Privacy as a public good – shielded pool subsidies

Bengt wrote this great article that explains one of the main taglines for Namada privacy as a public good. The design choice of supporting shielded set incentives is not an arbitrary one. Bengt’s article explains it very well, focusing on the economics behind this feature on Namada.

And this thread can be used for feedback or discussions on topic, feel free to comment!

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@bengt nice article, it is cool to see the mathematical analysis on the shielded pool subsidies.

I have a couple of comments!

Strictly speaking, privacy itself is not a public good because although it is not rivalrous it is excludable. Preventing users from entering the shielded pool is trivial.

I personally would not have made the argument that privacy is excludable since there are technical ways to prevent a user from entering a shielded pool. I assume that may be for some potential OFAC compliance reasons? Over time, won’t there be shielded pools created that ideally have no guard rails?

I guess to me I see this more that the state is against (financial) privacy being a public good, even though people may in fact want it to be treated like something that is non-excludable, and a basic right, as opposed to something nefarious where access to it needs to be blocked. Right?

On Namada the shielded set is subsidised, so that the initial users do not depend on the existence of a sufficiently large shielded set. Instead, the subsidy is programmed to ensure that no matter the size of the shielded set, there is sufficient incentive for assets to enter the shielded set.”

Near the top of the article it mentions the above, yet it never talks about this in detail in the actual article text. I was hoping to understand the application of the subsidy better in relation to Namada. I think it’s definitely neat to incentivize the initial people supplying assets into the shielded pool to build up the anonymity set, but would like to hear more about how this will work in practice (e.g. how long do they have to keep assets in the pool to be able to claim the subsidy? and other mechanism design details)


Hey @stellarmagnet, thanks for the insightful comments! :grin:

I agree with your first point and am also hopeful for a world with many censorship-resistant shileded pools that are free to enter. When I said privacy was excludable, I guess what I was getting at was the point that the shielded set could exclude some peoples’ consumption. More precisely, the shielded set is non- non-excludable, where non-excludable here defines a good which cannot be excluded from others’ consumption. I think this is the correct term, as “excludable” might mean that it is being excluded from some people. :sweat_smile:

On the second point, the reward/subsidy schedule is something we have not yet implemented (only specced out) and therefore I didn’t feel comfortable discussing details beyond what can be found at Hopefully once this becomes more clear, I can update the article to provide these details :smile:

Just to respond to this point specifically - the rewards are paid per-epoch for assets kept in the shielded pool, and the reward rates vary according to a PD-controller which targets specific amounts of specific assets kept in the shielded pool (these assets and amounts are set by Namada governance). Assets can claim the subsidy after the first epoch in the shielded pool, and they can keep claiming as long as the assets stay shielded (but there is no need to claim every epoch; rewards can be claimed in bulk later). Rewards claimed are claimed in the shielded pool directly (otherwise this would be a privacy leak); they can then be unshielded later. There are a lot of design constraints for privacy incentives which are expanded on in more detail here (the same link @bengtlofgren posted); this was the best design we found which satisfied all of these constraints.