Brainbot Strategic Product Decision Making and Retrospective for Shutter (2023-2025)

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Brainbot Strategic Product Decision Making for Shutter (2023-2025)

Introduction

This document outlines brainbots strategic direction for their efforts regarding Shutter concerning product development, technology, partnerships, and market fit from 2023 to 2025. It begins with fundamental concepts of Shutter before presenting a timeline of key milestones and strategic shifts.

Problem and Solution Overview

Problem #1 (High level: Privacy)

At a high level, Shutter addresses issues of information asymmetry and lack of privacy onchain. In a world where information equates to money, encryption emerges as a powerful tool to protect information.

  • The absence of privacy is a major obstacle preventing Ethereum from mainstream adoption in real-world use cases (e.g., banking should not be fully transparent).
  • To ensure privacy for a vast array of use cases a combination of advanced programmable cryptography primitives such as Threshold Encryption, Fully Homomorphic Encryption (FHE), Multi-party Computation and even indistinguishability obfuscation (iO) will be needed All these approaches also need decentralized (threshold) key management (e.g. in FHE to decrypt/utilize outputs). This is crucial to ensure trust-minimized, private, verifiable transactions and data in essentially all cryptographic technology primitives. Here Shutter plays a crucial role.

Problem #2 (MEV/Censorship)

Malicious MEV, Censorship & a Broken Transaction Supply Chain

  • The MEV and transaction supply chain is broken and operates on a “trust me, bro” basis, leading to builder centralization.
  • Front-running affects many users today, with an estimated $2 billion in MEV extracted annually. The potential market for MEV extraction is even larger (~$290 billion, per Eigenphi).
  • A few centralized entities (e.g., Beaver and Titan) control 86.5% of blocks, consolidating power.
  • AI will exacerbate the issue, enabling sophisticated attacks and unlocking the full MEV extraction potential.
  • MEV is generally seen as a zero-sum game, with users collectively losing millions.
  • Worse, MEV drives centralization: the more a transaction supply chain intermediary extracts MEV, the more ETH it commands, further amplifying MEV extraction.
  • Even private mempools only provide temporary fixes.

Censorship

  • A centralized transaction supply chain allows anyone to censor transactions.
  • Examples include OFAC compliance and incidents like Soneium, where users lost thousands due to censorship.

The Solution: Decentralized Encryption-as-a-Service

Shutter provides decentralized encryption-as-a-service through threshold encryption:

  • Commit-reveal & time-lock encryption to address free option problems in trading.
  • Encrypted transactions with enforced inclusion commitments to prevent censorship and front-running.
  • Unlike other MEV solutions, which primarily redistribute MEV, Shutter aims to eliminate front-running in a decentralized manner.
  • Note: For full effectiveness, Shutter must be deeply integrated into blockchain protocols (encrypting as early as possible, decrypting as late as possible). Superficial implementations provide little value. This is very hard, protocol level dev work that only a few teams can do around the world and we need to buy in from the core dev teams of the chains we’re working with.

2023

MEV and Shielded Voting as the Problem-Solution Set

2023 for brainbot and Shutter had strong emphasis on mitigating MEV and censorship in blockchain transactions and providing Shielded Voting for DAO governance.

Shutterized Beacon Chain as a Long-Term Vision

  • The Shutterized Beacon Chain was set as the long-term vision to combat MEV and censorship at the Ethereum L1 level.
  • However, feedback from key members at Ethereum Foundation (EF) and other stakeholders suggested that a Layer 2 (L2) implementation should be prioritized as a proving ground before wider Ethereum adoption.
  • This insight led to a strategic pivot toward engaging L2 networks for early integration.

Early Shutter Decentralization and ProtoDAO

  • An early version of Shutter was live in 2023 with a keyper set, the decentralized network of key managers required for threshold encryption.
  • A simple DAO prototype, “protoDAO,” was launched to manage the keyper set and coordinate operations.
  • The goal of the protoDAO was to experiment with decentralized governance mechanisms before committing to a full-fledged DAO structure.

Integration with Snapshot Shielded Voting

  • Shutter was already implemented into Snapshot Shielded Voting, providing an encrypted voting mechanism for DAOs.
  • This innovation ensured that governance participants could cast votes without premature exposure, reducing governance attacks and manipulations.
  • Business development (BD) efforts focused on outreach to DAOs to encourage adoption of Shielded Voting and also to other DAO governance solutions (e.g. Tally, Optimism Governance solutions etc.) to implement Shielded Voting.

