ConsenSys, the blockchain software company headed by Etherem’s co-founder Joseph Lubin, plans to launch a compliance service focused on decentralized finance projects (DeFi) and cryptocurrency exchanges to analyze and track transactions utilizing the Ethereum network.
ConsenSys To Launch A New Service
According to a recent Bloomberg report, the new service coming from ConsenSys will primarily focus on better know-your-customer (KYC) regulatory compliance requirements. The company noted that some cryptocurrency firms have struggled with their implementation.
Decentralized applications (dApps) are becoming more and more popular among firms and developers, and a proper KYC system will fit “like a Lego piece,” said Lex Sokolin – an executive at ConsenSys based in London. He added that with the new service, his company is trying to make “the decentralized financial infrastructure much more safe, transparent, much easier to trace.”
While traditional finance has banks and third-party KYC/AML providers to watch out for any illicit activities, the cryptocurrency field is somewhat lacking proven methods. KYC is arguably the most utilized policy to keep fraudulent actions away from exchanges and platforms, but the results have not always been highly efficient.
As such, numerous exchanges have relied on third-party compliance and analytics companies to determine if someone is attempting criminal activities on their platforms. ConsenSys plans to enter the compliance market as well, but it will focus on payments employing only one blockchain network – Ethereum.
The report outlined that ETH’s network is still the most widely adopted, with over 280,000 coins transacting through it. With the new service, Consensys will analyze those coins on exchanges and DeFi companies allowing borrowing, lending, and other financial functions by utilizing smart contracts.
DeFi Recent Issues
Decentralized finance, with all of its merits, has been expanding rapidly, but a few projects also experienced security issues lately.
Firstly, an unknown attacker exploited the Chinese DeFi protocol dForce. It resulted in a loss of nearly $25 million from the platform. Somewhat surprisingly, the hacker later returned most of the assets, and dForce refunded its users.
A group of rogue mining entities initiated a form of a 51% attack on another project, dubbed PegNet. The miners, controlling 70% of the PegNet hash rate, manipulated the price of a Japanese Yen-pegged stablecoin (pJPY), submitted false data, and artificially inflated a wallet balance of $11 up to $6.7 million.
However, the perpetrators were unable to liquidate the assets and decided to burn them instead.