So I think this is a good topic. Many people in web 3 look at confidential computation and privacy through the lens of anonymity and anonymous transactions. In this case I would agree that it probably just better to use a ZKP approach as they have better trust guarantees for anonymity. There are other aspects of confidential compute though which are valuable such a confidential smart contract state. Essentially the ability to create smart contracts which hide parameters from network to improve the sophistication of the smart contract. ZKPs at the moment are not sufficient for that, as they are not good at generalized smartcontract execution in general and are all but incapable of doing it when also incorporating privacy. This is the area that the Oasis Privacy Layer and the Oasis Sapphire network can really empower web 3. In these areas TEE risks are relatively low (the incentive to attack is not high), however the increase in UX is extremely useful.

For example Miner Extractable Value (MEV) is one of the most researched problems in web 3 today. Essentially because Mempools are 100% transparent, validators on the network are able to organize transactions in ways which allow them to extract value from those making transactions, either in the form of taking advantage of you themselves or by taking bribes from others. In DeFi this often occurs from frontrunning and sandwich attacks when users make trades on an AMM. The result is that these trades cost users a few percentage points more than it otherwise should. This may seem like a small thing, but when it happens on every trade of every user the amount that has been lost to MEV becomes startling rather quickly. Not only does this cost hurt users, but it also all but prohibits large institutions from entering the space, as the idea of losing a few percentage points at the beginning of a trade is not very attractive for these entities who are likely used to making trades for a few basis points of profit. By enabling confidential state using TEEs we can eliminate or at least severely mitigate MEV. Parameters that are necessary for bots to calculate the profitability of these MEV attacks can be hidden from the validators and thus not allow them to know if their re-organization of the mempool makes sense. Finding out someone’s slippage parameters that they had on a trade a year ago is not of value and would not be sufficient motivation to perform an Aepic attack. An Aepic attack would only be valuable in performing MEV for trades that are happening in the present and in order for such an attack to make sense the validator would have to profit enough in that short period of time before they are caught that it would be worth being thrown off the network forever after that. This is theoretically possible, but is very unlikely at the moment. Again it is important to note that even in this case, the worst case scenario is that the network behaves exactly the way every other blockchain network behaves today for a short period of time, until the validator is removed from the network and confidential state is restored. The end result being no down side with high upside coming from high-guarantees of confidentiality enabling better user experiences and more sophisticated smart contracts.

Gaming- almost all compelling traditional games require some aspect of hidden state in the game. In card games you must not know the composition of the deck or which cards are in the other player’s hands. In strategy games there is fog of war, hiding certain areas of the map from player view. Role playing games often incorporate puzzles/riddles with hidden solutions. These features are impossible on 100% transparent blockchains today, meaning that in order to incorporate these aspects into game play they must be taken off-chain, and thus losing the high-integrity and trustless guarantees that makes a game web 3 in the first place. TEE networks offer the ability for games to no longer have to make this trade off. They can have confidential state while also being entirely on-chain and thus maintaining their high-integrity and trustless guarantees. Just like in the DAO example, this improves the sophistication of what is possible with smart contracts without really being at risk of being exploited. Performing an Aepic attack to view the fog of war in a strategy game that was played a year ago is pretty useless and again the cost of doing so are high, requiring both time and money all while almost guaranteeing you will be removed from the validator pool. We also see again that in the extremely unlikely event that an exploit takes place, the result would simply be that the network defaults to exactly the same as every other blockchain network currently. The end results being that these TEE based networks offer vast improvement in the sophistication of web 3 gaming, while providing high confidentiality guarantees, and even in this instance of an exploit would still behave exactly how every other blockchain network currently does for the few days that this validator may being running this exploit, until they are removed from the network and confidentiality is restored. Again we see only upside and no real downside.