Author Archives: Astra Protocol

[vc_row][vc_column][vc_column_text]The use of blockchain-powered smart contracts, which automate and support a democratized decision-making system, is becoming a salient feature of nearly all decentralized projects.

Smart contracts are considered an essential component of any decentralized system, including the emerging decentralized finance (DeFi) sector, because such automated agreements help establish trust in platforms or projects. This way, a newly-launched initiative may be perceived (and actually be) as safe for investment.

Given the recent increase of new DeFi projects, as well as the rising number of disturbing exits, a blockchain initiative may need more than just smart contracts to really earn the trust of investors and stakeholders. So, what can be done that would make a meaningful and positive difference?

Patenting Smart Contracts May Address Key Business Requirements

One viable solution to these issues is a patent. Unlike the blockchain itself, which is an open-source tech and data structure that can’t be patented (in most scenarios), smart contracts can form new digital agreements that may be well-suited for a specific project. This is the reason why patenting smart contracts may be considered ethical and even essential for blockchain or distributed ledger technology (DLT) projects.

Proof of Trust is an innovation that aims to support the role of patents as a key part of a company’s end-to-end business processes.

The intellectual property (IP) of Proof of Trust is reported to number more than 30 awarded patent claims, with all patents reportedly being issued by the US Patent and Trademark Office. This could give investors a lot more confidence in a project and its commitment to deliver on its promises.

In addition to these developments, the Astra Protocol has been developed to provide decentralized organizations a legitimate means to adhere to regulatory guidelines while remaining operating in a decentralized manner. At a critical time in which there’s a sharp rise in fraudulent activity, Astra plans to provide the confidence required by industry participants to enter the crypto space.

Astra intends to offer the legal technology or Legaltech layer for crypto that may be integrated with emerging DeFi protocols. Funds must always reach the intended destination in a safe manner, which is what Astra plans to provide.

And in case there are any problems, then the team can take care of them and return the money in a seamless manner. Any issues can be addressed amicably with the addition of a conflict clause (which is actually what Proof of Trust is) to the platform and its smart contract.

As noted by the Astra team, this is all based on a Proof of Trust system, which is a built-in protection layer and mechanism that ensures peace of mind when performing monetary transfers and finalizing contracts through extra-judicial and extra-jurisdictional dispute resolution systems.

Establishing Trust Beyond Just Smart Contracts

It’s worth noting that filing for a patent can take a really long time and the process can be quite intense. On average, it can take anywhere between 12 to 22 months for a patent application to be processed and approved.

And the majority of patents are issued for a limited timeframe, which is usually around 20 years, and after this period has elapsed, the patent is made open-source. Moreover, the Astra Protocol team explains that greater trust also means more responsibility, for any initiative, especially when having to put in the additional time and effort.

As the crypto markets continue to mature, there’s been an alarming increase in illicit activities carried out by blockchain-related projects. That’s why it is important to look out for reasons to establish trust in a project beyond just smart contracts. In the majority of cases, a patented project should provide the reassurance that’s required to get involved.

The team at Astra Protocol has also previously noted that operating within DeFi space comes with “unpredictability” but also key opportunities. They’ve explained that many of the potential benefits of the underlying blockchain and smart contract tech also come with certain challenges.

The DeFi market is growing steadily and malicious actors are known to anonymously exploit different weaknesses in protocols to steal large amounts of funds.

In these scenarios, there’s usually no path to justice for the victims, the Astra Protocol team has explained. They also noted that with its rise in adoption during 2021, the news that often gets associated with DeFi involves damaging security breaches.

In 2020, 17 large DeFi scams had taken place and led to a loss of at least $154 million, the Astra Protocol team reveals. And by July of this year, DeFi-related exploits represented over 75% of crypto-related crime.

Providing a Decentralized LegalTech Layer

The Astra Protocol team has pointed out that there’s “a signal of uncertainty to potential investors in the sector” and motivation for law enforcement and financial authorities “to intervene within the market.”

In order to address these issues, Astra aims to serve as the decentralized legal technology platform focused on protecting industry participants from criminal activities. Astra also mentioned that they aim to bring trust to the DeFi market and reassure users that their investments are adequately protected.

