POC Mend: Leveraging Miden's account-based privacy model to build a Privacy-Preserving Lending Platform

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Privacy-Preserving Lending Platform: Miden's privacy features could enable the creation of secure and private lending platform where users can lend and borrow assets without revealing their identities or transaction details to the public.

Here is an extensive POC how a privacy-preserving lending platform could be built on Polygon Miden:

Account Model

Miden uses an account-based model rather than a UTXO model. Each account has a unique ID and holds assets. Accounts can be either public or private..

For private accounts:

• The account state (balance, nonces, etc.) is stored off-chain and not visible to the network
• Public inputs for transactions are just the account ID and hash, without revealing the actual state
• This allows private accounts to execute transactions locally without disclosing their state changes to the network

Private Lending Transactions

To enable private lending, the lending platform would have two types of accounts:

1. Lending pool accounts - These are public accounts that hold the pooled assets available for borrowing
2. User accounts - These can be either public or private. Private user accounts allow users to borrow and repay loans without revealing their identities.

The lending flow would work as follows:

1. Users deposit assets into the lending pool (public transaction)
2. Borrowers take out loans from the pool, sending a private transaction from their private account to the pool account. The network only sees a proof that the transaction is valid, without knowing the borrower's identity or the loan amount.
3. Borrowers repay loans by sending another private transaction from their private account to the pool, again without revealing details.

Compliance

For compliance purposes, the lending platform could use a "firewall" account[4]. When a user wants to withdraw funds, they would send a private transaction to the firewall account. The platform could then verify the user's identity off-chain before approving the withdrawal to their external wallet.

Conclusion

By leveraging Miden's account-based privacy model, developers can build lending platforms that provide strong privacy guarantees for users while still meeting compliance requirements. Private accounts allow users to borrow and repay loans without revealing sensitive information, while public lending pool accounts enable transparency around the pooled assets.