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Penumbra Community Call Key Highlights & Updates: Noctis Explorer, Liquidity Tournament, Prax Wallet, and more.
Here’s a detailed breakdown of the topics discussed:
1. Noctis: The Penumbra Blockchain Explorer
Blockchain explorers are a vital tool for users and developers, allowing them to analyze transaction activity, monitor network status, and verify execution without compromising privacy. Unlike standard blockchain explorers that expose wallet balances and transaction histories, Noctis ensures that only essential, aggregate data is visible, protecting individual users’ financial privacy
Sergei from PK Labs presented updates on Noctis, Penumbra’s privacy-preserving blockchain explorer. Noctis serves as an essential tool for users and developers to gain visibility into the shielded network while maintaining privacy.
Key Features & Updates
1. IBC Tracking: Mapping Cross-Chain Transactions
IBC (Inter-Blockchain Communication) is how Penumbra connects to other Cosmos-based chains, allowing users to shield and unshield assets from external networks like Osmosis, Cosmos Hub, and Noble (USDC issuer).
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Visualizing Connected Chains: Noctis displays a comprehensive list of all chains connected to Penumbra via IBC, including which ones are actively transacting.
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Tracking Transactions: Users can monitor inbound and outbound transactions, meaning they can see when assets are transferred into Penumbra (becoming private) or unshielded back to public networks.
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IBC Client Monitoring: Since Penumbra is permissionless, any chain can attempt to connect via IBC. Noctis tracks both active and expired connections, making it easy for developers to see which bridges are functioning.
2. Validator Information: Strengthening Network Transparency
One of the upcoming enhancements is a dedicated validator tracking section within Noctis.
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Users will be able to see the full list of validators, their staked amounts, and transaction history (minus private details).
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Delegators will have better visibility when choosing where to stake their UM tokens.
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Noctis will help monitor validator performance and governance participation.
This addition will provide more insight into network security and decentralization, ensuring Penumbra remains strong and reliable.
3. DEX Insights & Liquidity Monitoring
With Penumbra’s Liquidity Tournament (LQT) launching soon, liquidity providers need better insights into DEX activity. Noctis is expanding to provide critical trading data, including:
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Liquidity Position Overview: Users will see a global view of all liquidity pools, rather than only their personal positions (which are accessible in Penumbra Dex, Veil.)
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Batch Execution Tracking: Since Penumbra executes swaps in batched transactions, Noctis will provide visibility into how swaps are routed efficiently across multiple liquidity sources.
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Shielded & Unshielded Trading Volume: An important metric for understanding DEX usage while preserving privacy.
These updates will empower liquidity providers to make informed decisions while reinforcing Penumbra’s privacy-first trading model.
What’s Next for Noctis?
Expanded Shielded Pool Metrics—users will be able to track total network liquidity while maintaining privacy.
Enhanced Developer Tools—including raw JSON transaction inspection for debugging and protocol development.
More Analytical Tools—allowing traders, validators, and researchers to study Penumbra’s growth without exposing individual user data.
Noctis is evolving into a powerful visibility tool for a privacy-first blockchain, ensuring that users, traders, and builders get the insights they need without compromising the network’s privacy guarantees.
Sergei emphasized the importance of privacy while ensuring useful network data remains visible. The improvements to Noctis will play a crucial role in helping users navigate Penumbra’s privacy-first landscape.
2. Liquidity Tournament: Incentivizing Market Depth
Erwan, CTO of Penumbra Labs, explained the newly developed Liquidity Tournament (LQT), a protocol-level incentive mechanism designed to reward market makers for contributing liquidity.
Why the Liquidity Tournament Matters
Unlike many DeFi platforms that rely on arbitrary liquidity incentives or backroom market-making deals, LQT ensures that liquidity is provided efficiently by rewarding those who contribute the most useful liquidity, meaning positions that actually drive trading volume.
Instead of simply rewarding liquidity providers for depositing funds, the system measures how much trading volume their liquidity generates, ensuring that incentives go to participants making the DEX more functional.
How It Works
1. Delegator Voting Determines Rewarded Assets
Each epoch, delegators vote to decide which assets will be eligible for rewards. If an asset (e.g., USDC, TIA, BTC) gets enough votes, it becomes part of the tournament for that epoch.
- Voting happens every epoch, allowing the community to adjust which assets receive incentives dynamically.
- Only staked UM holders (delegators) can vote, ensuring that participants have skin in the game.
2. Liquidity Providers Compete for Volume
Once an asset is selected, liquidity providers (LPs) compete to provide the best liquidity for trading pairs involving that asset.
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LPs earn rewards based on execution volume rather than mere deposits.
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To maximize earnings, LPs need to provide liquidity at competitive prices, ensuring better market depth and tighter spreads for traders.
