anonymity set that includes bad actors.
  • Funds typically wait for days in smart contracts, and there must be enough users who have deposited the same asset in amounts equal to or higher than what the user deposited, depending on the implementation. This makes scaling difficult and introduces serious UX issues.
  • Interacting with mixers typically means high gas costs as there are large data structures being manipulated and altered (depending on implementation).
  • As soon as you interact with a mixer, your funds are tagged and scrutinized by CEXs, on/off-ramp solutions, and other protocols.

For these reasons, although mixers remain the best current privacy solution on Ethereum, they haven't generated enough trust or proper UX to achieve adoption by everyday users and businesses.