The Sienna Network, a privacy-focused, cross-chain decentralized finance (DeFi) platform, has raised $11.2 million in a private and public token sale. Of the total amount, $10 million came from long-term investors including NGC, Inclusion Capital, Lotus Capital, FBG, SkyVision Capital and others.
Sienna is built on the Secret Network, a Tendermint-based chain within the Cosmos ecosystem that uses privacy-preserving smart contracts. It allows the Sienna community to privately swap, lend and convert its tokens into their private equivalent.
The network functions like any DeFi system, but using Sienna Swap the transactions are private rather than public for anyone to see.
“It has been an extraordinary month and we have hit a super sweet spot between institutional investment and our community,” said Monty Munford, chief evangelist and core contributor to Sienna Network.
The tech
Users can swap any private SNIP-20 token on Sienna. SNIP-20 is a specification for private fungible tokens based on CosmWasm (a smart contract platform) on the Secret Network. If users don’t have private tokens, they can use the Secret Network’s bridge to exchange their tokens for the private equivalent and then convert them back again at any time.
The bridge currently supports Ethereum, and will soon support Polkadot, Monero, Cosmos and Binance Smart Chain.
“Sienna is on a long-term mission to protect users’ privacy and to prevent personal information from being hijacked,” said Munford. “By using privacy-preserving blockchain in a user-friendly way, we save no login information, no wallet data, no transaction data or anything else. We do not even track the Sienna website or give any information to any third party.”
On its website, Sienna breaks down the token conversion, which consists of turning regular tokens into secret tokens. In practice, this means ETH becomes sETH (secretETH), DAI becomes sDAI and so on. These can then be traded on Sienna Swap or converted back to their original form.
Users can then trade through Sienna Swap, using a token pair of SIENNA plus the secret token (sDAI, sETH) of their choice.
Sienna is a pure SNIP-20 token while sDAI is a bridged token to the DAI stablecoin token.
Stakers of a pool earn 0.28% of their share of the daily volume by providing liquidity to a pair ETH-based tokens.
Addressing front-running
An issue in DeFi that the Sienna Network hopes to address is front-running. Front-running is the act of getting a transaction first in line in the execution queue, right before a known future transaction occurs. Bots executing such front-running operations by paying slightly higher gas, or transaction, fees have been a sticking point for DeFi. Multiple projects have been developing privacy solutions to address this issue.
“Execution priority on platforms such as Ethereum are driven by transaction fees,” said Munford in a statement. “A transaction can be preempted by simply introducing a transaction and paying a higher transaction fee and is illegal in regulated financial systems. Hence front-running.”
Indeed, a report from February suggested an Ethereum trading bot strategy extracted $107 million in only 30 days.
“Sienna’s success validates the vision we’ve long shared to bring data privacy to blockchains and decentralized applications,” said Tor Bair, the Secret Foundation’s executive director and chairman. “We believe Sienna will be a key pillar of Secret DeFi and help drive mass adoption of a more secure decentralized financial ecosystem.”
Munford said these initial funds will be used to expand the team and to roll out a very extensive roadmap being brought to market throughout 2021, not least of which is an automated market maker (a privacy-first decentralized exchange).
The network’s name is a variant of the Italian city of Siena, which played a historical role in banking and cryptography as early as 1135 AD.