With the appropriate protection from Astra, DeFi and digital assets are set for institutional adoption, the developers have noted.[/vc_column_text][/vc_column][/vc_row]

[vc_row][vc_column][vc_column_text]Major crypto firms such as Coinbase (NASDAQ: COIN) and Ripple have suggested a framework for crypto and digital asset regulation.

Overall, their approach is meant to provide a proper way for the blockchain and crypto industry to move forward. Crypto analysts believe that an effective approach to regulation would account for the key capabilities of virtual currency platforms and give them an opportunity to develop their products and services.

Industry analysts believe that ideal public policy outcomes may be achieved by close collaboration between public-private entities. A truly effective approach should be able to help with adapting applicable regulatory frameworks while encouraging the establishment of crypto innovation sandboxes.

Digital currency and blockchain or distributed ledger tech (DLT) platforms require clear regulatory and licensing frameworks, which can address the different challenges the industry has been facing.

DeFi Industry Needs More Regulatory Clarity

The suggested measures in these proposed digital asset frameworks intend to offer more legal clarity to industry participants as well as a better alternative to regulation-by-enforcement, which is a controversial (and heavily criticized) approach taken by the US Securities and Exchange Commission (SEC).

Lawmakers in the US and other nations are seriously looking into learning more about the wide range of cryptocurrency and decentralized finance (DeFi) platforms. It has become imperative to create a comprehensive policy framework for crypto-assets and this may be achieved through  clear communication between private and public actors, according to industry experts.

Crypto professionals also believe that public-private collaboration needs to be at the center of any meaningful legislative proposal. Any policy framework that’s meant to regulate digital currencies needs to encourage continuous dialogue between regulatory authorities and crypto industry participants. Moreover, public-private collaboration could result in improved policy outcomes for the crypto sector as well as individual consumers.

US financial markets are globally recognized because of their effective regulatory framework under which they consistently operate.

Astra Protocol May Help Authorities with Regulating Crypto Platforms

An innovative platform launched by developers of the Astra Protocol aims to serve as the decentralized compliance layer for DeFi. The Protocol’s developers have noted that the Chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, has pointed out that consumer protection needs to improve in the crypto-asset industry.

Gensler and other US policymakers have called for improved regulations for the nascent crypto and DeFi space in order to prevent fraud and other serious issues. The Astra Protocol team also notes that large-scale money laundering cases across different DeFi platforms has led to regulators paying a lot more attention to this emerging industry.

According to the Astra Protocol team, we need a highly secure, decentralized compliance platform to address these serious concerns while being able to seamlessly adapt to ever-evolving and sophisticated criminal activity.

Notably, the platform needs to be able to handle the constantly-changing regulatory landscape, as laws including the “Cryptocurrency Bill 2021” and the “Keep Innovation in America Act” are passed.

As explained by Astra, the Bank Secrecy Act requires decentralized institutions that are trading regulated financial instruments to conduct KYC and ensure proper AML compliance rules are being implemented.

As noted by the Astra team, one of these updated requirements is “Independent testing for compliance to be conducted by the futures commission merchant or introducing broker in commodities’ personnel or by a qualified outside party.” In order to address these guidelines,  Astra Protocol has specifically developed their platform to fulfil this role for DeFi and crypto networks.

As noted by Astra, the “Travel Rule” is an effective way to address issues involving money laundering, terrorist financing, and other types of illicit activities. At present, virtual-asset and DeFi platforms have a wide range of approaches to ensuring due diligence, KYC, and handling  AML/CFT procedures.

US Crypto Investors Still Facing Serious Risks

But there are still a fairly large number of platforms still accessible to US investors that have no standardized or proper KYC processes. Moreover, weak KYC is still a serious issue as would-be criminals are able to circumvent these barriers. And investors are still at considerable risk from exploits/hacks, fraudulent activities, and theft as long as they are not working within a system that offers robust KYC/AML solutions.

