There are a couple of different ways XMR could be integrated:
Enable users to deposit XMR and it will be converted to RBTC for use on the RSK blockchain
Enable users to deposit XMR and it will be bridged onto RSK as an ERC-20 token (similar to how the bridges to Ethereum and Binance Smart Chain work with ETH and BNB, respectively)
In both cases users get some privacy in terms of it not being possible to tell where their deposit originated from (Monero blockchain protects their privacy to a degree). But once their funds are on RSK they lose almost all privacy (normal pseudonymous privacy model with transparent, public blockchain).
What we could do to add even more privacy is add a concept of a “shielded account”. This shielded account would be generally useful for all of a user’s RSK activity, not only Sovryn. All funds held in the shielded account are fully encrypted: no one watching the blockchain can tell what a user’s shielded account balance is, what assets they hold, or what transactions they have sent to/received from other shielded accounts. Users can deposit RBTC and other RSK assets into the shielded account and then make transactions depositing to or withdrawing from various contracts on RSK (including Sovryn).
Blockchain observers will only see an amount of some asset leaving the shielded account contract and going into a particular transparent contract, and vice versa they will see an amount of some asset getting withdrawn from a particular transparent contract and sent back into the shielded pool, but they will not know which specific shielded account user the transaction originated from (unless a timing or amount correlation is possible, but the shielded account interface could have safeguards to warn users if a transaction they’re about to do would cause such a correlation to be possible).
wow, this sounds really awesome! thanks for taking the time to explain this to me. As I said before I am a crypto enthusiast but not very technical. I assumed attaining privacy features wouldn’t be as easy as just adding a token to the chain. This is very helpful for to start diving deeper into this fascinating world.
I guess then a question would be, if we have that in place, would there even be a use case for XMR?
Maybe some would like to still hold it and use it the pools to earn some SOV, although they would need to switch it back to it’s original chain to enjoy the privacy features… Man, there is so much to learn here and very interesting conversations happening!
So glad I joined and became a part of this, looking forward to see how the project develops!
The trust model of using XMR directly on the Monero blockchain is different than using RBTC or a bridged version of XMR on RSK. Some might argue it’s less risky from a trust/security perspective to use XMR on Monero than RBTC or a bridged version of XMR on RSK. Other than that, I would say the privacy provided by fully shielded transactions is superior to the privacy provided by Monero’s various techniques e.g. RingCT + stealth addresses. So while I wouldn’t go so far as to say that a shielded account system on RSK totally negates the use case of XMR I would say that for some users who are ok with the trust/security tradeoffs of using RSK this way that there’s much less of a reason to use Monero in this scenario.
very interesting perspective, I guess maybe some people would still want to have XMR… and maybe want to have it in the RSK chain to earn some yield while they are not using it and switch it back to it’s native chain when purchasing stuff… But given what you said (and I’ll try to inform myself more on this subject because it’s sounds really interesting) I wouldn’t be surprised to see the use of XMR diminish.
I am very happy that I am here to learn and watch the space grow, it is really unreliable what is happening. This technology can’t help but change the entire world.