Shutter Network

The Shutter Network is a decentralized threshold cryptography network that provides transaction encryption as a service for decentralized applications (dApps) and blockchains. Its core mechanism uses a Distributed Key Generation (DKG) protocol to create a shared public key, allowing users to encrypt their transactions before submission. These encrypted transactions are included in a block but remain unreadable by validators, sequencers, or potential attackers, thus neutralizing frontrunning and sandwich attacks.

The decryption process is triggered only after the block is finalized. The network's keypers—a decentralized set of nodes—collaboratively decrypt the transactions using their individual private key shares. This threshold decryption ensures no single entity can access the transaction content prematurely. The primary use case is integrating with Ethereum and EVM-compatible rollups via a smart contract, enabling projects to offer fair ordering and protection from predatory MEV strategies.

Key technical components include the Shutter DAO for governance, the Keyper Set managing the DKG process, and a punishment mechanism called slashing for malicious keypers. By making transaction intent opaque during the critical ordering phase, Shutter Network aims to create a credibly neutral and censorship-resistant environment. This is particularly vital for decentralized exchanges (DEXs), voting systems, and initial DEX offerings (IDOs), where transaction privacy directly impacts fairness and economic outcomes.

The core mechanism of Shutter Network is a Distributed Key Generation (DKG) protocol run by a decentralized set of operators known as keypers. These keypers collaboratively generate a shared public key for encryption and a corresponding set of secret key shares, with no single entity ever possessing the full private key. When a user submits a transaction to an application integrated with Shutter, it is encrypted with this public key, rendering its contents—such as bid amounts in an auction or trade details in a DEX—unreadable on the public blockchain.

This encrypted transaction enters a commitment phase, where it is broadcast to the network and included in a block, but its payload remains confidential. After a predefined block delay, the keypers run a threshold decryption process. A predetermined threshold of keypers (e.g., 2/3 of the committee) must contribute their secret shares to reconstruct the decryption key and reveal the original transaction data. The now-decrypted transaction is then executed on the destination application, such as a smart contract, in the same block, preventing any entity from front-running it based on prior knowledge.

The system's security and liveness rely on the economic security of the underlying Ethereum blockchain, as keypers are required to stake collateral and can be slashed for malicious behavior like refusing to participate in decryption. This architecture ensures cryptographic front-running protection and transaction privacy for the commitment period. Key technical components include the Shutterized smart contract wrapper, which manages the encryption/decryption lifecycle, and the keyper set, which can be dynamically updated via governance.

The Shutter Network is a decentralized key generation (DKG) and threshold cryptography system that enables transaction encryption for smart contract platforms. Its core mechanism involves a distributed set of nodes, known as keypers, who collaboratively generate a public encryption key. Users submit their transactions encrypted with this key, making the transaction contents—such as the amount, recipient, or specific function call—unreadable to the public mempool and potential frontrunners. This encrypted state persists until a predefined future block, at which point the keypers use threshold decryption to reveal and execute the transactions simultaneously.

The architecture relies on a Keyper Set, a permissionless, dynamically changing committee elected through the native Shutter DAO. This set runs the Keyper Node software, which performs the Distributed Key Generation (DKG) ceremony to create a shared public key and individual secret key shares. For decryption, a predefined threshold of keypers (e.g., 2/3 of the committee) must collaborate to reconstruct the decryption key, ensuring liveness and robustness even if some nodes are offline or malicious. This process is managed by the Shutter Smart Contracts on the host chain (like Ethereum), which coordinate keyper sets and finalize the decryption results.

A primary application is encrypted mempools for decentralized exchanges (DEXs) and auction mechanisms. For example, in a sealed-bid auction or a DEX trade, users can submit encrypted orders that are only revealed and settled at the same time, eliminating the advantage for bots that scan the public mempool. This transforms potential malicious MEV—like frontrunning and sandwich attacks—into fair ordering, where transaction sequence is determined by the protocol rather than by gas price bidding wars after information leakage.

Integration with existing systems is achieved through Shutterized smart contracts. Developers can make their dApps MEV-resistant by modifying functions to accept encrypted inputs, which are only decrypted after a delay (e.g., 5-10 blocks). The network is chain-agnostic, operating as an overlay network that can be deployed on any Ethereum Virtual Machine (EVM)-compatible chain. Its security is rooted in the economic security of the underlying chain and the cryptographic security of the threshold Ethereum BLS signatures used by the keyper set.

The protocol's economic model involves the SHU token, used for governance within the Shutter DAO to manage the keyper set and protocol parameters. Keypers may be incentivized through rewards for participation, while a slashing mechanism can penalize malicious behavior, such as refusing to participate in required decryption rounds. This creates a cryptoeconomic system that aligns the network's operators with the goal of maintaining a secure, liveness-guaranteed encryption layer for the broader blockchain ecosystem.