What if there was a protocol that enabled trustless custody of cross-chain assets at scale? There are plenty of privacy applications that could benefit from this merge, but perhaps the most accessible use-case is bringing the value of Bitcoin into the DeFi ecosystem without depending on trusted third parties. If all goes well, the Keep network and NuCypher network are about to join forces to overtake WBTC. We believe that this may be the first Web 3 protocol merger.
In the proposed NuCypher + Keep protocol merger, called “Keanu,” the economics of each asset will only be dictated by their respective community. Currently that means no token swap, the NU community will dictate NU economic policy, and the same for KEEP. Participation in the upcoming network codenamed KEANU will be totally voluntary and governed equally between the two communities.
Figment voted yes on the preliminary proposal because we think that this merger will benefit both protocols, and we have confidence in and support the NuCypher team and the Keep team. We see this as an exciting opportunity for two communities to combine their efforts and their unique, complementary strengths to deliver real value to the Web 3 space. Figment is particularly eager for privacy features to be valued and adopted by the broader Web 3 community, and we think that tBTC v2 is the right vehicle to get things started with the help of NuCypher.
What is NuCypher?
NuCypher is cryptographic infrastructure for privacy preserving protocols and applications. Their Key Management System (KMS) is designed to address the current limitations that consensus networks have with securely storing/sending/manipulating private and encrypted data.
What is Keep?
The Keep Network is designed to enable privacy options for Ethereum applications and users. “Keeps” hold small amounts of data in the secure, distributed Keep Network, which launched with tBTC, one of Keep’s core applications. tBTC lets Ethereum smart contracts lock BTC on the Bitcoin network and mint Ethereum-based tBTC tokens, which are backed by real BTC. Unlike WBTC, Keep’s tBTC enables the trustless custody and use of BTC in the Ethereum ecosystem.
How can they work together?
Keep has scalability issues launching tBTC v2. Nucypher can unblock this. The idea here is that a new network codenamed KEANU is forming, and both NU and KEEP can each be staked to secure and capture value generated on this new network. The goal of tBTC v2 is to overtake WBTC, and the custody fees (~30 bps) for holding the BTC will be delivered to NU and KEEP stakers.
What will a merger look like?
As a token holder we expect there will be very little impact on you. If you own KEEP and are not staking, nothing should change. Same with NU tokens.
As a staker you can stake either KEEP or NU or both on KEANU when the protocol launches. You may choose to remain staking on the native network (eg. stake NU on NuCypher’s legacy network), or stake on KEANU, or stake some on each network. Figment will keep you apprised about the timelines and responsibilities involved in the staking processes as opportunities arise and change. You can be sure that any such changes will first be discussed and voted upon by stakers. Governing this new network, KEANU, will be jointly governed by those staking NU and/or KEEP on KEANU.
Broadly, we expect that you will be able to stake KEEP and/or NU with a single staking arrangement on KEANU (rather than having one arrangement for staking KEEP and then another separate arrangement for staking NU on KEANU).
Where are we now?
Both communities have voted unanimously to move forward with the preliminary proposed plan to launch a protocol merger. But there’s still work to be done.
What should we expect next?
There are still details to be worked out between the current proposal and the final DAO proposal. We should expect all details to be discussed on the NuCypher forum and Keep forum before being brought to a vote.
Most importantly, we’ll need to know the difference between staking on the legacy network (either the Keep network or the NuCypher network) versus staking on KEANU (the new network). If the current incentives remain the same, then it may make more sense to remain on the legacy networks to capture new issuance rewards, rather than to join a new network to capture usage fees. We expect to see more granular details to emerge for a final, detailed DAO proposal, and consider the current proposal to be preliminary.
The market capitalizations of NU and KEEP are different. The current number of staking nodes for NuCypher and Keep are different. Why will there be 50:50 control over KEANU?
The idea is that the 50/50 split would be based on the allocated supply. That means the split will likely be based on what can be staked, so there’s only the potential for the shared network to be a 50/50 split, but one of the communities will likely have a majority stake in KEANU. If one of the communities stakes a greater amount than the other, then they will control more than 50% of the new network.
Check out the community call here: