EXECUTIVE SUMMARY

Some believe that privacy should be a human right. One such project advocating in favor of privacy is Iron Fish. It is a decentralized, proof-of-work (PoW) based, censorship-resistant, and publicly accessible blockchain project.

The project strives to enable everyone to secure confidentiality irrespective of their technical skills. Additionally, the project seeks to be regulatory compliant with a set of view keys associated with every account.  At the moment, Iron Fish’s ecosystem consists of:

  • The Incentivized Testnet
  • The networking layer
  • The Gossip Protocol
  • The storage layer
  • The IRON token
  • Nodes
  • Miners
  • Wallet
  • The verification layer

The network’s native token, $IRON, is a utility token mainly offering a mechanism for payments. The total token supply of $IRON is finite, and the block subsidy formula is embedded into the network’s code.

The project is located in the United States, a country with the most significant number of crypto investors, trading platforms, exchanges, investment funds, and crypto mining firms.

Its team members have a solid technical background, having gained experience working at well-known tech companies. A group of notable investors financially backs the project.

The project’s incentivized testnet is live, and the mainnet is yet to be announced. The testnet shows to be running smoothly.

Our researchers gave Iron Fish a final rating of C. The breakdown of this rating is available at the end of this report.

 

PRODUCT & COMPANY DESCRIPTION

Introduction to Iron Fish

Iron Fish is building a new Layer 1 blockchain intending to become the universal privacy layer for all of Web 3.0 (ref. 1). It protects every transaction by using zk-SNARKs and the Sapling protocol (ref. 2).

The first step to becoming the universal privacy layer is to make a solid foundation to ship a privacy-first, easy-to-use Layer 1 blockchain (ref. 3).

The project envisions becoming “a shielded layer for many assets, even ones on different chains” and ”providing a platform for true digital cash” (ref. 2). The project aims to enable the free flow of value and is built on the belief that everyone has a right to privacy. 

Iron Fish’s initial iteration is setting up the groundwork for everyone to reliably use private transactions with a low barrier of entry. The next iteration will include, among other things:

  • Custom assets.
  • Functionalities to support layer-2 networks and stable coins.
  • Mobile support and richer web (ref. 4)

The project’s notable features include:

  • Regulatory compliance support
  • An entirely new codebase
  • A multi-asset bridged privacy coin

Iron Fish supports regulatory compliance through a set of keys associated with accounts, allowing financial organizations or exchanges to comply with all their AML obligations and give a full audit of the accounts they manage. (ref. 1)

The ecosystem of Iron Fish includes the following elements: 

  • IRON token: $IRON is the native cryptocurrency of the Iron Fish blockchain. It has been designed from the ground up to make easy-to-use and fully private payments possible by closely following the Sapling protocol used in Zcash. $IRON has been touted as a cryptocurrency that does not compromise on accessibility or privacy.
  • Miners: Miners are described as being essential to the well-being of the Iron Fish network. Without miners, blocks will not be generated, and transactions will not be transmitted. A more in-depth explanation of miners and mining is available here.
  • Wallet: Wallets are made to support fully private transactions. The secret key, a 32-byte random number, is necessary to construct every other wallet component. The public address consists of a Diversifier and a Transmission Key. Together, they make it possible for one wallet with one private key to contain up to 2^11 public addresses (ref. 5).

Iron Fish has published a whitepaper outlining essential technical topics relevant to the project. The whitepaper does not fully explain tokenomics. The CEO of Iron Fish has confirmed that the team will be working on releasing more details about tokenomics.

The project’s initial testnet, which was not incentivized, was launched on April 6th, 2021. Phase 1 of the incentivized testnet ran from December 1st, 2021, to March 11th, 2022. Currently, the incentivized testnet is undergoing Phase 2, which started on May 10th, 2022 (ref. 6).

The block explorer is available here.

Success Factors

Based on our understanding, there are several success factors for the project. These factors are listed below: 

  • The project is developer-friendly due to its use of a familiar tech stack, e.g., TypeScript and Rust.
  • The support for regulatory compliance. 
  • Financial backing by venture capital firms.
  • A team with a solid technical background. 

 

MARKET CONDITIONS AND COMPETITION

Market Conditions

The Privacy Coins sector witnessed an erratic market trend. Currently, there are 79 privacy coins, and the Privacy Coins sector in the crypto space is the 31st largest by market capitalization (ref. 7). The market capitalization of this sector is $4.8 billion at the time of writing, with Monero and Zcash having the largest share at 43.2% and 16.7%, respectively (ref. 8).

