Understanding Liquefaction

Liquefaction introduces a revolutionary approach to digital asset control, allowing owners to delegate access without transferring ownership.

How It Works

Liquefaction is a wallet platform that uses trusted execution environments (TEEs) to enforce fine-grained access-control policies on private keys. By encumbering keys with programmable rules, it allows assets to be shared, rented, or pooled while preserving privacy and leaving no on-chain traces.

Key Concepts


  • Encumbered Key → The system generates a key pair inside a Trusted Execution Environment (TEE). We call this the "encumbered key", as it is not accessible to anyone, not even the creator.
  • Access Control → Smart contracts define the rules and limitations for the encumbered key, including Time-based restrictions (e.g., 2-minute usage windows) or Action limitations (e.g., only allow transfers to specific addresses).
  • Asset Segmentation → You can define access control mechanisms on a per-asset basis, allowing for two people to have exclusive access to different assets that lay in the same wallet.
  • Many Applications → This simple construction has many applications, from the creation of fully private mixers, to the use of Oasis as a Bitcoin L2 and even Locked token trading! You can find all the applications of Liquefaction below.

Applications of Liquefaction

Governance

Voting

Enable private DAOs to operate within public DAOs, allowing for dark DAO voting systems with private delegation capabilities.

Quadratic Voting

Distribute voting power across multiple accounts while maintaining identity systems integrity.

Multisigs

Enable selling access to key participation in multisig structures with enhanced privacy.

Reputation

Soulbound Tokens

Allow temporary renting of non-transferable NFT proofs while maintaining core ownership.

Transaction History

Enable purchasing accounts with specific transaction histories for exchange requirements.

Airdrop Rights

Trade access to accounts that may be eligible for future airdrops.

Loyalty Points

Split rewards across multiple accounts while maintaining account integrity.

Wash Trading

Create less traceable trading between seemingly unconnected accounts.

Privacy

Trading Locked Tokens

Trade locked tokens and bypass transfer restrictions while maintaining ownership rules.

Private Asset Trading

Execute trades across multiple user wallets without on-chain transactions.

Private DAO Treasuries

Enable raising and storing funds in a decentralized, private manner.

Secret Contract Payments

Pay bounties by revealing secret keys of encumbered wallets.

Hidden Privacy Pools

Create Dark DAOs that enforce inclusion through association-set proofs.

Ticketing

Token-Gated Ticketing

Transfer event or metaverse access to users without transferring the underlying asset.

Provenance

Faking Theft

Simulate asset theft by secretly maintaining access to transferred funds.

Dusting Attack Mitigation

Prove that unsolicited token deposits haven't assumed control of assets.

Cross-chain

Overlay Smart Contracts

Treat encumbered addresses as smart contract interfaces across different blockchains.

Note: While liquefaction enables many powerful applications, some uses may have adversarial implications. It's important to understand both the constructive use cases and potential misuse scenarios.