Espresso Systems Launches Testnet of CAPE Privacy Product

Espresso Systems, a scaling and privacy system for Web 3 applications, has launched its first product in testnet. Configurable Asset Privacy on Ethereum (CAPE) is a smart contract application that lets asset creators define customizable privacy policies that determine who can see what information about the asset holders and transactions under certain circumstances.

The launch comes three months after Espresso Systems raised $32 million in a funding round led by Greylock Partners and Electric Capital, with participation from Sequoia Capital.

According to one company official, Web 3 tends to have a black and white approach to privacy, where it’s either everything you do is transparent to all people all of the time or – in the case of Zcash or Tornado – everything is shielded from view in most cases.

“What we’re trying to do is crack open the area in the middle to make privacy a flexible, programmable, configurable feature of how we interact with Web 3 products,” Espresso Systems co-founder Jill Gunter told CoinDesk in an interview. “With CAPE, this is our first showcase of the functionality that we’ve developed.”

CAPE is “specifically oriented towards being able to configure different privacy policies for different assets, such that different people under different circumstances will be able to see different transactional data about what’s happening within a given asset,” she continued.

The need for some form of privacy in Web 3 is often touted as the path to bringing more companies and institutions into crypto. Gunter noted that the implications of CAPE could be important for institutional players, for example, who might want to get involved with crypto but don’t want to leak their proprietary data or investment strategies to the whole world.

“One of the Holy Grail use cases that we’ve yet to see really play out is payments,” said Gunter. “If you talk to businesses [that] have explored or dabbled in crypto as they’ve looked into paying cross-border payroll or even [peer-to-peer] payments, one of the first big things that they’ll bring up is, ‘Well, there is no privacy there.’ [T]hat has precluded a lot of these big more incumbent-style users from really meaningfully exploring these different types of use cases.”

CAPE also has crypto-native use cases. A stablecoin provider with a U.S. dollar product could hide user transactions from the general public while the issuer maintains real-time insights. A decentralized autonomous organization (DAO) could move its treasury into CAPE to limit access to balance and transaction information to just the administrators.

Espresso has released the wallet and graphical user interface for CAPE on Ethereum’s Goeril testnet for users to start building.

CAPE is the first showcase of the underlying Espresso Systems solution for scalability and privacy on Ethereum. Espresso is building a layer 1 blockchain that will be Ethereum Virtual Machine compatible. The first testnet on the scalability side is expected later this summer.

“It’s very difficult building [layer 1] infrastructure. You really get one shot at deploying, and we didn’t want to just go away for the next year until we have built out an end user product around a mainnet launch,” Gunter explained. “We wanted to start putting our products out into the public to be able to get people using the product, getting their hands dirty, and getting their feedback.”