Blockchain-based startup, Shyft Network is building some novel solutions to address the transparency issue within the sector. The Barbados headquartered firm seeks to establish some universal standards that can be applied by decentralised platforms to ensure regulatory compliance.
The Shyft Network solution comes as a timely remedy for the Decentralised Finance (DeFi) sector that has recorded massive growth recently, albeit remaining largely unregulated. Subsequently, there is an air of uncertainty surrounding DeFi that is greatly limiting its potential.
Compliant DeFi has been recommended as the suitable solution for breaking these barriers and unshackling the sector to ensure it lives up to its promise.
Why Crypto Compliance matters
The crypto community is quite averse to regulation in any shape or form such that the mere mention of compliance evokes very strong emotions and almost unanimous opposition. And this is understandable to a great extent. Reason being, anonymity, decentralisation and self-governance are some of the core tenets of blockchain technology. These principles also serve as the main drive behind the decentralisation movement.
So far, this tough stance has worked fairly well for the crypto community facilitating permissionless, peer to peer, and censorship resistance blockchain transactions without needing middlemen.
Similarly, blockchain technology has failed to achieve some of its potential due to its inherent nature. For instance, its trustlessness has created an opening that bad actors have exploited repeatedly leading to enormous losses for multiple users. So, no matter how well intentioned this feature is, it is working against the blockchain technology thus requiring a rethink.
The space has evolved greatly over the last decade with its transition to the internet of value ever edging closer. For this to happen some changes are needed thus requiring some compromise from the crypto community.
Why DeFi Compliance matters
The DeFi sector has emerged as one of the real life applications of blockchain technology with major implications in the everyday lives of millions across the globe. Its value has skyrocketed from about $650 million at the beginning of the year to over $14 billion currently according to Defipulse. In the process, DeFi has showcased its ability to transform the livelihoods of multiple households by availing basic financial services like savings and lending.
This explosive growth has courted the interest of key players in the mainstream financial markets with the likes of PayPal and Square among others seeking entry into the space. The entry of such companies would potentially bring millions of users to the crypto space thus greatly expanding its capacity and catapulting DeFi to the mainstream market.
However, the unregulated nature of the sector remains a major impediment and a cause of concern for these organisations. Their successful entry into DeFi needs to be preceded by regulatory compliance and transformation of the sector to accommodate the various guidelines provided by authorities.
As things stand, the crypto community has worked its best to push for mass adoption over the years but unfortunately seems to have hit a ceiling. The entry of traditional financial organisations into the space bears much potential and the ability to transform the sector.
In this respect, DeFi compliance seems like the logical next step in the journey of mainstream crypto adoption.
Shyft Network compliance solution
Shyft Network is a decentralized protocol designed to bridge the gap between fully decentralized, permissionless systems and fully centralized, permissioned systems. The network is an open-source development protocol designed to run decentralized identity-centric and trusted data applications. It also serves as a development platform for building applications that combine institutional and regulatory requirements into decentralized, permissionless systems.
Shyft Network is the first Decentralized Personal Information network that aggregates traditional requirements into decentralized infrastructure, enabling a bridged ecosystem for users.
Put simply, Shyft Network will facilitate trustless transactions in a decentralised environment by helping the parties to comply with all the regulatory requirements imposed on centralised systems. The platform achieves this by acting as a Trust Anchor that validates the personal data and transaction details by publishing their proof on the blockchain.
The Shyft Network has in-built smart contract capabilities in its architecture and is compatible with multiple blockchains thus making it ideal for facilitating frictionless transactions by limiting counterparty risk.
The Shyft Network’s compliance tool is a game changing invention that addresses the fundamental identity, security and reputation counter-party risks unlike similar compliance applications. They only provide proof of identity in concurrence with a transaction. This means the digital identity and other personal information always remain hidden, only to be retrieved when the need arises.
How would a Compliant DeFi with Shyft Network look like?
The Shyft Network’s solution does not entail any fundamental changes to the DeFi sector but rather will augment the industry making it more secure and efficient with minimal risk.
The tool will enable both decentralised and centralised entities to continue operating seamlessly meaning they will be lending, staking, and providing liquidity without fear of falling victim to bad actors. DeFi participants will be required to provide proof of their identity that will be used to whitelist their addresses. Whitelisted addresses will be able to interact with both the decentralised finance providers and mainstream institutions freely as they bear a higher level of trust.
The Shyft Network will also continually monitor all wallet addresses interacting with DeFi smart contracts and regularly query them for risk assessment purposes. The result of these queries will be used to generate reports and score addresses on a set risk evaluation scale to establish the trust levels of various participants. The Shyft Network will make this information readily available for DeFi platforms interested in making assessment of various participants. Most importantly, addresses found to be in violation of the set guidelines will be blacklisted to protect others from potential nefarious actors.
Evidently, the Shyft Network provides a much needed solution to the DeFi sector that has been likened to the Wild West. The platform opens up the sector to the mainstream institutions that have the potential to transform the crypto sector through mainstream adoption.
Even though compliance is a dreaded possibility for the crypto community, its benefits by far outweigh the costs thus making it a worthy compromise. The Shyft Network solution provides the means for frictionless transactions. This greatly improves trust in the DeFi sector thus enhancing its potential for growth in the future.
Source: Read Full Article
Litecoin (LTC) Price Analysis: Bears Aim More Downsides
Dogecoin Price Prediction: Doge Restarts Rally And Aims For $0.10
Fiserv Completes Acquisition of Marketing Platform BentoBox
European Commission To Present Regulatory Framework For Digital Euro In June
Has the Doge had its day? Dogecoin interest cools