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Execution tracking ensures fairness - LPs can’t artificially inflate their activity through wash trading.
3. Reward Distribution Based on Performance
At the end of each epoch, the rewards pool is distributed to liquidity providers based on how much real trading volume their positions generated.
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The best-priced liquidity earns the most rewards.
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LPs can’t game the system easily. They have to price their liquidity competitively to win.
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This creates an organic incentive for deeper liquidity, improving execution quality for traders.
Key Benefits of the Liquidity Tournament
Encourages honest liquidity provisioning—rewards go to those who actually contribute to trading volume, not just deposit idle funds.
Eliminates inefficiencies—unlike typical liquidity incentive programs, LQT prevents wash trading and ensures maximum value creation.
Enhances price discovery—LPs competing to provide the best price leads to tighter spreads and lower slippage for traders.
Dynamic & transparent—delegators shape the tournament by voting, allowing the ecosystem to react to evolving demand.
This mechanism represents a major step forward for decentralized trading in Penumbra, ensuring fair, transparent, and competitive liquidity incentives while reinforcing privacy-first trading.
3. Prax Wallet Improvements
Major user experience enhancements have been deployed for Prax, the browser extension wallet for Penumbra.
What’s New in Prax?
Faster Performance & Smoother UX
Early versions of the wallet faced challenges with transaction processing times and interface lag. The new update significantly improves responsiveness, making interactions between Prax and Penumbra snappy and seamless.
Enhanced Transaction Handling
Users can execute shielded transactions with less friction—fund transfers, staking, liquidity provisioning, and swaps happen with minimal wait times.
Improved Connection Stability
Penumbra’s shielded architecture requires specific cryptographic proofs for transaction execution. Earlier versions of Prax had occasional issues syncing transactions, causing delays. The new stability improvements ensure a more consistent experience across all wallet operations.
Better Integration with Penumbra Dex (Veil)
On Veil, executing shielded trades, managing liquidity positions, and interacting with governance is more intuitive and effortless.
The improvements address previous usability concerns, making Prax Wallet significantly more efficient. Users who stepped away due to early friction are encouraged to re-engage and test out the enhanced version.
4. Governance Proposal: TIA as an Accepted Gas Token
A governance proposal has passed, seeking to add Celestia’s TIA token as an accepted gas token within Penumbra.
- Users holding TIA will not need to acquire UM tokens to transact on the network.
- Voting is now closed. Users can participate in voting on the next governance proposals via void.vote.
5. UM Token: The Core Utility of Penumbra
The UM token plays a critical role in Penumbra’s privacy-first ecosystem, not just as a governance token, but as a functional tool that enhances the usability and efficiency of the network. Unlike many blockchain-native tokens that serve only as speculation assets, UM is deeply integrated into the mechanics of Penumbra, ensuring that it remains useful beyond governance and staking.
Key Functions of the UM Token
Gas Fees & Transaction Execution
UM is the most cost-efficient fee token on the network, meaning users who hold UM pay the lowest possible transaction fees when executing swaps, transfers, and staking operations. While Penumbra supports alternative fee tokens (like USDC, ATOM, and OSMO), those tokens have slightly higher fee pricing compared to UM. This creates an organic incentive to hold and use UM for efficient transactions.
Liquidity Tournament (LQT) Participation
UM plays a key role in governance, specifically in determining which assets receive liquidity incentives in the newly introduced Liquidity Tournament (LQT).
- Delegators stake UM to vote on which trading pairs receive incentives.
- This ensures that liquidity rewards go toward the most useful assets, rather than arbitrary market-making deals.
- By voting, UM holders shape the trading environment, driving deeper liquidity and tighter spreads in the Penumbra DEX.
Privacy-Preserving Swaps & Market Execution
UM serves as a key vector for shielded transactions. It plays a vital role in enabling efficient trading within Penumbra’s private decentralized exchange. The token functions as a fundamental trading pair, reinforcing privacy and accessibility for users who want to swap assets securely.
Alternative Fee Token Expansion
Penumbra allows specific external tokens to serve as gas fees, reducing friction for first-time users entering the network.
- Currently, USDC, ATOM, and OSMO are accepted fee tokens.
- A newly passed governance proposal aims to add TIA (Celestia’s native token) to this list.
- These alternative tokens let users transact without needing to acquire UM first, improving user accessibility while still reinforcing UM as the lowest-cost fee option.
A detailed blog post explains the three components of Penumbra’s token economy.
Final Thoughts & Next Steps
Penumbra is evolving rapidly, with enhanced tools, liquidity incentives, and governance improvements ensuring that privacy and usability remain top priorities. Community members are encouraged to test Noctis, engage with Prax, provide feedback in Discord, and vote on governance proposals to shape the future of Penumbra!