Bachelor/Master Thesis
Analysis of the Penumbra protocol
Penumbra is a privacy-focused proof-of-stake blockchain built within the Cosmos ecosystem. It combines a multi-asset shielded pool with a private decentralized exchange and a novel design for private staking and governance. Unlike many privacy-preserving protocols, Penumbra integrates privacy into a complete smart contract platform while retaining compatibility with existing IBC-enabled assets and protocols.
This thesis studies Penumbra from two complementary angles: the privacy guarantees it provides and the distributed mechanisms that support them. From a privacy perspective, Penumbra adopts ideas from Zcash to shield transactions, but extends them to support multiple assets, staking, and governance. From a distributed algorithms perspective, Penumbra operates as a BFT-style consensus protocol with a publicly observable validator set, while hiding all other identities and value flows.
The student will study the protocol specification and identify the primitives and subprotocols that achieve privacy at different levels: transaction confidentiality, shielded delegation, encrypted governance, and private DEX operations. They will also analyze how privacy constraints interact with state replication and distributed validation. For instance, privacy hides the link between inputs and outputs, but validation must ensure soundness, uniqueness of spends, and correct execution of staking and liquidity operations.
This project focuses on the privacy, security, and correctness of the protocol’s conceptual and algorithmic components. Prior knowledge of basic cryptographic notions, as well as distributed systems concepts like state machine replications, atomic broadcast and consensus, is not required but should be acquired during the thesis.
References
[1] Documentation of the Penumbra protocol