Today Coinfirm is proud to announce the release of AML Oracle, the first smart contract-based solution for AML compliance of the burgeoning decentralized finance (DeFi) scene.
The Oracle unlocks a key barrier that DeFi presented to previously developed blockchain compliance technology on the market.
Because DeFi protocols run on-chain smart contracts – meaning that any compliance layer needs the same format of technology required to interact with a DeFi provider such as a decentralised exchange (DEX) through client smart contracts – a specifically tailored solution is necessary.
By being built out of the Ethereum protocol the AML Oracle is that solution – enabling decentralized entities to continue their lending, staking and general DeFi activities without fear of falling afoul of nefarious actors in their system – with an added emphasis on security and cost-effective gas usage.
“As a company, we are continually striving to present the market, firms and teams with solutions that uniquely fit around their chosen operations. The Oracle is a first-of-its-kind innovation to solve the issue of compliance in DeFi without DEXes having to conform to a centralised model.” – Coinfirm Chief Technology Officer, Jakub Fijolek
Coinfirm’s AML previously developed the Network Members system which enabled users to report suspicious addresses in return for AML rewards. The Oracle builds the foundation for more complex compliance structures. It moves to provide the tool to support an exponentially expanding frontier in crypto to be accepted in a compliant fashion, and thus increasing the user base in the long run.
The new solution approaches the question of compliance with a focus to streamline business activity for the DeFi based on risk / reward ratios of resources deployed.
When users interact with a decentralised finance provider, their wallet address can be queried for risk through AML Oracle’s smart contract-compliant system which in turn passes data through Coinfirm’s API to generate a report ID C-Score based on 270+ risk evaluation scenarios that relates the information to the DEX.
AML Oracle therefore enables DeFi platforms to quickly assess the risk of new addresses by receiving an immediate C-Score, giving the DEX the ability to make a fully-conscious decision about the transaction. If the decentralised entity is needing a more detailed explanation of the ‘why’ – a fully enhanced report on that address is provided.
Inclusive of this new smart contract-compliance technology are intelligence exchanges, blacklisting capabilities & real-time protection against malicious actors. Oracle smart contracts can be deployed in various configurations & code revisions running in parallel for unique needs to each DeFi application.
Intelligence Exchange enables AML Oracle partners to report nefarious cryptocurrency addresses related to ransomware, hacks, rug pulls and other types of fraud. Blacklisting, where the Oracle ecosystem can block suspicious users and funds from transacting. Protection Against Malicious Actors, where DEXs receive protection from actions by bad actors. They are notified in real time about scams, hacks and high-risk wallets’ activities.
Additionally, whilst DEXs and other DeFi platforms may seem to be decentralised, development teams in control will put them in regulatory sights. For truly decentralised DeFis, the rapidly growing sector will inevitably attract regulatory scrutiny tailored to the model. By this new product offering, Coinfirm provides applications of both partial and full decentralisation a tool to proactively manage compliance risks.
With $1 Billion locked into DeFi at the beginning of 2020, the figure is increasing rapidly, currently standing at close to $10 Billion, a 10x increase. As the space continues to break new ground and records, Coinfirm is proud to announce the AML Oracle and stands ready to partner with those looking to create a safer blockchain economy.
For partnership enquiries about the AML Oracle & how the solution de-risks compliance in DeFi, drop an email at oracle@coinfirm.com
Creating a safer blockchain economy.
