What is Anonymity Mining, how does it work and why is it needed?

In order to achieve privacy, Whirlwind uses a multi-sig that acts as a pool and consolidates all deposited Bitcoin. Once funds are withdrawn by a completely new address from this pool, the on-chain link between the source and destination is severed, thus anonymising the withdrawn Bitcoin.

The goal of this pattern is to aggregate different deposits into a single pool, such that distinguishing between them becomes unfeasible. The only factor to keep in mind is that this pattern is useless if there are not many deposits of varying sizes, such that the set of probable suspects is too small. We aim to overcome this issue by launching the Anonymity Mining campaign. The more people use Whirlwind, the more secure it becomes for everyone. We will consider the bootstrapping phase over when the Anonymity Set crosses 10,000 deposits.

Anonymity mining is an incentive to increase the level of privacy Whirlwind offers by rewarding participants with Bitcoin dependent on the deposited amount and how long they keep their assets in the pool. The campaign will run for a limited time until the Anonymity Set hits 10,000 deposits and it will be structured in the following way:

In return for increasing the Anonymity Set Whirlwind rewards all funded Notes with 1% monthly interest on their balance. The rewards will be paid out automatically on a daily basis and they are withdrawable anytime. All you need to do in order to participate in the campaign is make a deposit and wait for as long as you want to accrue rewards before withdrawing.

Example: If the multi-sig’s average balance during a month is 100BTC Whirlwind will pay out 1BTC in rewards during that month on a daily basis. 1BTC/30 days = 0.03333BTC paid out daily. If you have a Note with a balance of 1BTC you will receive 1% of 0.03333BTC which is 0.000333BTC every day.

It’s important to emphasize that the rewards will be paid out from our personal reserve and only for a limited amount of time until the Anonymity set passes the 10,000 deposits threshold, at which point incentives won’t be needed anymore. We will monitor the progress and make adjustments if needed.

Looking forward to your questions!

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Below you will find the changelog with the latest updates and an illustration that should help you better understand how Whirlwind works and why it's so important to have a strong Anonymity Set.