Business Development and Outreach

  • Active collaboration with Gnosis and OPStack positioned Shutter as a MEV solution in the Ethereum ecosystem.
  • The pitch to L2s was centered on making their networks front-running and censorship-resistant through the encrypted mempool.
    • This approach provided a more practical path to sequencer decentralization than fully decentralizing the sequencer itself.
    • The benefit was twofold: it prevented front-running while still allowing sequencers to extract back-running MEV, which some viewed as an acceptable tradeoff.

Recognizing the Need for a DAO

  • As adoption grew, it became evident that a DAO was necessary to coordinate the keyper set and decide as a decentralized instance on critical aspects such as:
    • Fee distribution
    • Governance roles
    • Participation incentives
  • Work began on developing a DAO blueprint to formalize governance and participation rules.
  • Brainbot was not going to launch a DAO itself but instead release a blueprint that others could use to deploy independent Shutter DAOs.

2024

Shutter’s focus in 2024 was on expanding its ecosystem, refining its strategic direction, and positioning itself for long-term success. After the community’s initiation iIt was obvious that in a fast moving environment it is necessary to be early in the relevant positions of the Ethereum ecosystem. Several opportunities have been evaluated and approached. The year saw a shift from L2 integrations to Gnosis Chain and an increased emphasis on Ethereum L1 encrypted mempool development. Additionally, the launch of Shutter API introduced a new way for developers to integrate privacy into decentralized applications.

Q1: Shutter DAO & L2 Testnet Launch

  • DAO Blueprint & Community Adoption:
    • Released the Shutter DAO blueprint, enabling decentralized coordination of the keyper set and governance structure.
    • The community launched Shutter DAO 0x36, which took on key responsibilities for managing the network.
  • Shutterized OPStack L2 Testnet:
    • Developed and deployed a Shutterized OPStack L2 testnet, showcasing the feasibility of integrating an encrypted mempool into an L2 environment.
    • This testnet allowed developers to experiment with censorship-resistant and MEV-protected transactions.
  • Business Development & Partnerships:
    • Focused on extensive BD efforts to onboard L2s, engaging with:
      • Arbitrum, Mode, Starkware, Polygon, Taiko, Mantle, ZKSync, and others.
      • RAAS (Rollup-as-a-Service) providers, including Conduit, Gelato, Altlayer, Gateway.
      • L2 infrastructure providers, such as Espresso and Eigenlayer.
    • Engaged with Optimism and Mode, both of which expressed interest in encrypted mempool integration.
  • Challenges & Strategic Shift:
    • The idea of building a dedicated Shutter L2 was considered but ultimately deemed unaligned due to:
      • Saturation of the L2 market (many new L2s launching).
      • High development and operational costs.
    • Encountered obstacles in L2 adoption:
      • Most L2s are centralized and controlled by trusted teams who choose not to frontrun.
      • Evolving OPStack architecture made deep integration difficult.
    • Major strategic pivot:
      • Shifted focus away from L2s and instead prioritized Gnosis Chain as a proving ground for encrypted mempools.
      • Worked closely with Nethermind and Gnosis to integrate the encrypted mempool.

Q2: Gnosis Chain Mainnet Release & Shutter Explorer

  • May 2024: Released the Shutterized encrypted mempool on Chiado, the Gnosis Chain testnet.
  • Stage 1 Encrypted Mempool Deployed on Gnosis Chain (July):
    • Marked the first production deployment of a threshold-encrypted mempool on a mainnet.
    • Still in beta, requiring further stability improvements and additional functionality.
  • Shutter Explorer Release:
    • Built and launched Shutter Explorer, a tool for tracking Shutter-integrated transactions.
    • Provided users with insights into encrypted transactions before they were decrypted and included in blocks.
  • Launched a Refresh of the Shutter Brand: Aiming to make Shutter’s solutions more understandable to a wider range of audiences and raise awareness of malicious MEV and DAO vote manipulation from unshielded voting.

