Figment’s First Look: NuCypher

Figment is currently active on NuCypher’s incentivized testnet. Staking Hub will be hosting an AMA with NuCypher’s CEO MacLane Wilkison and CTO Michael Egorov, on February 20th at 12pm ET, to discuss staking mechanics, token distribution, data encryption, and general protocols within the NuCypher network.

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End to End Data Encryption

NuCypher is building cryptographic infrastructure for privacy preserving protocols and applications. Their Key Management System (KMS) is intended to address the current limitations that consensus networks have securely storing/sending/manipulating private and encrypted data. 

Their main offering, Umbral, is a proxy re-encryption scheme. It will enable a proxy entity to transform or re-encrypt data from one public key to another, without having access to the private keys. 

They are also working on NuFHE, which is a Fully Homomorphic Encryption library that allows arbitrary, secure computation of encrypted data.

Value Proposition

NuCypher will be designed to function as horizontal infrastructure for anyone building a dApp or decentralized protocol that’s managing private data. Broadly, this is how NuCypher’s technology could be used:

Secrets Management – Ability to store encrypted secrets in any storage backend, while allowing data owners to conditionally grant and revoke access to said secrets. 

Dynamic Access Control – Grant or revoke access to data on demand or automatically under customizable, pre-specified conditions (eg. time-based, behavior-based). 

Secure Computation – Perform operations on encrypted data while preserving the confidentiality of the inputs and results.

Where could we see NuCypher’s tech?

Medical applications – Patients could control their electronic health records by owning the data and encryption keys. How? When a patient wants to share their records with a third-party, they can issue re-encryption keys, which grants temporary access to the third-party. 

Digital Rights Management – Access controls can be embedded in encryption itself so that they follow the data wherever it goes. Encrypted marketplaces selling software, apps, photos, and other digital content may be built using NuCypher. 

Enterprise Password Management – NuCypher will be designed to manage shared credentials that employees use to access web services. This makes it easier to revoke access to specific employees when they leave.

How it will work

The NuCypher network plans to provide accessible, intuitive, and extensible runtimes/interfaces for secrets management, dynamic access control, and secure computation. 

Access will only be granted by the data owner via sharing policies, thus the data owner will have complete control over who/what accesses their data. At no point will data decrypted during this process, and private keys will not be determined by the NuCypher network. 

Data owners will grant access to their encrypted data to anyone they want and upload it to the NuCypher network. Data owners can revoke access at any time.

To retrieve data, data recipients will send an access request to the NuCypher network. If the request is valid, the data will be re-encrypted to their public key, and they will be able to decrypt it with their private key.

Encrypted data will be sent to nodes, known as Ursulas, on the NuCypher network. These nodes will then re-encrypt data in exchange for payment fees and token rewards.

The Team

The majority of the NuCypher team is focused on engineering and cryptography. They have already acquired a lot of support from the likes of Polychain Capital and Y Combinator. Their commitment to building responsibly, collaboration, inclusiveness, and organizational transparency is also worth noting.

Network token

Nucypher plans to use the NuCypher Token (NU) as a security deposit on the network, and end-users will use Ethereum tokens (ETH) to pay service fees. 

NU will have an initial supply of 1 billion, and a maximum of 3.89 billion will be minted through inflation.

Staking

The NU tokens that are staked to nodes work to increase the probability that a validator will be chosen to perform encryption services. The probability of performing encryption services is proportional to the amount staked. Nucypher’s staking model motivates nodes to stake NU for long periods, thus keeping liquidity low.

NuCypher requires nodes to specify the duration they are willing to stake their tokens. The minimum staking period is one month, and you cannot decrease the length of the staking period once you specify its duration. You can however increase the length of the staking period at any time. The initial inflation rate will be between 50% and 100% APR depending on how long each node initially commits to staking. Inflation will decay at an exponential rate via halving 4 years and 2 years, respectively. 

Validators on the NuCypher network can be slashed. Slashing occurs when a node provides a false re-encryption. Slashing for downtime is still being discussed, as well as the specific penalties for any violations.

Project Status (Testnet)

Nucypher’s Come and Stake It Incentivized Testnet is live and is open to join until at least February 7th. The first 2 phases require you to complete a variety of tasks like staking, launching a node, performing re-encryptions, and re-staking of rewards. 

Phase 3, which is estimated to begin on February 17th, will test their new token distribution mechanism entitled ‘WorkLock.’ Yet to be finalized, there will be a 3 to 4 week contribution period. NU received will be stake-locked and will only be unlocked by running a node (i.e. you can no longer “burn” ETH in exchange for unlocked NU). It will likely be uncapped with a short cancelation window after the contribution period that will serve as an escape hatch for people who would be expected to receive less than the minimum stake. This will immediately precede the mainnet launch. 

We at Figment are looking forward to watching this project grow. Feel free to join NuCypher’s Discord channel to join the conversation, and stay up to date on NuCypher developments.

Also, we hope that you tune into Staking Hub’s AMA with the NuCypher founders on February 20th, at 12pm ET.

Join us! Thursday, February 20th at 9am PT / 12pm ET / 6pm CET

Planning on staking NU?

Figment Networks will be supporting NuCypher and NU token holders at launch. Contact us for more information.

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