Tornado Cash
Crypto Overview
Overview
Tornado Cash is a decentralized protocol designed to enhance privacy in Ethereum transactions by breaking the on-chain link between source and destination addresses. The TORN token serves as a governance token for the protocol, allowing holders to vote on protocol upgrades and changes.
Intended Utility
The primary intended utility of TORN is governance over the Tornado Cash protocol. Token holders can create and vote on proposals affecting protocol parameters, upgrades, and treasury management. The protocol itself aims to provide privacy-preserving transactions on the Ethereum network through zero-knowledge proofs.
Actual Usage and Developments
In August 2022, the U.S. Treasury's Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, citing its use in laundering over $7 billion worth of cryptocurrency since 2019, including funds stolen by North Korean hackers. This led to the arrest of one of the protocol's developers and significant reduction in protocol usage.
Token Distribution and Governance
The initial token distribution allocated 10% to founding team members with a 1-year vesting period, 5% to early supporters and advisors, and the remaining 85% distributed to the community through various mechanisms including liquidity mining and governance treasury.
Current Status
Following the OFAC sanctions, many centralized entities have blocked interaction with Tornado Cash smart contracts. The protocol continues to operate due to its decentralized nature, but with severely reduced activity and practical usability.
Crypto Impact
To assign a comfort level investing in Tornado Cash from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to Tornado Cash.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
We will review your contribution for accuracy before publication.
Importantly, you can review listed contributions and vote on which one you think has the greatest impact, positive or negative.
You only have one vote per asset so use it wisely.
You can change your vote if you change your mind.