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Tees, Explained: Use Cases, Tradeoffs, More
Spilling the TEE: A primer on trusted execution environments
Aaditya Shidham
Trusted execution environments (TEEs, or sometimes just “enclaves”) are isolated spaces within a computer for processing data securely. While they’ve been around since the 1990s — used for digital rights management, content protection, and secure payment — there’s been new interest in them as part of blockchain systems.
While TEEs can be useful, builders should be wary. TEEs are neither trustless nor decentralized. And because they can be compromised, builders need to have a strategy in place when these exploits affect their protocols.
TEEs are popular now among protocol designers because they enable node operators to participate in a network without knowledge of the private data that is being processed on their server. They can be an especially efficient way to bootstrap networks that process private data when cryptographic alternatives, like multi-party computation or fully homomorphic encryption, are too costly.
As TEEs proliferate in decentralized systems, this technology will likely be used in many different kinds of protocols — each with different risk profiles and trust assumptions. Potential applications include: dark pools, private AI agent deployment, MEV-resistant block building, and onchain processing of sensitive healthcare and financial data. But it is important to understand what TEEs can and cannot do, especially when projects aim to be decentralized and trustless.
In this case, it’s better to be safe than sorry: Builders should assume that their TEE is going to be compromised, build in protections like ORAM (oblivious RAM), and use them for data that, if leaked, won’t compromise the whole project. For more…
Decentralization: It’s all about control
Miles Jennings
Expansive and ambiguous definitions of decentralization have led enforcement agencies like the SEC, CFTC, FinCEN, and DOJ to pursue actions against crypto projects, regardless of whether they’re good or bad actors.
A simpler and more concrete regulatory approach is possible — one that draws a clear line between what is permitted and what is not, and helps builders stay on the right side of the law.
How would this play out? Within a given regulatory framework, the meaning of decentralization should be constrained to unique and objectively measurable characteristics of blockchain technology relevant to that framework — more specifically, the characteristics that mitigate the risks that framework is intended to address. This core principle can be used to define decentralization for legal regimes that apply to money transmission, custody, securities laws, commodities laws, and beyond.
In practice this means that, for digital assets, decentralization should focus on the absence of control, not on curtailing ongoing developer efforts. This approach could be used to protect investors, while still fostering innovation; limit digital assets being used to issue ordinary securities that circumvent securities laws; and provide a framework that’s easier for regulators to apply and for builders to follow.
Product messaging must-haves
Pyrs Carvolth and Maggie Hsu
For founders, the ability to communicate a vision can be, quite literally, everything. Even for the earliest stage startups, thoughtful messaging can anchor teams, build credibility and intent, and ensure the success of a product’s go-to-market plans. It’s your chance to tell people who you are, what you’re building, and why you have the best team to build it.
Still, you’d be surprised by how many teams forgo the fundamentals.
We dive into how to build out messaging, as you get ready to explore potential partnerships, create sales enablement materials, fundraise, and more — including the baseline artifacts founders need before taking products into the wild…
More news and updates…
A new CFTC Chair nominee… Brian Quintenz, head of global policy for a16z crypto, has been nominated to lead the U.S. Commodity Futures Trading Commission. He previously served as a commissioner at the derivatives market regulator from 2017 to 2021.
SEC v. Coinbase… Founder and CEO of Coinbase Brian Armstrong, announced that the U.S. Securities and Exchange Commission has dismissed their litigation against the company.
The “pay later” platform meets crypto... Klarna cofounder and CEO Sebastian Siemiatkowski says the fintech platform plans to embrace crypto. He asked for ideas in a post on X, which ranged from building an L2 to products that allow users to “buy now and pay later” with staking earnings.
Book news… Chris Dixon’s bestselling book Read Write Own: Building the Next Era of the Internet is out in paperback. If you haven’t yet read it, or if you have friends and family to fill in, now is a great time to pick up a copy.
— a16z crypto editorial team
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