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Home Crypto

Tornado Cash: proof that you can’t kill a decentralized application

Nicholas by Nicholas
January 10, 2023
in Crypto
0
Tornado Cash: proof that you can’t kill a decentralized application

About 6 months after being blacklisted by the US Treasury, the Tornado Cash mixer is still functional and active. Although it has become more difficult to access it, here is a proof that it is almost impossible to close a decentralized application. Let’s analyze the situation of Tornado Cash today.

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Tornado Cash : la preuve qu’on ne peut pas tuer une application décentralisée

Tornado Cash still in service

In a report published on January 9, 2023, Chainalysis returns to the impact of the sanctions carried out in 2022 against the cryptocurrency sector. The on-chain data analysis firm mentions in particular the most significant sanction, namely that of Tornado Cash.

As a reminder, on August 8, 2022, the Tornado Cash mixing service was the first decentralized protocol – and the only one to date – to be sanctioned by the Office of Foreign Assets Control (OFAC), the financial control agency of the United States Treasury. At issue: facilitation of money laundering.

Six months later, what have been the impacts of these sanctions? According to Chainalysis, they did have some effect, since usage volumes dropped 68% in the first 30 days, “but they haven’t stopped completely.” Indeed, if we look at on-chain data, here is what we observe:

Decline in Tornado Cash volumes

Evolution of volumes on Tornado Cash (before / after OFAC sanction)

The observation is the same for the number of users. As the decentralized mixer progressed quietly with an average of 600 addresses per week, US Treasury sanctions brought its momentum to a halt. Nevertheless, between 50 and 100 addresses continue to use the protocol every week.

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Unnecessary sanctions against DeFi?

As evidenced by on-chain data, Tornado Cash is hit but not downed. Only the protocol website has been taken down by OFAC. Of course, access to the service is much more complex nowbut it is still possible.

Indeed, as a decentralized protocol, Tornado Cash is based on smart contracts that remain functional. In other words, as Chainalysis explains: “no person or organization can ‘unplug’ Tornado Cash as easily as they would with a centralized service.”

Moreover, Chainalysis draws a parallel with Hydra, a centralized darknet marketplace. After the German police seized the servers and dismantled the organization, the activities came to a halt and the volumes of cryptocurrency transactions were logically reduced to zero.

In summary, the fall in the number of Tornado Cash users is due to two reasons. First, difficulty in accessing the service, now reserved for blockchain veterans. Next, the risk of having their address blacklisted of some other Ethereum applications.

👉 Read also – NFT: A Frenchman arrested in the United States for a multi-million dollar scam

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Sources: Chainalysis Report, Dune

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Journalist for Cryptoast, I strive to dissect every detail of the exciting world of cryptocurrencies and make it accessible and understandable to as many people as possible.

Lilian Aliaga

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