 

Privacy Coins Market Cap & Dominance (as of June 17, 2022). Source: blockchaincenter.net

Competition

As noted, there are 79 privacy coins, so the competition is quite intense. It should also be noted that other privacy-focused projects are not listed among those 79 privacy coins. Some examples include other Layer 1 blockchains offering privacy solutions like AlephZero (ref. 9), Oasis Network (ref. 10), and Partisia Blockchain (ref. 11). Besides, some additional services and protocols provide privacy solutions like tumblers and mixers. CoinJoin is another such protocol, providing a privacy solution within Bitcoin’s ecosystem (ref. 12).

Other privacy projects (protocols and dApps) are detailed in the chart below:

 

 

The most well-known competitors are Monero and Zcash. Grin and Pirate Chain are other projects against which Iron Fish has been compared.     

 

How is the project different from its competitors?

 

These features differentiate Iron Fish from the competition: 

  • No compromise on privacy: The project asserts that existing privacy coins like Monero, Grin, and Zcash, have drawbacks in accessibility or privacy. It is claimed that Iron Fish is not compromising on privacy while still being easily accessible. 
  • An entirely new codebase: Compared to Pirate Chain, which is based on a quite old legacy code of Bitcoin, Iron Fish is based on an entirely new codebase (source: Telegram).
  •  A multi-asset bridged privacy coin: Iron Fish will be a multi-asset bridge coin, which is not the case with Zcash (source: Discord).

 

TECHNOLOGY REVIEW

Product

Iron Fish is an open-source project. Iron Fish’s CEO mentioned that most of the codebase had been written in TypeScript (with Rust for the cryptography side) to have purposefully higher open-source participation. The GitHub instance is accessible here.  

  • The Incentivized Testnet 

The project launched its incentivized testnet on December 2nd, 2021. Phase 1 of this testnet was completed on March 11th, and Phase 2 started on May 10. The incentivized testnet is tracking member participation by points in a leaderboard. Participants can earn points by hosting a node, sending a transaction, submitting a pull request, and finding bugs. The incentivized testnet will distribute up to 420,000 (1% of the initial supply) IRON tokens to eligible participants, proportional to their leaderboard points. The distribution of tokens may be canceled at any time because of regulatory concerns. The project can at any time eliminate or amend leaderboard points. Eligible participants will likely need to complete a KYC process.    

  • The networking layer

In contrast to other networking layers requiring users to set up port forwarding for routers to address the NAT problem, the networking layer of Iron Fish is focused on accessibility, using a combination of WebSockets and WebRTC for the transport layer. This construct enables the node implementation to work right out of the box, i.e., in a CLI environment or directly within the browser. The project asserts that this makes it easy for anyone to use Iron Fish, regardless of technical ability.

The networking layer has four different internal message types:

 

 

All messages on the network are routed depending on various factors, through one of the following four styles:

 

 

  • The Gossip Protocol

This protocol is primarily used for broadcasting new transactions and blocks to every peer within the network. This can be visualized as nodes connected, forming a network, with a blockchain being the data structure they agree.

 

Illustration of how nodes are connected. Source: Whitepaper

 

Once started, each node will independently verify the transactions before further broadcasting them to different peers and validate the incoming blocks before applying their encompassing transactions to the node’s local copy of the blockchain.

The gossip protocol’s main objective is to enable every peer to get the message as quickly as possible when a message is broadcasted.

Here is a more in-depth explanation of the networking layer and the gossip protocol.

  • The storage layer

The storage layer works as a command-line interface tool running on computers as a program and entirely in the browser. Simply put, the storage layer is an API over the underlying data stores; it can operate on stores from schemas with all the usual key-value store operations like PUT, GET, DEL, and HAS. Models of Iron Fish and the data structures are stored by using IndexedDB and LevelDB.

There is also a generic layer of abstraction based on LevelUp for data stores and database access. The abstraction layer takes care of the underlying database’s specific implementations and exposes a generic layer that can be used both in the NodeJS environment and in the browser, providing a simple datastore-agnostic API.

 

Illustration of the interactions taking place involving the storage layer. Source: Whitepaper

 

A more in-depth explanation of the storage layer is available here.