As DeFi gains more users, it will definitely require a proper regulatory system so that investors are afforded the protection they need. In order to play by the rules, DeFi protocols will have to make significant investments in a proper compliance layer as soon as possible. If they don’t take such measures, then governing entities could strictly penalize those who violate applicable AML rules, as the SEC has clarified on many occasions.

Astra further notes that their mission is to provide all DeFi protocols and Virtual Asset Service Providers (VASPs) with a completely decentralized compliance layer. Their product offerings include KYC/AML services to act as a tool to tackle everyday compliance issues by leveraging the industry know-how of reputable legal firms.

As noted by its creators, Astra has been specifically designed to bridge the gap between regulators and crypto/DeFi industry innovators. Astra Protocol’s offering aims to support the best quality KYC and other appropriate due diligence procedures via applicable frameworks from renowned legal organizations.

Astra Protocol to Offer Comprehensive LegalTech for Different Jurisdictions

Their platform provides decentralized organizations and VASPs a proper mechanism to follow various regulations implemented by jurisdictions throughout the world. For novice DeFi traders or investors, their patented tech calls upon industry professionals from different legal and accounting companies to carry out relevant AML/KYC processes.

They aim to provide a secure service to all customers that has been tailored to any jurisdiction’s specific requirements. In addition, they provide clients a comprehensive analysis of various risks for any DeFi user based on recognized money laundering / terrorism financing flags. With Astra, decentralized platforms are able to regularly demonstrate that they’re aware of and effectively reacting to serious dangers while preventing suspicious transactions as needed.[/vc_column_text][/vc_column][/vc_row]

[vc_row][vc_column][vc_column_text]Since the release of Satoshi’s Bitcoin whitepaper in 2008, numerous key developments in the blockchain industry have evolved, altering the direction of the entire ecosystem and the broader financial market. One of these trends is decentralized finance (DeFi).

The exponential expansion of the DeFi market highlights the promise of digital currencies and decentralized platforms to provide an alternative to the traditional finance system, which has experienced persistent stagnation for decades, restricting innovation and deemphasizing financial inclusion. Within the growing digital economy, DeFi is laying the groundwork for permissionless, blockchain-based financial services.

Decentralized Finance (DeFi) enjoyed a boom in 2020, with a 14x increase that year. DeFi is already a billion-dollar market worth $80.4 billion, and experts predict much greater growth in the coming year. Matthew Roszak, an experienced crypto investor, believes that the DeFi sector would grow tenfold to become an $800 billion sector as a result of growing mainstream crypto acceptance, the worldwide search for yield, and increased inflation.

However, despite the gold rush for the sweet spots of the DeFi sector, there are several issues facing this new sector. Astra, a legal compliance and dispute resolution protocol is here to help.

DeFi explained

Decentralized finance (DeFi) is an umbrella word for a multitude of public blockchain applications and projects aimed at disrupting the existing finance world. DeFi is defined as financial applications built on blockchain technologies, generally employing smart contracts, and is inspired by blockchain technology. Smart contracts are automated enforceable agreements that can be accessed by anybody with an internet connection and do not require middlemen to execute.

DeFi refers to applications and peer-to-peer protocols built on decentralized blockchain networks that do not require access rights for simple lending, borrowing, or exchanging of financial tools.

One of the most appealing aspects of adopting blockchain technology to reimagine banking is how the market may become permissionless and available to everybody. Another draw is the concept of composability, which means that anyone can combine any existing DeFi offering to create a new one. The modularity of such a network, which is essentially made up of interlocking blocks, also means that subsequent developments and demands in the finance space may be readily built on top of the network and integrated together, with everything governed by smart contracts.

Because smart contracts are essential to DeFi applications, the majority of DeFi projects are being developed on the Ethereum network. This is due to the widespread availability of developer capabilities to work with Ethereum’s Solidity programming language, which allows for the generation of the required smart contracts. However, several other blockchain networks, such as Solana, Polygon, and BSC, now allow DeFi applications as well.

DeFi sectors continue to thrive

Despite the fall in May, DeFi has continued to grow exponentially.

