DFP-31: optional regulatory features for pools

Header Content
Author Runex (@relativeread)
Created 2022-6-8
Status Draft

Motivation

Making dhedge accessible to everyone, also means taking into account upcoming regulation in specific territories.
I’m a big fan of decentralization and making finance available to everyone. As Dhedge is related to synthetix, it’s one of the defi projects that adhears closely to the defi-principles. I do not want to move away from this. I also understand this proposal is maybe a difficult one, but basically it makes dhedge more and easier accessible without limiting the core protocol, which should be universal.
However, people live in territories with laws. Dhedge should be available universally, but there should be a mechanism so people are sure pools are fine within their territory.

Description

Pools should have an optional feature, which may be enabled by poolmanagers to do kyc, mony-history check, … The core protocol should be universal, so “optional feature” is essential here. Things which are required for one territory would not be required somewhere else.The protocol that enables this should be one that knows the defi space.
I know this feature might be a bit early, but it would allow dhedge and the unique safety-features for investors and managers it provides, to be available to more people in the future.

Implementation

I’ll provide a more specific implementation here, but the real kyc-provider is open for me, but I think regulatory-features should be options on a pool.

Sekuritance, is a project/company I know through Trustswap. Trustswap has been using them for quite a while for their kyc-requirement regarding project-launches. I also mention here that I own about 200k in skrt (their token) myself, as I believe in their project.
Now, based on their medium page, they have a running offer, that anyone who owns 1 500 000 SKRT gets a free onboarding of their platform (Loyalty becomes Royalty: Adopter Levels for $SKRT Holders | by Sekuritance | Medium). Based on their current token price ($0.00286279), that shouldn’t be so expensive. https://www.coingecko.com/en/coins/sekuritance. Buying the SKRT will require a governance proposal, which I’ll link to this feature-proposal, if accepted.

Of course, it’s a startup basically, who already provides services to Trustswap though and is growing. There is a risk however. Dhedge would need to buy the required SKRT and before this gets bought, I’ll ask sekuritance whether that offer is still valid of course. But from everything I read, that seems to be the case.
They offer rest-api’s to do the different supported procedures (kyc, money background check, …).
They are also launching non-transferrable nft’s which will work as an id for a wallet. Once a user is known by sekuritance, they have done kyc for all projects which use sekuritance for kyc. That is how I understand it.

Besides this, they’ll also be launching virtual ibans, securecode verification, … in 2022-2023, which may be interesting for onboarding users. But that is a bit offtopic, but maybe interesting.

Vote

[Vote ]
I first would like to get some feedback on this proposal, to see if there’s support for it and maybe modifications are required. I’ll also abstain from the vote.

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Interesting proposal. Given dHedge is a decentralized protocol living on the blockchain as a set of smart contracts, I guess it would be best to outsource these services to a third party which managers can use.

Are there any good turnkey solutions for defi that managers can easily start using today?
Technically it shouldn’t require any token purchases etc.

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Why is the token purchase a bad thing? I have no real knowledge about this domain, but this isn’t about a bridge to normal finance, although it may be in the pipeline. This is about kyc, money-origin check, …

One also needs to buy dht-token to have a say/stake in the protocol, linked to its usage. Skrt is maybe even more, or as much, linked to its protocol token skrt than dhedge currently, as they link their services to skrt in this case. So, I see a defi-oriented company here.

For the rest, it’s a third party, turnkey-solution. They use rest-api’s to my knowledge, although the non-transferable nft I mentionned, would be a defi thing to check against in smart contracts.

Anyway, feel free to correct me if I’m wrong. My intention around this is that regulation is just a part of reality for a lot of people. Adding it to dhedge would make it great contender to cex’s, … while being based purely on the blockchain, and the core operating universally.

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FYI, this can be achieved today by creating a private pool and using a service like Blockpass. You can configure the Blockpass kyc/aml process to request a wallet address from customers, and then that wallet address can be whitelisted.

The only issue is that wallet white-listing is not an exposed method in the dhedge v2 SDK. So the process has to be manual, or you’d need to create a custom script on your environment that talks to the dhedge contracts to facilitate automated white listing post aml/kyc.

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