Stellar Community Fund

By Alterscope

KYP - Risk Dashboard (Phase 2)

SCF #26

$99.2K

Legacy v5.0 Community Award

Awarded

We provide a Soroban ecosystem dashboard, enabling the community and LPs to perform DDs on protocols and create risk frameworks.

Products & Services

Alterscope aims to craft a real-time risk overview within Soroban's growing ecosystem, highlighting dApp-specific risks. We follow the thesis that liquidity is directed to trustworthy protocols with the best risk-return ratio. For that reason, we provide retail investors and professional liquidity providers a risk-adjusted view of protocols, and enable them to monitor risks in real-time. We offer publicly accessible risk dashboard that anybody can perform their own research, and onboard protocols and liquidity pools front facing relevant liquidity providers in our institutional setup. We propose to build a community dashboard for Soroban with the major DeFi applications included to facilitate end users to research dApps and to perform due diligence on on-chain/off-chain related parameters, ranging from liquidity to security metrics. Thereby, we provide a clear look at dApps in the Soroban ecosystem, helping improve projects and attract and retain liquidity in the ecosystem. “Know Your Protocol" (KYP) is a concept we have developed to emphasize the importance of understanding the intricacies of dApps. Drawing inspiration from the financial sector's "Know Your Customer" principle, KYP allows a comprehensive research of protocols. The Stellar "Know Your Protocol" dashboard links to a DYOR community dashboard to assess dApp-specific risks metrics.

Benefits for Soroban ecosystem: Enable the community to do their own research: DYOR (“Do Your Own Research”) does not work. Neither the community nor professional LPs can sufficiently research risks of protocols. Alterscope changes that by facilitating anybody to perform sound and comparable research across chains, protocols and liquidity pools. Overcome obstacles for large LPs to invest: 53% of crypto hedge funds and 43% of traditional hedge funds are already involved with liquidity provision strategies. Top obstacles for professional players to invest remain a lack of understanding of protocol fundamentals, security concerns, and perceived complexity. Show regulatory compliance: Our KYP (Know Your Protocol) dashboards underscore the value of transparency, demonstrating a commitment to regulatory compliance and fostering a healthy DeFi ecosystem.

Benefits for dApps to become integrated on our platform: Bolster credibility: Show your commitment to risk management and transparency by and linking to your Alterscope risk dashboard. Accelerate your business development: By referring to a neutral third-party that provides metrics around security, liquidity, governance, and socials, the speed of decision making is increased among liquidity providers and investors. Make the right metrics available to investors: Alterscope has built up its solution in partnership with institutions and hedge funds. By showing the right metrics, large LPs are enabled to make investment decisions.

After completing Phase 1 (Activation Award), we have established the foundations for indexing and integrating protocols in the Soroban ecosystem in our KYP dashboards, enabling the community to perform sound due diligences on ecosystem elements. This application is dedicated to Phase 2 of integrating Soroban-based dApps in the Alterscope platform.

Product Frontend Alterscope has developed frontend frameworks that take into account the needs of LPs and investors when analyzing dApps encompassing metrics around security, liquidity, and governance. Our dashboards are continuously updated and further developed to become more and more comprehensive and powerful. We are working on various major risk categories to analyze risks and facilitate users' analysis of risks, which we currently break down in the following overarching dimensions: Security, Liquidity, Community, Governance & Tokenomics. The first section starts by collecting general information about the protocol, such as protocol type, and links to the website, code repository and documentation. Also, we apply an initial assessment based on our own standardized methodology (see here for more information about the Alterscope risk scoring methodology).

Security The Security Section provides information on general security-related parameters, such as information on the founder team, bug bounty amounts, code upgradability (i.e., proxy contracts), past hacks, etc. We deploy a static smart contract analyzer to check for adherence of coding best practices. Additionally, we provide comprehensive development statistics, such as the number of issues raised and pull requests submitted, and analyze the skewness in the distribution of developer contributions. The security section gives additionally anybody the ability to easily evaluate protocols’ audits by aggregating and clustered relevant information around the auditor and, the auditing firm and the audit itself.