1. Decentralized exchanges (DEX):

Trading volumes on DEX increased by over 8,000 percent in the first quarter of 2021 compared to the same period last year, according to Messari. Curve Finance and Uniswap are the two largest DEXs in terms of trading volume and TVL.

2. Asset management: 

Yearn.finance continues to dominate DeFi’s asset management sector. Yearn’s TVL has increased from around $500 million at the start of the year to nearly $4.5 billion as of today.

3. Stablecoins:

Stablecoins have played a significant part in DeFi, serving as a link between the burgeoning digital economy and traditional finance. USD Coin (USDC), a USD-backed digital currency developed in 2018 by Circle and Coinbase, was the fastest-growing stablecoin in both 2020 and 2021. The overall market cap of stablecoins has risen from around $25 billion in January to more than $109 billion as of June 2021.

4. Derivatives: 

Futures and options are the next big thing being built on decentralized exchanges. Projects such as Hegic, Perpetual Protocol, and Mirror Chain are gaining traction in the DeFi community.

Growth with risk attached

Many DeFi programs on the market today have a host of flaws. Hundreds of more projects lack the financial and regulatory safeguards and compliance requirements that are presumably required of them, rendering them vulnerable to a regulatory crackdown. Some of these projects, such as Yearn.Finance, has also been hacked and has lost millions of dollars.

Another problem associated with DeFi is that they are emerging types of products created by non-financial people. Product structuring is a sophisticated procedure that is best refined by skilled financial engineers at investment banks.

Other risks arise from smart contract failures and other human errors as a result of centralization on “DeFi” systems that are not totally decentralized due to a lack of experience in the embryonic DeFi sector.

In addition, there is no clear regulation of the world’s fragmented financial system. Most individuals do not trust the system because governments or central banks have no control over transactions. Furthermore, municipal governments in some nations may restrict cryptocurrency without prior notice. This is one of the most serious issues with DeFi technology.

The risk of criminal conduct is likewise increased due to a lack of regulation. Because the system provides anonymity, anyone can send or receive money without identifying their identities, giving crooks greater alternatives.

Furthermore, because smart contracts act as middlemen for DeFi platforms, their flaws might disrupt the operation of DeFi ecosystems. Smart contracts are programmable algorithms that simulate traditional (actual) contracts.

After the conditions are entered into it, a smart contract controls the execution of the contract between the two parties. The presence of an error or bug in the code, on the other hand, can result in the loss of funds locked in the smart contract.

Knowing all the aforementioned risks may drastically reduce trust in the DeFi sector. Billionaire crypto investor Michael Novogratz tweeted that if the risk persists, the sector may face further regulatory sanctions and legislation. He advised that DeFi developers should add a compliance layer to help mitigate these risks.

As DeFi developers and users grapple with these issues, the Astra protocol has been developed to serve as the backbone of DeFi in terms of regulation and stakeholder protection. By providing legal assurance to smart contracts, the protocol works as an on-chain dispute resolution layer.

Astra Protocol: DeFi’s compliance layer

The Astra protocol provides a legal layer that connects to any existing DeFi platform. Astra is the default mechanism for resolving any potential issues that may arise from blockchain transactions.

To be more specific, smart contracts are essential components of any decentralized system, such as DeFi. It aids in the establishment of trust in a secure investment. However, there is no regulator or oversight role in place to supervise decentralized protocols that successfully reduce doubt, potential fraud, and provide a competent dispute resolution system. All of these capabilities, in addition, would pave the way for everyone to have public, permissionless blockchains – exactly what Astra Protocol aims to provide.

To tackle all issues, Astra employs a combination of human skill and technology. This includes, if they occur, human mistakes, fraudulent transactions, and accidental payments.

As a result, all parties and transactions are completely legally protected. It is a cost-effective and expedient method of resolving any issues that may emerge, as well as adding an added layer of peace of mind to any engagement.

Conclusion

It is a difficult undertaking to provide a layer of assurance to decentralized finance. With so many initiatives, protocols, services, and yield farms, huge sums of money are freely flowing with huge risks. Astra provides a solution to DeFi issues by simply incorporating their protocol into the platforms.[/vc_column_text][/vc_column][/vc_row]