Cryptocurrency Valuation and Decentralized Custody Framework
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Solution Overview
Problem
Current methods for querying and characterizing blockchain transactions are inadequate for analytical workloads, and traditional data mining and machine learning approaches fail to accurately represent blockchain behaviors due to insufficient data and unknown categories, leading to high error rates. Additionally, existing asset management systems are ill-equipped to securely value and safeguard cryptocurrency assets, which are prone to theft and require new valuation techniques that account for their unique nature.
Innovation Solution
A novel valuation framework for cryptocurrency assets based on developer activity, project utility, and market maturity, using a Fundamental Crypto Asset Score (FCAS) that incorporates unique data sources and characteristics, along with a decentralized algebraic mechanism for custodial services that splits private keys among multiple parties to secure assets without a single point of failure.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional data mining and machine learning approaches are used to characterize blockchain transactions, then the analysis can be performed with existing tools, but the error rates become extremely high due to insufficient data and unknown categories
Solution Approach 1:
The patent transforms the approach by changing the parameters used for characterization from traditional probabilistic clustering to a hybrid model that incorporates deterministic rules, graph theory metrics, and behavioral patterns. This fundamental parameter change allows accurate characterization even with limited data by relying on structural properties of blockchain transactions rather than statistical assumptions
Solution Approach 2:
The patent introduces an intermediary layer of analysis that processes raw transaction data through multiple stages: initial filtering using deterministic rules, graph-based relationship mapping, and behavioral pattern recognition. This intermediary processing layer bridges the gap between raw data and meaningful insights, reducing error rates by validating results through multiple independent analysis pathways
2Ease of operation
If conventional asset management systems are used to safeguard cryptocurrency assets, then custody services can be provided by third-party trusts, but the problem is simply pushed onto a separate party and clients do not want to be responsible for securing their own assets
Solution Approach 1:
The patent segments the private key into multiple distinct shards using secret sharing schemes. Each shard alone is insufficient to access the asset, but a threshold number of shards can reconstruct the private key. This segmentation distributes trust across multiple parties and eliminates single points of failure, allowing clients to access assets conveniently through authorized combinations of key holders without relying on a single third-party custodian
Solution Approach 2:
The patent implements beforehand cushioning by pre-distributing key shards to multiple trusted parties before any security incident occurs. This proactive measure ensures that even if one or more key holders are compromised, the assets remain secure as long as the threshold is not met. The system cushions against future security threats by design rather than reacting to incidents
3Ease of manufacture
If traditional valuation metrics are used for cryptocurrency assets, then familiar financial methods can be applied, but many metrics do not exist or are not as accurate for crypto-assets due to their different underlying structures and activities
Solution Approach 1:
The patent changes the valuation parameters from traditional financial metrics (P/E ratios, market cap based on earnings) to blockchain-specific parameters including transaction volume, active addresses, developer activity, network hash rate, and protocol adoption metrics. These parameter changes reflect the actual value drivers of cryptocurrency assets, improving valuation accuracy while maintaining systematic assessment approaches
Solution Approach 2:
The patent creates a universal valuation framework that can assess different types of cryptocurrency assets (coins, tokens, utility tokens, security tokens) using a common set of adjusted metrics. This multi-functional approach adapts traditional valuation principles to work across diverse crypto-asset classes by modifying the relevant parameters for each asset type rather than requiring entirely different valuation methods
4Device complexity
If blockchain data is stored and accessed using traditional database structures, then existing database tools can be used, but addresses, transfer style transactions, contracts, and contract method calls are fundamentally different entities that require unique storage choices
Solution Approach 1:
The patent segments blockchain data into distinct structured categories: transaction data, contract data, account data, and metadata. Each segment is stored in optimized formats suited to its specific access patterns and query requirements. This segmentation allows the system to handle fundamentally different entities (addresses, transactions, contracts) efficiently while maintaining overall system simplicity through modular architecture
Solution Approach 2:
The patent adds dimensional organization to blockchain data by creating multi-level indexes and hierarchical structures that enable efficient querying across different data types. Rather than forcing all data into a single flat structure, the system organizes data along multiple dimensions (time, account, transaction type, contract address) allowing versatile access patterns while maintaining storage efficiency
Data Source
AI summary
The fundamental health of a crypto-asset is determined based on factors associated with the development and utility of the crypto-asset. Developer activity data associated with the crypto-asset is received from one or more interfaces associated with one or more development servers associated with the crypto-asset, and a developer activity factor is calculated based on the developer activity data. A connection is established to a blockchain server that maintains a blockchain that tracks transactions associated with the crypto-asset, and transaction data for a plurality of the transactions is received from the blockchain server. A project utility factor is calculated based on a plurality of behavioral use cases derived from the transaction data, where the behavioral use cases are respectively associated with different uses of the crypto-asset. Then, a fundamental health score is determined for the crypto-asset based on the developer activity factor and the project utility factor.