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The mastercoin specification (https://github.com/OmniLayer/spec) details an obfuscation process, but doesn't provide the motivation for implementing this obfuscation.
Why does mastercoin use this type of obfuscation, and what data does it inhibit onlookers from determining?
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Mastercoin (now called Omni) had an uneasy relationship with the bitcoin core team early on. Some of them objected to our injecting metadata into the bitcoin blockchain to do advanced transactions.
Because of their objections, we were concerned somebody might try to identify and censor our transactions. That didn't actually happen, thankfully.
I haven't heard any talk of censorship for a long time now, so I doubt that will be a concern going forward. Still, we had plans in place in case it became an issue. But it hasn't been used and hopefully won't need to be.
So the obfuscation was never actually used? – morsecoder – 2016-01-11T16:17:10.050
How would obfuscation help if mastercoin transactions can be easily identified by the exodus address? – morsecoder – 2016-01-15T17:05:53.273
The obfuscation would be combined with removing the Exodus Address output. It hasn't been used and hopefully won't need to be. – dacoinminster – 2016-01-15T21:23:30.030