Hackernoon logoProviding Proof in an Untrusting World by@dragonchain

Providing Proof in an Untrusting World

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@dragonchainDragonchain

America's Blockchain

It’s no surprise trust in our institutions is dwindling. Given the current state of politics, biased media, and bad actors in our financial markets, more and more people are seeking proof, over a promise. For a business, it can be difficult to break through skeptical barriers to capture and maintain its customers' trust. That is why Beaxy called on Dragonchain and its Proof Systems

At a time when those of us are learning the ropes to decentralized finance, Beaxy is staying true to its mission to build the most transparent, user-friendly exchange in the world. Not constrained by poor liquidity, inefficiencies, or difficult user experiences like those seen in decentralized finance, Beaxy has found that “best of both worlds” sweet spot. No other exchange, crypto, or legacy, provides immutable proof secured to multiple public networks with a level of transparency not seen elsewhere. Who says the spirit of crypto can’t be seen in a centralized exchange!

All the trades at Beaxy have been on-chain since August of 2020. Learn more here.

What’s A Proof System?

Powered by Dragonchain’s Interchain technology and secured by hash power, Proof Systems leverage multiple blockchain systems to prove that transactions occurred at some point in time. The system is all about providing measurable proof of compliance to consumers, regulators, and partners of industry regulations and standards. The hybrid blockchain-based chain of custody solution includes a private business blockchain for businesses to privately and securely ledger their transactions. Proof of the transaction then goes through a series of decentralized verifications within Dragon Net, Dragonchain’s consensus protocol. Then, the proof is ledgered to Bitcoin and Ethereum to capitalize on the immense hash power of both public networks. Let’s dive into how a business could use Proof Systems through the lens of Beaxy.

Proof of Orders

An order book is a list of buys, sells, and canceled orders at each price point. The order book provides the necessary transparency into price action, asset availability, depth of the trade, who initiates transactions, and the history of all orders. This transparency is important for traders to make informed decisions when executing trades. The data is also important for the exchange as regulators will also need this information.  

Dragonchain provides Proof of Orders for exchanges by placing every order on-chain when created. This time-stamped proof provides evidence for both the trader and the exchange that all transactions occurred well in advance of their fulfilled order, providing a measurably provable trusted environment. This one action has enormous benefits for Beaxy as well as its customers.

Proof of Volume

The volume reported throughout the day by exchanges is typically estimated and indicates the significance of any increase or decrease in asset prices so traders can make informed decisions. There tends to be a lot of skepticism about volume in the crypto community. In 2019 Bitwise released an in-depth report on which exchanges had verifiable volume. By analyzing the granular data offered through APIs, Bitwise was able to identify ten exchanges that were reporting accurate numbers.

Dragonchain takes it a step further by plugging into Beaxy's level two order book. The level two order book is the equivalent to legacy exchanges’ level three recording of canceled, partial, pending, and executed orders.

Because of the hybrid architecture of Dragonchain, Beaxy could reconstruct the history of every order from the time that it's initially sent to the time it's either canceled or filled to prove accurate volume data all while maintaining anonymity. 

This level of transparency is not matched and only possible with Dragonchain’s hybrid architecture. 

Proof of Timing

As an answer to front-running, Dragonchain is providing Proof of Timing. Front running is when a broker or entity has prior knowledge of a non-public order that is set to take place and acts on the prior knowledge. On-chain time-stamped orders prove the timing of each order and can be used to indicate whether or not a broker acted before one of its client's orders. 

Time-stamped orders also allow Beaxy to prove there is no “line jumping”, as is sometimes seen in decentralized finance. Line jumping is where a faster trader sees a transaction hit the blockchain and puts the exact same transaction on the blockchain, but with a higher gas fee. Line jumping has never been done at Beaxy and now they can prove it. 

All orders are on-chain to provide proof of regulatory compliance and customer trust. Learn more here.

Proof Report for Every Transaction

A Proof Report is the historical breakdown of a Dragonchain transaction. The simple and easy-to-read report provides information essential to proving chain of custody by showing the transaction ID, timestamp, raw data, and the hash of Bitcoin and Ethereum.

The proof report also shows the Transaction Security Value. This value shows, in real-time, how many dollars ($USD) of energy consumption has been used to secure a transaction. The security value of a transaction starts with millions of dollars of proof on the first day and increases to billions of dollars within a few months. Every subsequent block securing the transaction makes tampering with any transactions economically debilitating.

In the above picture after just 7 months, this Beaxy transaction has a Transaction Security Value of $2,587,660,647.36. This amount of security is applied to each and every transaction without added cost to the business and will continue to increase infinitely.

Proof reports can be distributed to authorized parties or consumers to enhance accountability and transparency. The customizable report can selectively expose all or part of any transaction class to partners or customers. These reports can further be used to prove compliance to regulatory authorities should the need arise. 

See a proof report here!

Proof Systems for Regulatory Compliance 

There is no getting around the fact that every industry comes with some amount of regulation. Keeping up with compliance can cost a business upwards of $30.9 million, depending on the business. Non-compliance isn’t an option as it can cost businesses twice as much as maintaining compliance. 

With a simple integration into existing software, Proof Systems will help businesses prove they followed policies and procedures as outlined in the specified regulatory framework. Transactions are stable and deterministic with costs as low as $1.00 per 400,000 transactions. Once a business has all its data on-chain, generating proof reports for regulators becomes a much easier and cost-effective process. 

Proof Systems for Everyone

Although Beaxy is the pioneer user of Proof Systems in this manner, our software technology can easily do the same for any business needing to prove compliance. From supply chains to healthcare, any industry that needs to prove a process will find proof systems a cost-saving solution for intelligent decision making, trade surveillance, and risk management.

Proof Systems use the fundamentals of blockchain technology to ledger data for time-stamped proof, immutability, and security. By integrating Proof Systems into its order book, Beaxy is actually using blockchain underlying technology to foster a transparent and secure environment for its customers. This massive leap in blockchain application can be replicated throughout all industries, across all businesses. 

To learn ways Dragonchain can implement Proof Systems for you contact us today!

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