  • Nodes

In the whitepaper, the terms nodes and peers are used interchangeably, so a node in Iron Fish is always a peer. At the same time, miners are those nodes proposing to other nodes a new block to be added to the blockchain. To be considered a miner, a node must have synced both of the global data structures (the Merkle Tree of Nullifiers and the Merkle Tree of Notes) and know at the minimum the two most recent blocks.

  • The verification layer

Consensus is the verification layer, setting rules by which nodes accept incoming blocks. These rules force nodes implicitly to construct a block by these rules; otherwise, blocks will not be accepted in the network by other nodes.

A more in-depth explanation of verification and consensus is available here.

Blockchain

The blockchain algorithm of Iron Fish dynamically adjusts the mining difficulty to achieve average block times of 60 seconds (subject to change) by either decreasing or increasing mining difficulty if prior blocks are observed to be coming in too slow or too fast. The implemented difficulty calculation is largely influenced by Ethereum’s difficulty calculation, as explained in EIP-2.

The specifics about the Hashing Algorithm will be declared closer to the launch date (ref. 13).

It has been claimed that Iron Fish aims at scaling while ensuring the highest level of privacy. There has been a hypothetical assumption that the blockchain of Iron Fish can support a maximum of 2000 transactions per second.

Consensus Mechanism

Iron Fish’s blockchain uses a Proof-of-Work consensus mechanism (ref. 14).

Security Audit

The project has not been audited.

 

ROADMAP

The roadmap is quite detailed and shows the accomplished goals and developments in progress. It also contains descriptions of product milestones. The roadmap is hosted on Google Docs and evolves regularly.

 

TEAM

The project currently lists 11 team members who are highly skilled in different fields like software engineering and graphic design (ref. 15). Some of their previous accomplishments include winning international design awards and a national app-development contest. The team members have also gained business experience working for firms like Airbnb, Facebook, Microsoft, and Uber.

Elena Nadolinski (ref. 16), the CEO, has worked as a software engineer at Airbnb. She has also worked at Microsoft.

Derek Guenther (ref. 17), a Senior Software Engineer, has worked as a software engineer at Uber and won a national app-development contest.

Jason Spafford (ref. 18), a Senior Software Engineer, has worked as a senior software engineer at Uber.

Skylar Richard (ref. 19), a Product Designer, has won international design awards.

Advisors

The project has not appointed any advisors.

General Comments on the Team & Advisors

The project is built by an experienced technical and graphic design team. Iron Fish is hiring for various roles (e.g., Cryptographer, Front End Engineer, and Full Stack Engineer). These ongoing hiring steps would assist the project in bridging gaps in required skills.

During our review period, we did not find evidence that the team members have taken part in any previous or current illegal projects or projects that were controversial.

 

LEGAL AND COMPLIANCE SPECIFICS

Jurisdiction

Iron Fish Inc. is a privately-held company, and its primary office is located in San Francisco (ref. 20).

In the United States, the regulatory framework for cryptocurrencies is evolving despite existing differences in viewpoints and any overlap between agencies. For example, the U.S. Securities and Exchange Commission (SEC) often views many cryptocurrencies as securities, while the Commodity Futures Trading Commission (CFTC) calls Bitcoin a commodity, and the Treasury calls it a currency.

On a positive note, the United States is home to the most significant number of crypto investors, trading platforms, exchanges, investment funds, and crypto mining firms. The President’s Working Group and the Financial Stability Oversight Council will have essential roles in developing a future regulatory framework to straighten out the regulatory differences and clarify confusion about definitions and jurisdiction (ref. 21).

Partnerships

No service-based partnerships have been established.

The project has raised $27.7M in Series A round, led by a16z with participation from Electric Capital, Sequoia, Elad Gil, Dylan Field, Alan Howard, Do Kwon (Terra), Nathan McCauley (Anchorage), Jeff Weiner (Next Play Ventures), MetaStable, A Capital, Divesh Makan (Iconiq), Matt Luongo (Keep Network), Arrington XRP, and many other people (ref. 22).

 

Some of the backers of Iron Fish. Source: Iron Fish

Legal Advisors

The project has not appointed legal advisors or team members responsible for legal matters.

KYC & AML

As mentioned previously, eligible participants in the incentivized testnet will likely need to complete a KYC process.

No further details concerning KYC & AML have been released at the moment.

Token Classification

The native token of the Iron Fish blockchain, $IRON, is a utility token. The main utility that it serves is settling payments.

