Noah Pravecek on privacy controls for tokenized assets

Andy: All right, Noah, uh, good to see you again. Uh, and, uh, good event here in New York City. Thanks to ZKsync, to DTCC, to EEA, helping to put this on. It’s been great. We had, uh, Dan Dhoni, the CTO, speak about all of the work that they’re doing. And specifically, I think, you know, the, the, the compelling part was, well, a lot of it, but one specific part was the four obstacles that he laid out: quantum, scalability, privacy, and one more that I’m missing. And in the privacy…

Noah Pravecek: Yeah, identity, like the KYC side of things, right?

Andy: And, and so when it came, when it came to the privacy side, he, you know, he gave ZKsync, Matter Labs a shout-out. What is the work that you guys are doing together? Why is it important? Take us from the high level and get us all the way down to the nitty-gritty.

Noah Pravecek: Yeah. So what we provide to, to the DTCC is, we have a product called Prividium Commander. So we have provided the DTCC with Prividium Commander, which allows each participant that the DTCC onboards to their digital assets Besu ledger to only see what they are permissioned to see, rather than each participant being able to see the full state of the chain itself. And this goes for the participants as well as the wallets. So really a wide range of privacy capabilities.

We’ve seen that with companies that tend to adopt our technology, they want to be able to onboard different participants but not have to have a new setup process for each and every one of them. With this, DTCC is able to control who sees what, control privacy at a very granular level, and change it at the glimpse of, like, instantly, essentially, with simple-to-use APIs.

And it really allows you to have all the best parts of privacy while not having to do a bunch of blockchain-native type privacy solutions that can be harder to use. And as Dan said earlier, 700 contracts, that’s a lot of contracts to rewrite if, if you need to rewrite all of them to use a privacy solution. With our solution, it worked out of the box with some modifications for the DTCC.

Andy: So just let me kind of get the, get this, you know, my head wrapped around it. So kind of like a blanket layer of privacy across any DTCC tokenized asset, regardless of what chain, when applied, uh, leveraging the ZK, uh, SNARK technology behind the Prividium, that effectively, uh, enables you to have a, uh, a cryptographically secured or proven private layer added to the, uh, to these tokens, or to the actions that, uh, a DTCC-registered wallet, tokenized asset owner would be able to do. It’s just an additional layer that operates in tandem with these assets.

Noah Pravecek: Yeah. So the way to think about it is, it’s a privacy, privacy API layer on top of any private blockchain environment. It, it can pair with our own Prividium Ledger, which is our private blockchain solution that is powered by, and that’s what powers it in the public networks, that’s how you keep the privacy, is, is by… but it can also deploy on other networks, such as how the DTCC is using it on networks such as, like, a Hyperledger Besu, for example. So we’re able to support across any different network, and it works via a simple-to-use APIs, so you don’t have to worry about the zero-knowledge cryptography.

But if you want to leverage the verifiability and the private execution and the high performance, we do have Prividium Ledger as well, which is our separate blockchain product. So we really have two blockchain products, which is, one is the Ledger, for anybody that wants their own ledger itself, as well as the Prividium Commander, which is the privacy control plane that can go on top of any private chain.

Andy: As you mentioned, the Prividium Commander already runs on infrastructure like the DTCC’s internal Besu network. When it come, when it came to the institutional process of, or kind of like the sales process, when it came to the sales process and the process of kind of teaching and educating the DTCC and also other, other clients and other customers, how much has the, uh, current existing model already being, uh, running on Besu and kind of other clients helped you guys to show this to other, you know, potential customers and partners? How much has your kind of traction allowed you?

Noah Pravecek: I’d say we can’t, can’t exaggerate how huge it’s been for us as a company. What we’ve seen is that we started out, as many blockchain companies do, with an idea of a set of features, of, if we solve this, if we build it, they will come. And I think it’s the old, old adage. I remember speaking to you about similar things on the shared sequencer side a few years ago, where it was, if we have this set of features, it’s going to work.

And what we’ve seen with it is that we have this private blockchain solution with Prividium Commander that’s really been expanded out. So now it’s a very much so a platform of different modules. And we’ve seen that as it’s really expanded and grown, that’s allowed companies like the DTCC to be able to build better products that are more efficient, easier to operate for their operations teams, that allow them to have blockchain-based capabilities without necessarily overthinking it.

Andy: Yeah, that’s awesome.

Noah Pravecek: ’Cause everybody thinks the ledger is the hard part for these institutions. The ledger is almost actually the easiest part for most institutions. It’s everything that comes with it, of understanding, okay, transaction fails at 3:00 a.m. and nobody for that system is up. Can you debug it on your own or no? It’s like, if you have to figure out how to debug it on your own, that turns into a whole incident. And with our software, we prioritize making it easy to debug on your own, easy to walk away from. So there isn’t that key man risk that a lot of these other solutions, I’d say, on the market have.

Andy: And the one thing that I would like to hit on that is, is, you know, extrapolating that to then what we’re really trying to do here, which is build open financial onchain rails, right?

