The Phonon Protocol
What is Phonon? (First Phonon Blog Post)
Phonon is a protocol which uses secure hardware to enable private off-chain transactions for all blockchains. This lets you securely use any cryptocurrency with all the properties of physical cash.
It is a peer-to-peer system which prevents double spends through the use of unique hardware-derived cryptographic signatures. Secure hardware isn’t just limited to hardware wallets; compatible device categories also include SIM cards and smartcards which use the same kind of chip found in today’s credit cards. Phonon works with any blockchain, but the token and protocol governance framework are built on Ethereum.
Why Do Users Want This?
Phonon is Satoshi’s “Digital Cash” vision realized. The protocol enables secure, instant, privacy-preserving cryptocurrency transactions.
Phonon is a unique primitive for both privacy and scaling. Phonon is peer-to-peer so it is highly scalable and not subject to bandwidth constraints. There is no need to maintain a network of node infrastructure for the system to work.
The initial implementation of direct P2P off-chain transactions is uniquely useful on its own, but it will be an effective foundation for more ambitious applications such as:\
Instant L1← →L2 withdrawals and cross-L2 transfers. Liquidity providers with secure hardware can provide fast exits to users for a fee, without the need for challenge periods and fraud proofs. This will allow secure hardware owners to earn passive income on their holdings with low risk exposure.This is an ideal solution for cross-chain and cross-layer communications because it does not dilute economic security or rely upon a third-party validator set. It is hardware secured and instant.Private, fully trustless, cross-chain DEX. Using the same approach employed for cross-layer fast exits, Phonon can provide the foundation for a privacy-preserving cross-chain DEX. There is an opportunity for the DAO to develop such a DEX on its own or integrate the technology into an existing protocol.
Ethereum’s rollup-centric roadmap and the Cambrian explosion of useful scaling solutions has upended the old-fashioned focus on self-contained monolithic blockchains. This makes Phonon unique option for bridging liquidity between L2s and other chains.