Q3: Ethereum L1 Strategy & NanoShutter

  • Refocusing on Ethereum L1:
    • Recognized that while Gnosis Chain served as a useful testbed, Ethereum L1 required a different approach due to its out-of-protocol PBS (Proposer-Builder Separation).
    • Developed a three-stage plan for integrating an encrypted mempool into Ethereum’s transaction pipeline:
      • Proposer commitments – Require proposers to commit to including encrypted transactions.
      • ePBS integration – Work towards compatibility with Ethereum’s PBS system.
      • FOCIL & full integration – Align with FOCIL (Fair Ordering and Censorship-Resistant Inclusion Layer).
    • Engaged partners such as:
      • Chainbound, MEV Blocker, Nethermind, Gnosis, Commit-Boost, and others.
  • NanoShutter Release (October):
    • Built and launched NanoShutter, a simplified implementation of Shutter designed for:
      • Hackathons and educational purposes.
      • Providing a lightweight way for developers to experiment with time-locked encryption.
    • Made it easier for DApp developers to integrate privacy features without requiring the full Shutter stack.
  • Increased focus on community engagement, for example via a dedicated Galxe campaign.

Q4: Encrypted mempool on Gnosis Chain p2p issues, Shutter API & Strategic Shift

  • Addressing Gnosis Chain Challenges:
    • Continued working with Nethermind to resolve stability issues in the encrypted mempool.
    • Recognized that the Gnosis Chain encrypted mempool effort was more complex than initially foreseeable, the p2p communication between the two decentralized sets of nodes in a heterogeneous setup requires deep research for debugging and sophisticated solutions to forge a stable solution. (Nethermind validators and Shutter Keypers).
    • Major effort spent on outreach and education to Gnosis Chain validators to onboard them to run the Shutterized Nethermind client.
  • Major Strategic Shift: Shutter API
    • Introduced Shutter API, a threshold encryption service designed to simplify privacy integration for DApps.
    • Exposed Shutter’s core functionality via four easy API calls, allowing developers to:
      • Encrypt transactions & messages.
      • Use commit-reveal mechanisms.
      • Implement time-locked encryption.
  • Differentiation from Mempool Encryption:
    • Unlike the Gnosis Chain encrypted mempool, which mitigates MEV and censorship at the protocol level, Shutter API is focused on application-layer privacy.
    • Opens up new use cases beyond MEV prevention:
      • Governance & voting (shielded votes).
      • Sealed-bid auctions.
      • Fair on-chain gaming.
      • Parimutuel betting.
      • Smart account encryption.
      • Time-locked crypto gifting.
  • Parallel Efforts:
    • Began forming partnerships for Shutter API use cases.
    • Worked on bootstrapping in-house apps that leverage Shutter API.
    • Continued supporting the DAO and Polycrypt initiatives.
  • Revamped the Shutter website, blog, and released a docs page to better explain Shutter’s products (Shielded Trading, Shielded Voting, Shutter API, and educate the community of threats from information asymmetry).

Key Takeaways from 2024

  • Successes:
    • Deployed an encrypted mempool on a live mainnet (Gnosis Chain).
    • Started working on Shutter API, making encryption accessible to all developers.
    • Refined the Ethereum L1 roadmap, aligning with PBS.
    • Released Shutter Explorer & NanoShutter, expanding accessibility.
  • Challenges & Lessons Learned:
    • L2 traction was lower than expected due to their centralized nature.
    • Gnosis Chain encrypted mempool required more effort than initially planned.
    • Ethereum L1 requires a different integration strategy (moving toward proposer commitments & ePBS).
    • Marketing and communication needs much higher priority and needs a lot of resources. Galxe campaign did not achieve the goals we intended for it. In general these sorts of campaigns seem to yield results that are short lived.
    • While we already put a strong emphasis on partnerships/relationships management and we acquired many partnerships (e.g. in the RAAS space), this area also required more work and refocusing.
  • Strategic Shifts:
    • Less emphasis on L2 adoption, more focus on Gnosis Chain & Ethereum L1.
    • Introduction of Shutter API to make encryption easy at the application layer.
    • Engaging with major partners (e.g., Chainbound, MEV Blocker, Commit-Boost) for Ethereum L1 integration.
    • We’ve been increasing our efforts in regards to marketing, communication, PR to raise awareness of Shutter and to better explain Shutter’s solutions to a wider audience beyond protocol developers.

2025: Shutter API and Encrypted Mempool for Ethereum L1

The focus is on launching new privacy-enhancing applications, refining the encrypted mempool for Ethereum, and growing adoption of the Shutter API. The goal is to bootstrap adoption that is independent from large integration partners while pushing towards the big integrations.

