Administrative Precompiles for Risk-Based Blockchain Compliance
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Solution Overview
Problem
Institutional entities face challenges in interacting with decentralized applications due to varying Know Your Customer/Know Your Business/Anti-money Laundering (KYC/KYB/AML) obligations, which traditional blockchains struggle to accommodate, leading to difficulties in compliance and operational efficiency.
Innovation Solution
Implementing administrative precompiles in institutional subnets to enforce security regulations and compliance, allowing network operators to control user interactions and modify blockchain states, thereby reducing operational burdens and enhancing adaptability.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If traditional blockchains are used without administrative precompiles, then decentralization and openness are maintained, but institutional compliance requirements (KYC/KYB/AML) cannot be enforced
Solution Approach 1:
The patent introduces administrative precompiles as intermediary components that mediate between institutional compliance requirements and blockchain operations. These precompiles act as trusted intermediaries that enforce KYC/KYB/AML regulations without requiring fundamental changes to the decentralized blockchain architecture, thus resolving the contradiction between compliance adaptability and system complexity
Solution Approach 2:
The patent segments the blockchain system into distinct functional components: administrative precompiles for compliance enforcement, validator nodes for consensus, and application contracts for business logic. This segmentation allows compliance requirements to be handled by specialized precompile components without complicating the entire blockchain system, enabling institutions to interact with compliant subsets of the network
2Adaptability or versatility
If administrative precompiles are implemented to enforce compliance, then institutional access and compliance are improved, but system resource costs increase
Solution Approach 1:
The patent implements preliminary action by performing compliance verification and risk assessment before allowing institutional interactions with the blockchain. Administrative precompiles pre-validate user identities, assess risk scores, and establish compliance parameters in advance, preventing resource-intensive operations on non-compliant transactions and reducing overall system resource consumption
Solution Approach 2:
The patent applies local quality by implementing compliance checks and administrative controls only in specific contexts where institutional interactions occur, rather than applying uniform restrictions across the entire blockchain. This allows the system to maintain low resource costs for standard decentralized operations while providing enhanced compliance capabilities where needed
3Reliability
If risk verification and scoring are performed for all users, then compliance and security are improved, but operational efficiency and speed decrease
Solution Approach 1:
The patent implements partial action by performing comprehensive risk verification only for institutional users and simplified checks for standard decentralized participants. Administrative precompiles apply differentiated verification levels based on user type, transaction value, and risk profile, ensuring compliance reliability for institutional operations while maintaining operational efficiency for routine blockchain transactions
Data Source
AI summary
A method and system for generating versions of assets comprising various levels of detail is provided. The method includes generating an institutional subnet with one or more blockchains. The method further includes enabling a set of administrative precompiles for the one or more blockchains, verifying whether a user of the institutional subnet is authorized to interact with the one or more blockchains. The method further includes generating a risk score associated with the user and modifying, based on the risk score, at least one administrative precompile in the set of administrative precompiles for the one or more blockchains based on risk score requirements of each of the blockchains.