 

TOKEN OFFERING

Iron Fish has not yet announced a token offering.

The initial supply of $IRON in the genesis block at launch is supposed to be 42 million, and the total supply will change in the subsequent years. After launch, a formula calculates the number of new coins that will be minted for a particular year.

 

Total supply figures. Source: Whitepaper

 

Using the block reward formula, the emissions curve, with a cap of 256,970,400 coins for the final total supply, looks like the chart below.

 

Emissions curve. Source: Whitepaper

 

SOCIAL MEDIA AND VIRALITY

The project is active on Twitter. The channel has 17.9k followers (ref. 23).

Discord is the most accessible and popular channel to communicate with the team. Some team members actively participate in community discussions on varying topics about the project. The Discord server has 23.9k members (ref. 24). The Telegram group has 5.8k members (ref. 25). It is understood that the Telegram group is less popular and has fewer interactions.   

Iron Fish has 560 followers on LinkedIn. The account is relatively active (ref. 26). 

There are several reviews and tutorials about the project on YouTube, e.g.:

 

RISKS TO THE PROJECT

The following list of risks is not an exhaustive one. Some of these risks are internal, and others are external to the organization. Some risks may be minor/not materialized.

  • Regulatory/Legal Risks: The occurrence of regulatory inquiries or regulatory actions could restrict or limit the project’s progress. Moreover, evolving or new laws and regulations in the United States or elsewhere may negatively affect the project. The project’s ability to comply or not comply with these new laws or regulations could have financial or reputational risks involved. Moreover, future lawsuits or regulatory pressure could also be detrimental to the project’s future. This risk applies to privacy projects like Iron Fish due to their anonymity-enhancing features.
  • Security weaknesses: There is a risk that Iron Fish, the IRON token, and the associated products may or may not include unknown security weaknesses or bugs, which may interfere with the use, or cause the loss of the tokens.  
  • Competition: The Privacy Coins sector is highly competitive, as discussed above. In this environment, Iron Fish might fail to be a formidable competitor.
  • Lack of adoption/interest: The project derives demand from a continued interest in using projects that offer privacy-focused solutions. Declining interest in such solutions may hinder the progress of Iron Fish.   

 

RATINGS

Everything you see in this report is the aggregate result of an extensive research process carried out by a distributed team of researchers and crypto enthusiasts around the world. The process consists of 60 questions divided into three phases. Researchers are called to answer these questions about a project, while providing links or screenshots as evidence to support their answers. For every answer, they also provide a rating from zero to ten. The average of their ratings is detailed below.

 

Our researchers gave Iron Fish a final rating of C.

 

 

DISCLAIMER

This Report is for informational purposes only and/or all or any of its content thereof, should not, may not and will not be taken to constitute, either as a whole or in part, any investment advice or recommendation or similar, regulated, or authorized advice, and D-Core by producing, disseminating, giving away, or making available this Report does not, should not, may not and will not be taken to advise on investments, or carry out any similar activity, or any regulated activity or any other authorized activity. D-Core is not authorized by the Financial Conduct Authority or by any other competent EU or elsewhere or otherwise competent authority to carry out any regulated activities and/or any activities within the scope of these authorities’ competence. 

D-Core excludes and disclaims all liability and/or responsibility whatsoever and/or howsoever caused, arising out of any actions, or omissions taken, or made by any authorized and/or other recipient of this Report in reliance on, or arising out of, or in connection with any or all content of this Report. Any authorized and/or other recipient of this Report acknowledges, accepts and agrees that they carry out their own independent research and act in their own sole risk in reading or using any or all information contained in this Report. In any event, recipients of this Report are urged to seek professional advice before making any potential investment decision in relation to the project described herein. Any authorized and/or other recipient of this Report accepts this Disclaimer in full. For the avoidance of doubt, this Disclaimer is binding against any recipient of this Report whatsoever.