Q1: Product Launches and Ethereum L1 Proposal

Shutter Hongbao: Secure Crypto Gifting with Time-Locked Transfers

  • Released Shutter Hongbao, a small, fun decentralized application (DApp) for time-locked gifting on Gnosis Chain.
  • Features:
    • Time-locked transfers: Senders can specify when the recipient can claim their funds.
    • Password protection: Users can set a password that the recipient must enter to access the funds.
    • Non-custodial, in-browser passkey wallet: Provides enhanced security and user control over assets.
  • Strategic Importance:
    • Demonstrates real-world consumer use cases for threshold encryption.
    • Expands the Shutter API ecosystem by showcasing its capabilities.

Ethereum L1 Encrypted Mempool Proposal Published on EthResearch

  • Released a detailed proposal outlining the encrypted mempool architecture for Ethereum L1.
  • Engaged with key partners to evaluate and refine the approach, including:
    • Chainbound
    • MEV Blocker
    • Gnosis
    • Nethermind
    • Commit-Boost
    • Primev
    • Eigenlayer
  • Strategic Importance:
    • Positions Shutter as a leader in the “holy trinity of censorship resistance”:
      1. Encrypted mempool
      2. ePBS (enshrined Proposer-Builder Separation)
      3. FOCIL (Fair Ordering and Censorship-Resistant Inclusion Layer)
    • Moves Shutter closer to Ethereum mainnet integration, increasing its long-term impact on blockchain security.

Shutter API & SDK Released

  • Launched the full Shutter API to make threshold encryption easily accessible for developers.
  • Released the Shutter SDK, allowing projects to integrate encryption/decryption with minimal effort.
  • Strategic Importance:
    • Expands the addressable market beyond MEV protection.
    • Enables new applications across gaming, governance, and finance.

New Shutter API Apps in Development

  • Shielded Voting will move to Shutter API very soon
  • Shutter Predict:
    • A decentralized prediction app
  • Others (working with external partners)

Key Takeaways from Q1 2025

  • Successes:
    • Launched a real-world encrypted DApp (Shutter Hongbao).
    • Ethereum L1 integration plans are progressing with active engagement from top ecosystem players.
    • Received positive coverage and media engagements for the whitepaper launch and encrypted mempools on media such as Cointelegraph, Crypto.News, CCN, Crypto News.
    • Shutter API is now live, with adoption growing across multiple verticals.
    • The development of high level solutions like apps and the API require a significantly lower amount of work as the establishment of the basic protocol and protocol level integrations.
  • Challenges & Next Steps:
    • Coordination with Ethereum Core Devs for encrypted mempool implementation.
    • Scaling adoption of Shutter API across more use cases.
    • Need to strengthen social media capabilities and community engagement to increase Shutter awareness and community growth.

Summary Retrospective

What Worked Well

  • People really like the encrypted mempool idea in principle—as seen in Vitalik’s, Marc’s, and EF’s posts. With the out-of-protocol PBS supply chain developing and centralization increasing, it becomes more and more clear that encrypted mempools are needed more than ever.
    • So writing/developing architecture attracts attention and helps build credibility.
  • Working with strong, value-aligned partners (e.g. Gnosis, Nethermind, Snapshot, OPstack) bolstered our efforts.
  • Shielded Voting: once DAOs are convinced to switch over, retention is high.
  • The Shutter API introduced simpler technology and enabled new use cases beyond merely making trading more secure.
  • Dogfooding our own applications on top of Shutter API

What Didn’t Work Well

  • Heavy dependency on external partners sometimes slowed progress and reduced control.
  • The overall complexity of our solutions requires extensive explanation, which is increasingly challenging given shrinking attention spans.
  • Decentralized systems engineering faced hurdles: p2p communications between a Nethermind client on Gnosis and decentralized keyper sets (decentral-to-decentral) were less efficient than the more centralized keyper set communications with Shutter API.
  • Encrypted mempool for L1 needs a lot of stakeholders to buy in
  • While we think encryption-as-a-service is really valuable because it solves large-scale, expensive problems, it remains unclear how much and how willing users are to pay for it.
  • Internal coordination challenges and evolving market expectations sometimes complicated our execution and strategic pivots.
  • Experimented in paid community-engagement activities such as Galxe and retro rewards - did not generate the desired traction/relationship

Current Business & Development Focus

  1. The encrypted mempool on Ethereum L1 seems needed more than ever. Just within the last 24 hours, we’ve seen two extremely critical front-running exploits. Vitalik has recently mentioned the encrypted mempool as part of his vision and we’re seeing a “holy trinity of censorship resistance” emerging: FOCIL, ePBS, encrypted mempool. Just after we’ve published our latest roadmap towards integrating an encrypted mempool in Ethereum, two more encrypted mempool proposals were made which are highly complementary to our proposal. With this roadmap proposal, the partnerships in place as well as the encrypted mempool deployed on Gnosis Chain mainnet, Shutter is probably better positioned than any other project in the space to execute on this vision.

