At AvaCloud, our mission is to empower builders with cutting-edge blockchain solutions that deliver tangible, real-world value. Our approach, particularly in Avalanche Layer 1 (L1) lifecycle management, has drastically reduced the complexity, time, and costs associated with blockchain launches. 

Previously, deploying and maintaining an L1 blockchain could cost tens of thousands of dollars annually, required specialized engineering teams, and took months to launch. Now, with AvaCloud, businesses can deploy a mainnet L1 blockchain in less than 30 minutes, at a fraction of the original costs, significantly accelerating innovation and value delivery to end-users.

Building upon the success of our L1 launcher, we continuously strive to expand the solutions available to our clients. This started with our gas relayer, and expanded to other solutions such as VRF and interoperability tooling.

In late March, we introduced Encrypted ERC (eERC), an innovative novel, privacy-preserving token standard that is lightweight, compliant, and designed for high performance. With eERC, any project operating on Avalanche L1 can effortlessly incorporate privacy-preserving features into their applications. We strongly believe privacy will be a cornerstone of the next wave of blockchain innovation.

Why Is eERC Important?

Blockchains have revolutionized digital finance, offering trust-minimized financial systems accessible to everyone. However, the inherent transparency of blockchain transactions poses significant privacy risks. When users engage with blockchain applications, their entire transaction history becomes publicly available, exposing them and businesses alike to potential hacks, exploits, and malicious attention.

The introduction of eERC solves this crucial issue by enabling users to maintain confidentiality over their financial data—protecting information about account balances, owned assets, and spending behaviors.

Enhanced Confidentiality Driving Institutional Adoption

Privacy is essential for institutional participation in blockchain. While the pseudonymous nature of blockchains provides a basic layer of privacy, it is insufficient for the complex needs of institutions. eERC bridges this critical gap, paving the way for increased institutional adoption by:

• Preserving Competitive Advantage: Institutions, especially investment firms, rely heavily on proprietary strategies (alpha). Excessive transparency imposed by existing blockchains on chain token standards risk exposing these strategies, diminishing their competitive edge. eERC ensures that institutions can execute trades and manage their portfolios confidentially, protecting their strategic advantages.

• Ensuring Regulatory Compliance: Institutions operate within rigorous regulatory frameworks, and disclosing sensitive financial information publicly can cause compliance issues. eERC provides the confidentiality needed to meet compliance requirements, supported by specialized auditing tools designed for privacy-preserving transactions.

• Mitigating Counterparty Risk: Institutions regularly handle large-value transactions, which, if publicly visible, may become targets for front-running or malicious activities. eERC's confidentiality significantly reduces this risk, providing a more secure environment for institutional engagement.

Real-World Use Case Examples

Payments
Payments form the core functionality of blockchain—moving value efficiently from point A to B. However, traditional blockchain transactions publicly reveal users' account balances and transaction amounts. In the traditional financial system, such detailed exposure of personal financial information would be unthinkable. With eERC, users can convert standard ERC-20 tokens into privacy-preserving eERC tokens, concealing balances and transaction details, thus ensuring user privacy.

Payroll Processing
Crypto-based payroll systems offer substantial benefits, including reduced operational overhead for employers and faster, global payroll distribution for employees. However, publicly linking payroll payments to individuals' wallet addresses creates privacy risks, exposing employees to potential threats and unwanted scrutiny. 

Implementing eERC-compliant payroll solutions ensures paycheck values remain confidential, safeguarding employee privacy and enhancing overall security.

Internal Treasury Management
Large enterprises increasingly utilize blockchains for internal financial operations. Without confidentiality, treasury balances and internal transfers become publicly visible, exposing companies to unnecessary risks. By adopting eERC, enterprises can securely and confidentially manage internal transactions, significantly improving operational efficiency and reducing settlement risks.

In-Game Rewards
Gaming applications on blockchain often distribute rewards publicly, compromising user privacy and game strategies. eERC addresses this by:

• New Engagement Mechanics: Games can increase engagement by keeping quest reward amounts hidden.

• Fuel Competitive Edge: Enabling surprise rewards based on in-game actions, providing players strategic advantages in future quests.

• Private In-Game Assets: Issue in-game assets using privacy preserving tokens to protect user balances.

Real World Asset Tokenization

Real-world assets often carry sensitive data regarding ownership, valuation, and transaction history. By issuing these assets as confidential tokens, organizations can secure important financial details from public visibility while still enjoying the benefits of blockchain – such as efficient transfer, automated settlement, and transparent auditing for authorized parties. This balance of privacy and trust helps expand the range of assets that can be tokenized and traded securely on-chain.

Staking Rewards

Using eERC projects can offer yield and reward programs that offer benefits currently not possible on a public ledger. With confidential transfers, where transaction amounts and balances are hidden projects gain key optimizations:

• Prevent Front-Running: Token supply and distribution stays hidden avoiding runs on liquidity pools and manipulative trading.

• Preserve Economic Advantage: Users receiving disbursements with hidden amounts, means that users can protect their total holdings so they can enact different financial strategies.

With confidential staking rewards, projects can deliver yield while ensuring privacy, security, and compliance—ultimately attracting a broader base of participants who value discretion and trust.

What's Next?

eERC is merely the beginning. We aim to provide comprehensive privacy-preserving tooling to builders across the blockchain ecosystem. Moving forward, we plan to expand privacy tooling capabilities to include robust vertically integrated privacy solutions, enabling developers to build powerful, secure, and private blockchain applications.

Be on the lookout for more announcements soon. Until then read more about eERC by checking out:

• AvaCloud - To deploy your own L1 and set up eERC on your new blockchain.

• eERC Repo - Checkout the Encrypted ERC contracts to learn more about how they work.

• eERC SDK Documentation - Learn more about how to incorporate eERC into your app.

To learn more and explore the future of blockchain privacy with AvaCloud:

• Visit http://www.avacloud.io 

• Contact AvaCloud at sales@avacloud.io 

About AvaCloud:

AvaCloud is the leading managed blockchain service empowering organizations to effortlessly build, deploy, and scale high-performance decentralized Layer-1 networks. AvaCloud provides a no-code platform, automated infrastructure, and comprehensive support, enabling businesses to focus on innovation without the complexities of blockchain management.