 

REFERENCES

  1. “Iron Fish – Private, anonymous, and easy to use cryptocurrency.” https://ironfish.network/. Accessed 15 Jun. 2022.
  2. “Announcing Iron Fish – Privacy for Everyone.” 6 Mar. 2021, https://ironfish.network/blog/2021/03/06/introducing-ironfish. Accessed 15 Jun. 2022.
  3. “Roadmap to Universal Privacy Layer for Crypto – Iron Fish.” https://ironfish.network/roadmap. Accessed 15 Jun. 2022.
  4. “Next Steps – Private, anonymous, and easy to use cryptocurrency.” https://ironfish.network/docs/whitepaper/8_next. Accessed 15 Jun. 2022.
  5. “Account Creation | Iron Fish – Private, anonymous, and easy to use ….” https://ironfish.network/docs/whitepaper/5_account. Accessed 16 Jun. 2022.
  6. “Phase 2 Incentivized Testnet | Iron Fish – Private, anonymous, and ….” 10 May. 2022, https://ironfish.network/blog/2022/05/10/phase2. Accessed 16 Jun. 2022.
  7. “Top Crypto Categories by Market Cap – CoinGecko.” https://www.coingecko.com/en/categories. Accessed 17 Jun. 2022.
  8. “Market Cap & Dominance by Category – Blockchaincenter.” https://www.blockchaincenter.net/market-cap-dominance/. Accessed 17 Jun. 2022.
  9. “Introducing Liminal, a Multichain Privacy Layer for Web 3.0.” 21 Jun. 2021, https://alephzero.org/blog/liminal-multichain-privacy-layer/. Accessed 17 Jun. 2022.
  10. “Oasis Network: A privacy Layer 1 blockchain with $1.5M in grants for ….” 20 May. 2021, https://dappradar.com/blog/oasis-network-a-privacy-layer-1-blockchain-with-50k-in-grants-for-dapp-builders. Accessed 17 Jun. 2022.
  11. “Partisia Blockchain raises $20M to build an internet privacy ….” https://www.securityinfowatch.com/critical-infrastructure/press-release/21223074/partisia-blockchain-partisia-blockchain-raises-20m-to-build-an-internet-privacy-infrastructure-for-the-greater-good. Accessed 17 Jun. 2022.
  12. “Coin Mixing and CoinJoins Explained – Binance Academy.” 24 Mar. 2020, https://academy.binance.com/en/articles/coin-mixing-and-coinjoins-explained. Accessed 17 Jun. 2022.
  13. “Mining – Private, anonymous, and easy to use cryptocurrency.” https://ironfish.network/docs/whitepaper/4_mining. Accessed 20 Jun. 2022.
  14. “Introduction – Private, anonymous, and easy to use cryptocurrency.” https://ironfish.network/docs/whitepaper/1_introduction. Accessed 18 Jun. 2022.
  15. “Careers at Iron Fish.” https://ironfish.network/careers. Accessed 20 Jun. 2022.
  16. “Elena Nadolinski – Instigator (Founder/CEO) – Iron Fish | LinkedIn.” https://www.linkedin.com/in/elenanadolinski. Accessed 18 Jun. 2022.
  17. “Derek Guenther – Senior Software Engineer – Iron Fish | LinkedIn.” https://www.linkedin.com/in/derek-guenther. Accessed 18 Jun. 2022.
  18. “Jason Spafford – Senior Software Engineer – Iron Fish | LinkedIn.” https://www.linkedin.com/in/jason-spafford-14892511. Accessed 18 Jun. 2022.
  19. “Skylar Richard – Product Designer – Iron Fish | LinkedIn.” https://linkedin.com/in/skylar-richard-1b8999a4. Accessed 18 Jun. 2022.
  20. “Iron Fish Company Profile: Valuation & Investors – PitchBook.” https://pitchbook.com/profiles/company/224235-19. Accessed 18 Jun. 2022.
  21. “Cryptocurrency regulations by country – Thomson Reuters.” 1 Apr. 2022, https://www.thomsonreuters.com/en-us/posts/wp-content/uploads/sites/20/2022/04/Cryptos-Report-Compendium-2022.pdf. Accessed 18 Jun. 2022.
  22. “Iron Fish Series A and Incentivized Testnet.” 30 Nov. 2021, https://ironfish.network/blog/2021/11/30/series-a-incentivized-testnet. Accessed 18 Jun. 2022.
  23. “Iron Fish (@ironfishcrypto) / Twitter.” https://twitter.com/ironfishcrypto. Accessed 18 Jun. 2022.
  24. “Iron Fish – Discord.” https://discord.com/invite/EkQkEcm8DH. Accessed 19 Jun. 2022.
  25. “Contact @ironfishcryptochat – Telegram.” https://t.me/ironfishcryptochat. Accessed 19 Jun. 2022.
  26. “Iron Fish – LinkedIn.” https://www.linkedin.com/company/iron-fish-irf. Accessed 19 Jun. 2022.