  2. Shutter API has successfully launched which makes it extremely easy to integrate privacy features into d/Apps. Shutter API is live and powering early apps. Snapshot Shielded Voting will migrate to Shutter API soon. We’re also working with partners on adding new and existing use cases. See more on these use cases and partners in our recent livestream: https://x.com/ShutterNetwork/status/1899852890136862844

2025-beyond: Strategic Outlook

In general, for 2025 our focus will be:

  • Executing the next steps of Ethereum L1 integration (potential testnet deployments).
  • Expanding Shutter API adoption across more applications.
  • Strengthening Shutter’s positioning through targeted marketing and communication.
  • Increasing performance and DAO efficiency and expanding its operational capacity.

In the technical aspects, we’re seeing a couple of strategic options for Shutter, which could also be combined:

Other Strategic Options for Shutter

  1. Encrypted Mempool Vitalik’s vision for the future of Ethereum included an encrypted mempool as one key component. This would help address the rising threat of censorship and MEV extraction through builder centralization on Ethereum. Shutter already proves its capability with a live deployment on Gnosis Chain (probably the first threshold encrypted mempool on a mainnet in general) and has a clear roadmap toward integrating encrypted mempool functionality into Ethereum’s transaction pipeline (by leveraging proposer commitments and later FOCIL). By positioning itself as a key player in the “holy trinity” of censorship resistance—alongside ePBS and FOCIL—Shutter can capture a massive market share where the payoff, in both security and financial terms, is immense. This strategy leverages real market demand for decentralized, censorship-proof transaction processing and promises a strong competitive edge.
  2. Shutter API – Focus on Encryption/Decryption The Shutter API offers seamless access to robust threshold encryption and decryption services, making it easy for developers to integrate privacy features like commit-reveal mechanisms and time-lock encryption. This strategy leverages Shutter’s core competence, addressing the immediate demand for secure, censorship-resistant applications. By focusing on encryption/decryption, Shutter can quickly capture market share in gaming, decentralized governance, finance, and more.
  3. Shutter API – MPC/Threshold Crypto-Based Custody/Bridging Use Cases This approach extends the API to integrate threshold cryptography and multi-party computation (MPC) for secure custody and bridging across blockchains (see NEAR intents). It targets broader applications such as decentralized finance and cross-chain asset management, opening new revenue streams despite facing tougher competition from established players. By combining privacy with advanced custody solutions, Shutter can position itself as a key enabler in the evolving blockchain ecosystem.
  4. Decentralized MEV Solution Current solutions like Flashbots Protect mitigate MEV extraction but still suffer from elements of centralization that threaten market fairness and neutrality. Shutter can develop a private mempool alternative that offers a more decentralized approach, ensuring that transactions remain private until inclusion and eliminating exploitable front-running opportunities. This approach not only safeguards user interests but also positions Shutter as a pioneer in creating a truly trustless and censorship-resistant ecosystem.
  5. Threshold KMS (for FHE) The advent of fully homomorphic encryption (FHE) marks the next phase of privacy for Ethereum and public blockchains. But for FHE to work, one still needs decryption (to use the outputs) and threshold key management. Shutter’s core strength - its threshold encryption DKG - positions it perfectly to offer a Threshold KMS that bridges this gap.

Next Steps - Give us your thoughts

This post is meant to bring more clarity to Brainbot’s decision-making and progress. Building a product like Shutter—from the ground up, across technical and market fronts—takes time, exploration, and iteration. Some context may have been fully captured.

That’s why your input matters. Give us your questions, thoughts, concerns, so we can keep the conversation going and things improving.

More In-depth into Shutter Plans Coming Soon

And we’re releasing a 3-part blog series over the next few weeks to provide even further clarity - keep an eye out for it!

  1. Shutter Product-Market Fit
  2. Shutter Tokenomics
  3. Shutter Product Roadmap
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Highlighted this section, IMHO I don’t think these obstacles could change in the foreseeable future