0xbow: New Crypto Mixer for Good

The 0xbow team has rolled out a new privacy mixer on Ethereum, aiming to keep things private for everyday users while stopping crypto hackers and scammers from abusing it.

Popular mixers like Tornado Cash have gotten a bad reputation lately because too many dodgy players have used them. Funds associated with Tornado Cash are now often flagged as “questionable,” causing users of such services to face difficulties with exchanges, off-ramps, and various protocols.

0xbow wants to fix this core issue with mixers by blocking deposits tied to sketchy activities. They built a tool called Association Set Provider (ASP) that does the heavy lifting. ASP watches the transactions going through Privacy Pools, looks for anything suspicious, and checks if everything lines up with regulations. When someone’s deposit passes all the checks, it gets approved and goes into the Privacy Pool.

Importantly, ASP keeps updating its rules over time. A deposit that is accepted at first might later be marked as non-compliant. If that happens, users won’t be able to withdraw privately. However, ASP still allows those funds to be withdrawn publicly to the original deposit address.

However, one key question is how quickly ASP can respond to new potential hacks. If hackers can rapidly deposit and withdraw money from the protocol, they could effectively avoid being flagged by ASP and effectively launder their money. One solution might be to delay withdrawals to guard against this, but it is still up to the team to decide how to protect the protocol from such scenarios.

Right now, the team is testing the protocol and capping deposits at 1 ETH per wallet. Even with that limit, they have already got over 56 ETH in the pool, including a deposit from Ethereum’s founder, Vitalik Buterin. While 56 ETH is not massive, that number should climb as the deposit cap is lifted.

It's worth noting ASP is not just for Privacy Pools, it is a feature that other DeFi projects can use. Developers can use it in their dApps to set access rules based on regulations. It sorts users by their blockchain activity, helping projects comply with rules while staying decentralized. As regulations grow, ASP might soon show up in other DeFi protocols.

The launch of 0xbow Privacy Pools coincides with the United States lifting economic sanctions on Tornado Cash, now the largest mixer in the space. This paves the way for more protocols to adopt privacy tech and use it for positive purposes, rather than attempting to launder illicit funds.