Noah Pravecek: Exactly.

Andy: And so that’s imperative to that vision. However, obviously, you know, Hyperledger and the, the internal Besu chain exists, we’ll probably see a lot of this. How do you anticipate, uh, you know, us, you know, if each institution has a private chain, how do you, how do we solve the walled garden, siloed issue with, uh, this kind of setup that we have for DTCC, J.P. Morgan? How do you anticipate privacy, uh, kind of not just building little cryptographic private silo islands, but building a truly interconnected, uh, cryptographically secure and proven, private, interoperable state of networks?

Noah Pravecek: Yeah. So we’ve done deep investment into this as a company over the past couple of years and can’t say too much on it now, but I would say keep your eyes tuned over the next couple weeks and couple months, because we will be announcing some very exciting solutions in that space. We, we believe, to build the next greatest financial ecosystem, you need to have a great interoperability solution, and we believe we’ve come up with some, some really exciting stuff on that side. So will help solve a lot of this interconnectivity between these disparate ecosystems.

So it’s not just, hey, we’re all on this exact same solution and it’s all going to work. ’Cause at the end of the day, what we’ve seen with crypto is, one of the great things about it is that everybody gets to choose their own solutions and mix and match. And if you assume everybody is just going to use one solution to connect them all, it gets very difficult.

Andy: Yep. 100%. 100%. I love it. Um, so the DTCC’s, uh, the DTCC is going out and expanding their token quantity, as well as they’re, they’re putting out frameworks very soon, from what I talked to Dan about, to answer the “then what” question with tokenized assets, which is, you tokenize an asset, it’s private with ZKsync, Prividium, by design, or, you know, in some, in some, you know, way, shape or form. Then what? Well, then you go into a, you go into lending markets, vaults, DeFi protocols, DEXs, and you start to leverage the capabilities of tokenizing an equity and getting a lot more value and capital efficiency and productivity from it.

Noah Pravecek: Exactly.

Andy: How do you guys think about enabling privacy not only with the, the issuer level, you know, if you will, but also throughout the protocol level? Is kind of programmable privacy something that you guys are building out, you know, similar to a, a, you know, if, if Zcash is a private store of value as an asset, you know, is, are you guys building towards enabling programmable privacy at the kind of protocol and asset level with this? Like, just how do you think about that?

Noah Pravecek: The way that we view privacy is, it’s a very diverse set of problems that everybody kind of lumps into one category. It’s kind of like when people say, I work in blockchain. It’s like saying you work in fintech. You can work on, on loans, or you can be building banking as a service, and those are very, very different things. So for us, we view it as, we will expand into some of these different places, but additionally, we’re expanding into building out different workflows that make it easier for institutions to gain value when they come onchain.

A lot of the questions that we get asked is, okay, it’s great that, you, we have this solution, but now what am I going to do? How am I going to connect to my counterparties? How am I going to really get the business value out of this? And for us, that means building out these different workflows, building these private applications, and making it as easy as possible for you to get value if you are to adopt this technology, rather than saying, okay, you’re going to adopt this technology, and then you’re going to have to spend another 5 to 10 million on an engineering team to really get value. We really focus on what is the value add that we can bring to these clients. And we believe that building the full institutional blockchain platform is the way to do that, rather than just focusing on one component of that stack.

Andy: Yep. So really kind of like looking at it as an all-encompassing, because this is going to happen, right? We’re, we’re in, like, the tokenization process, but what’s coming is the, uh, tokenized asset utility era. In fact, I think that’s a, like a, a defining characteristic for, for 2027.

Noah Pravecek: Exactly. I think it’s, it’s more similar to like an AWS than, uh, Postgres, for example, where it’s like you’re coming to us as, we’re your platform to figure out your digital asset needs, versus coming to us as, like, okay, I just need the ledger, I just need this small capability. We typically find that clients will start out with some small capability and then they’ll decide, I need this, this and this. And if I’m building in-house, I need to do all of this work. And if you just build this part, it’s much easier for me, because I don’t have to worry about these system integrations.

Andy: I love it. It is. And the, the ed, education is needed as well as the implementation, right?

Noah Pravecek: Exactly.

Andy: Especially at this institutional scale.

Noah Pravecek: Yeah. I’d say education is a huge part, part of our business as well. Really helping more people understand how software is safe, how it works, how it fits their existing frameworks. Because at the end of the day, if you can’t fit existing risk frameworks, you’re dead on arrival at a lot of these institutions.

Andy: Exactly. Compliance. And DTCC has these baked-in, embedded compliance rules with their tokens.

Noah Pravecek: Exactly.

Andy: That makes two of us on the education side. Really appreciate your time. Uh, we’ve enjoyed, uh, having institutional asset managers on the show, uh, hearing their perspectives. It’s just so bullish, uh, from their side, as far as, like, what they’re trying to do. It’s a slow process, but it’s really starting to pick up steam. You guys are at the forefront. Appreciate you being a part of the conference, uh, today, and, uh, thanks for coming on.

Noah Pravecek: Thanks so much for having me.