Why Dero Is My Big Buy For 2024
I’ve been following Dero closely since early 2022 when I casually found out about its groundbreaking privacy technology called homomorphic encryption. Homomorphic encryption is a big deal because it means that Dero’s state is permanently encrypted and is updated without ever decrypting any data. The whole network acts like some sort of Faraday Cage that is impenetrable to any form of surveillance or chain analysis.
As the title of this article suggests I’ve increased my Dero position considerably in the past weeks making this my first big move in the current bull market. The reason is simple, I believe Dero has no competition in the foreseeable future and is extremely mispriced today.
1. FHE grade privacy: No privacy tech can deliver marginal utility against Dero
The cardinal definition of full homomorphic encryption states that an encryption scheme is FHE if it allows both additions and multiplications to be performed on encrypted data at the same time. As we know a blockchain is a ledger that is updated after every transaction by addition and subtraction of the respective balances of sender and receiver. As result of this, since even with an FHE scheme we would resort only to subtractions and additions, in the realm of blockchains an encryption scheme that performs addition/subtraction on encrypted data is equipotent to an FHE scheme.
Dero uses the El Gamal encryption scheme which is not an FHE scheme according to the cardinal definition of FHE. However, since Dero is a blockchain and as result requires only addition and subtraction, it has the same degree of unbreakable privacy as if it was using an FHE scheme. In fact even an FHE scheme would still be used only for additions and subtractions. Although there are no other blockchains (in mainnet) to date using FHE, even if they were to appear, they would offer no marginal utility and come with more computational load.
NB: The above is the reason why I personally disregard as buzzword compliant vaporware/scams any projects promising to be FHE per the cardinal definition of FHE because there is no marginal utility when compared to Dero. A quick research into the state of development of any FHE L1s will reveal they consist only of roadmaps and have mainnets scheduled for mid 2025 which is when the current bull market will most likely end.
2. Engram: Dero’s GUI superwallet (with encrypted messenger integrated)
Another reason I’m bullish on Dero is that its GUI superwallet Engram just leapfrogged from pre-alpha (released in 2022) to beta (released in December 2023). While there have been community mobile/GUI wallets, Engram is an official wallet. In Monero the release of the GUI wallet had a huge impact on adoption and price action, I believe a similar effect on adoption is highly probable here. Engram leverages Dero’s tech to deliver HE privacy through noob friendly user interfaces and features. Among others, Engram even has what is the most private p2p messenger to date allowing wallets to send and receive messages from each other.
Engram users also can browse the blockchain directly/permissionlessly for other assets or tokens without having to resort to any third parties. This is thanks to Gnomon. Gnomon is a software custom built for Dero by Civilware, a skunkworks style team of devs that operates under the guidance of the DERO Foundation and is separate from the Dero core team (Captain).
3. Unparalleled Protocol Level UX
I have played around with POC and not-so-poc Dero dapps since this summer. To date, I still haven’t come across a single proof of work chain that comes even close to Dero in terms of UX. Community devs in Dero have built, among others, a Uniswap style dex and an NFT market. The best proof of work defi I tried this summer in terms of UX was Alephium (currently sitting at ~$114M mcap). A single swap on Alephium takes more than one minute most of the time, on Dero ($39M mcap) it has always been few seconds.
Other theoretical Dero competitors in the POW Defi landscape include Kadena ($322M mcap) and Ergo ($116M mcap). None of these however offer a better experience on a protocol level and all of them are transparent, while Dero offers the highest degree of privacy possible through homomorphic encryption. Nobody knows what you own but you. Another dapp, the ETH-DERO bridge, is integrated in DeroDEX and makes it possible to buy/sell Dero directly onchain. I’ve personally used this to buy Dero in small clips throughout the summer with no issues whatsoever.
Finally there was a community initiative to fund a CEX listing on Mexc which was organized through a fundraiser community dapp called Private Islands. Thanks to Dero’s smart contract capability the fundraiser had a refund function that delivered automatic refunds to all contributors when the campaign did not meet its target. Private Islands is currently being revamped.
Despite being under $50M for most part of the past year, thanks to its unparalleled protocol UX we have already seen a remarkable first generation of POCs. Most of these are being iterated as we speak but above all constitute, in my opinion, living proof of Dero’s future potential as defi hub.
4. Product Market Fit
A clear trend for the past 12 months has been the implementation of stricter KYC policies by all major exchanges across the board, from Binance to Kucoin and even Bybit. Stricter KYC & AML regulations (see also MiCA in EU) implies less overall privacy as non KYC exchanges are used mainly by privacy savvy users. This will inevitably translate into more demand for privacy coins in general because there will no longer be work arounds such as non KYC CEXes that so far have served as fortresses of privacy.
Moreover, fresh research into one of the biggest real-world crypto adoption case studies, El Salvador, shows that lack of privacy has already become a huge headwind for adoption of Bitcoin payments in the country. To date there are no defi competitors for Dero in the privacy front. Dero is the sole private L1 today and it has also already bootstrapped a defi ecosystem. This makes it a perfect fit, as network, for privacy savvy users to fall back on.
5. Hardcore Cypherpunk Team With Proven Track Record
Captain has an impeccable record when it comes to development, from the early days. DeroHE itself (finalized and released in Q1 2022) is the end product of several years of R&D and iterations. It was built entirely from scratch, after an attempt to first add smart contracts to Atlantis, which was based on Cryptonote so on UTXO. Since UTXO proved to not be ideal for smart contracts, an entirely new protocol was built using the account model.
The new protocol is what we today know as Stargate or DeroHE. Stargate comes with pieces that were tailor-made for Dero to deliver a degree of disintermediation and permissionlessness that is resistant even to state actors. Dero’s database for example, called GravitonDB, was custom made for Dero and is open source. Dero’s code itself is also open source with research only license to prevent others from forking it for pump and dump copy pasta scams.
There is a historical reason for this that those who know Monero’s history will comprehend.
If you consider the coding skills Captain has shown to possess and other elements such as their writing style and some early posts like the one above, it becomes clear that they are most probably either the same team as thankful for today or closely connected to it. Among others, Captain:
- coded Atlantis based on the Cryptonote WP in Golang in 3.5 months (the only other coder to have coded from the Cryptonote WP was thankful_for_today)
- caught the Monero double wallet accounting bug before the monero core team itself. Monero core was the group of people led by fluffypony that hijacked bitmonero from the original coder thankful_for_today.
The research only license is probably a precaution from a lesson learned with bitmonero. To date there have not been any hacks or exploits on DeroHE.
Final thoughts
Dero is a $39M mcap L1 with the most advanced privacy tech in the market and with the best defi UX at a protocol level among POW chains and even most POS chains. Among privacy chains, on the other hand, Dero is the only L1 to have smart contracts built on top of the private L1 and has already bootstrapped an ecosystem and userbase. I believe that the relase of Engram beta marks the beginning of a new era for Dero as it opens up the doors to less tech savvy users. Through Engram now anyone can create an account/wallet and join the network in few clicks. As result I believe that we’re at the very beginning of an adoption cycle that will lift Dero higher throughout the upcoming bull market. None of this is financial advice, the price may bottom much lower from here, or slightly lower. This is, nevertheless, after years of close follow up, my only high conviction bet for the upcoming bull market.
