.@kassandraETH @ncsgy and others have been working hard for nearly a year on Kohaku. Kohaku's goal is to make two twin properties: * Security (and trustlessness) * Privacy (read and write) a reality on the access layer. Security and privacy on Ethereum must be normal.

I want to get a bit more public about the work we at the Kohaku Initiative inside the EF are doing I notice there's hype but there's also confusion. Best way to clarify things is to speak candidly and openly about what I'm working on day-to-day 🧵time (bc i dont pay twitter $)

only ethereum:0xe76c6c83af64e4c60245d8c7de953df673a7a33d and zcash:native finished green on the privacy board this week: ethereum:0xe76c6c83af64e4c60245d8c7de953df673a7a33d +9.2%, zcash:native +7.0% on 7d while btc/eth and most of the rest of the set were red. both still deep red on 30d though (RAIL −17.3%, ZEC −25.5%). few explanations i can think of for this: ZEC: @Grayscale zcsh took ~$41.1m in net inflows the week ending 23 oct, which was the best week since mid-sep. zcsh is still roughly −$62m on the month, but this COULD be a sign we're close to bottoming. nu7 (~5 nov, 75s→25s blocks) is the next real date i'm watching since that will have a real impact on the network/change the economics. RAIL: weaker hard catalyst this week. possibly a mean-reversion after the oct 19 dump plus the kohaku/ambire narrative into vitalik's nov 3 demo. the product is privacy on eth defi (shield erc-20 → private pools) with a compliance angle via private proofs of innocence, which appeals to institutional traders. tvl sits at roughly $112m, roughly $383k fees over 30d. its a real protocol with value, but that's probably not why the 7d % is up on its own. more likely it's due to retail investors bidding it up. my read: price movements here are short term and variable, mostly driven by retail and one time events. long term, privacy is still a phenomenal bet. institutions need it to move capital onchain, and large investors will always want to hide their wealth. we are starting to see which projects win, but are definitely still in the discovery stage for this section of the industry. chart: token relations × token terminal

RAIL is quite cheap when you look at FDV/Holders Rev, around 50x (depends on how you view holders revenue though). True there are still 40M tokens to be minted until the hard supply cap is hit (60M / 100M), but any additional mint needs to be approved by the Railgun DAO, and dilution in the foreseable future is likely to be minimal (cf. the 2.5M mint in July). Holders get a claim on the economics through staking, 4.2% of the treasury is distributed biweekly. That's probably not the cleanest value accrual mechanism, but I'd argue that it's not really an issue since all the fees go to the treasury and the treasury is governed by the DAO. It's not like there's some extraction in favor of another instrument, like equity. I personally consider any revenue governed by tokenholders to be holders revenue, but that's up for discussion, so the multiple can vary depending on your views. The current rate of rewards is "close to being sustainable": Based on the trailing 30-day numbers, current protocol fees cover the distributions. RAILGUN generates about $1.13 in fees for every $1 distributed to stakers ($369,719 vs. $325,788). I say "close to being sustainable" because I'd need to look deeper into the treasury composition. Only RAIL, WETH, and DAI are eligible for the distribution mechanism. But it doesn't really matter since the whole point is that RAILGUN's business can substantially grow from here: (1) more distribution through wallets that integrate RAILGUN via the Kohaku SDK (2) growing onchain activity and demand for privacy on Ethereum and other EVM chains where RAILGUN is deployed Growth has been quite reflexive, with double-digit MoM growth in some months since the June bottom. Market conditions will play a big role, as with any DeFi token. - There's probably some regulatory risk overhang with the ongoing lawsuit against the RAILGUN DAO. Also, some wallets may not want to integrate RAILGUN because of that. - Vitalik will demo Ambire wallet's privacy features on November 3, and RAILGUN was mentioned in the stack, so there may be some sell-the-news volatility around that day. But overall, clean chart, product with PMF and real potential for more growth. Looking forward to the Ambire integration. I think it can be both a short-term and long-term catalyst.