X Chain: Proof of Compliance

We believe financial ecosystems can be programmed and that it is important to maintain distinct nature of every jurisdiction's regulatory framework. XFT's blockchain is designed to meet these varying compliance requirements and ensure transaction adhere to regulatory standards across the globe.

With XFT's compliance dApp and oracle, regulators can customize, maintain, update, and realize regulatory compliance as opposed to seeking a "global standard."

Key Features

• Regulatory Nodes: Special nodes managed by regulatory authorities that update compliance standards.
• Validators: Nodes that validate transactions based on the latest compliance standards.
• Compliance Layer: A separate ledger to record and update compliance rules.
• Consensus Mechanism: Validators achieve consensus not only on the validity of transactions but also on their compliance with updated regulations.

Block Structure

import hashlib
  import time
  import json

  class Block:
    def __init__(self, index, previous_hash, timestamp, data, hash):
        self.index = index
        self.previous_hash = previous_hash
        self.timestamp = timestamp
        self.data = data
        self.hash = hash

  class ComplianceBlock:
    def __init__(self, index, previous_hash, timestamp, compliance_data, hash):
        self.index = index
        self.previous_hash = previous_hash
        self.timestamp = timestamp
        self.compliance_data = compliance_data
        self.hash = hash
  

Compliance Layer

class Blockchain:
    def __init__(self):
        self.chain = [self.create_genesis_block()]
        self.compliance_chain = [self.create_genesis_compliance_block()]

    def create_genesis_block(self):
        return Block(0, "0", time.time(), "Genesis Block", self.calculate_hash(0, "0", time.time(), "Genesis Block"))

    def create_genesis_compliance_block(self):
        compliance_data = {
            "rules": [],
            "updated_by": "Regulator"
        }
        return ComplianceBlock(0, "0", time.time(), compliance_data, self.calculate_compliance_hash(0, "0", time.time(), compliance_data))

    def calculate_hash(self, index, previous_hash, timestamp, data):
        value = str(index) + previous_hash + str(timestamp) + data
        return hashlib.sha256(value.encode('utf-8')).hexdigest()

    def calculate_compliance_hash(self, index, previous_hash, timestamp, compliance_data):
        value = str(index) + previous_hash + str(timestamp) + json.dumps(compliance_data)
        return hashlib.sha256(value.encode('utf-8')).hexdigest()

    def get_latest_block(self):
        return self.chain[-1]

    def get_latest_compliance_block(self):
        return self.compliance_chain[-1]

    def add_block(self, data):
        latest_block = self.get_latest_block()
        new_index = latest_block.index + 1
        new_timestamp = time.time()
        new_hash = self.calculate_hash(new_index, latest_block.hash, new_timestamp, data)
        new_block = Block(new_index, latest_block.hash, new_timestamp, data, new_hash)
        self.chain.append(new_block)

    def add_compliance_block(self, compliance_data, updated_by):
        latest_block = self.get_latest_compliance_block()
        new_index = latest_block.index + 1
        new_timestamp = time.time()
        compliance_data["updated_by"] = updated_by
        new_hash = self.calculate_compliance_hash(new_index, latest_block.hash, new_timestamp, compliance_data)
        new_block = ComplianceBlock(new_index, latest_block.hash, new_timestamp, compliance_data, new_hash)
        self.compliance_chain.append(new_block)

    def is_chain_valid(self):
        for i in range(1, len(self.chain)):
            current_block = self.chain[i]
            previous_block = self.chain[i - 1]
            if current_block.hash != self.calculate_hash(current_block.index, current_block.previous_hash, current_block.timestamp, current_block.data):
                return False
            if current_block.previous_hash != previous_block.hash:
                return False
        return True

    def is_compliance_chain_valid(self):
        for i in range(1, len(self.compliance_chain)):
            current_block = self.compliance_chain[i]
            previous_block = self.compliance_chain[i - 1]
            if current_block.hash != self.calculate_compliance_hash(current_block.index, current_block.previous_hash, current_block.timestamp, current_block.compliance_data):
                return False
            if current_block.previous_hash != previous_block.hash:
                return False
        return True

    def is_transaction_compliant(self, transaction):
        latest_compliance_block = self.get_latest_compliance_block()
        compliance_rules = latest_compliance_block.compliance_data["rules"]
        # Validate the transaction against the latest compliance rules
        for rule in compliance_rules:
            if not rule(transaction):
                return False
        return True
  

Update Mechanism

class RegulatorNode:
    def __init__(self, blockchain):
        self.blockchain = blockchain

    def update_compliance_rules(self, new_rules):
        compliance_data = {
            "rules": new_rules
        }
        self.blockchain.add_compliance_block(compliance_data, "RegulatorNode")

  # Example usage
  blockchain = Blockchain()
  regulator = RegulatorNode(blockchain)

  def aml_rule(transaction):
    # Dummy AML rule
    return "aml_check" in transaction and transaction["aml_check"] == True

  def kyc_rule(transaction):
    # Dummy KYC rule
    return "kyc_check" in transaction and transaction["kyc_check"] == True

  # Update compliance rules
  regulator.update_compliance_rules([aml_rule, kyc_rule])

  # Add a transaction
  transaction = {
    "aml_check": True,
    "kyc_check": True,
    "amount": 1000
  }

  if blockchain.is_transaction_compliant(transaction):
    blockchain.add_block(json.dumps(transaction))
  else:
    print("Transaction is not compliant")
  

Summary

• Block Structure: Defined blocks for transactions and compliance updates.
• Compliance Ledger: Separate ledger for compliance rules, managed by regulatory nodes.
• Proof of Compliance Mechanism: Ensures transactions are validated against the latest compliance standards.
• Regulatory Node: Allows regulators to update compliance standards dynamically.
• Transaction Compliance Check: Ensures transactions meet current compliance rules before adding to the blockchain.