Liquidity The Liquidity Analysis section is an essential part of our assessment for DeFi projects. Our approach to analyzing liquidity is carefully tailored to fit the specific type of DeFi protocol we're evaluating, such as DEXs, lending platforms, and others. This allows us to focus on the unique characteristics of each protocol's liquidity system. In our liquidity analysis for DeFi projects, we evaluate several key parameters to gain a comprehensive understanding of the liquidity dynamics. Our analysis starts at the overall protocol level by looking at general parameters, such as at TVL, which gives us a broad view of the financial health of the protocol. We then zoom in on individual liquidity pools, examining their design, activity, and changes in liquidity over time. For example, we monitor daily transaction activity by tracking the average number of transactions and the total transaction volume. This measurement helps us gauge the daily operational activity of the protocol. Next, we assess volume continuity by analyzing the average and median trading volumes, along with the number of unique wallet interactions and the total transaction count. These metrics allow us to evaluate how consistently users are trading and the overall user engagement with the protocol. We also focus on liquidity health, where we score all wallets associated with the protocol based on their financial stability. Our analysis extends to pool-specific insights where we delve into each liquidity pool to review critical aspects such as the liquidity pools’ total value locked, fees generated, transaction count, and the diversity of wallet interactions. We also analyze the volume and value of the tokens within each pool. These comprehensive evaluations provide a detailed view of not only the numerical data but also the practical functionality and stability of liquidity in DeFi projects, ensuring our analysis is both informed and grounded.

Community The community surrounding a protocol and the sentiment towards it can significantly impact the liquidity metrics of a dApp. In the Community Section, we offer a comprehensive view of the community and the social channels they use. For example, we provide statistics on subreddit popularity, Discord server activity, the number of moderators, and the communication patterns, including the intensity of daily interactions. We aggregate these parameters to calculate a sentiment index. Additionally, we offer clear insights through a clustering of recent topics discussed within the community. This enables anyone to quickly identify the most recent and prevalent topics related to the protocol, enhancing understanding of the community's current interests and concerns.

Governance & Tokenomics This section outlines the governance structure of a protocol and, where available, provides insights into the associated project token. Our format simplifies the understanding of key governance aspects such as the voting schema, the number of voters, and details relating to the spread of proposals, as well as metrics on voter engagement with each proposal. Our activity dashboards are designed to clarify the process of evaluating voter ratings and tracking monthly proposals, which are crucial for assessing voting power distribution and its relationship to community requests. If a token has been issued, we offer additional information on the tokenomics of the project, including price dynamics, lock-up periods, and the impact of major holders. We also analyze the Gini coefficient to understand the distribution among token holders. Included in our analysis are key circulation metrics such as the 24-hour trading volume, token velocity, the total number of holders, and the concentration of the top five holders, providing a comprehensive view of the token’s market dynamics.

Comparison Tool Based on the datasets of integrated protocols, we provide advanced features and tooling. For example, integrated protocols are included in our research tool that enables anybody to easily select metrics of the Alterscope platform and put them on a graph to analyze developments over time and across different protocols. With few clicks, anyone can build production-ready dashboards, analyzing off- and on-chain data, into the same visualization layer, greatly facilitating research in the web3 space.

Product Backend Data acquisition and processing: Our high-level design system streamlines a multi-faceted public data ingestion process, differentiated in on- and off-chain data sources. Regarding, on-chain data we run our own nodes and build proprietary ETL pipeline to ensure a high accuracy and latency of data (e.g., Liquidity Risk Data). Regarding off-chain data, we built our own data pipeline infrastructure for being able to continuously gather and process relevant data (e.g., Development Activity Data from GitHub). To ensure data integrity, we run stress tests on our infrastructure and establish quality processes. Architecture: The system architecture is designed to enable efficient data processing, ingestion, and management, integrating machine and deep learning capabilities with high speed data storage. The data processing utilizes Kafka for stream processing, coupled with a ML engine for risk processing, and employs an ETL process for data treatment. The system incorporates APIs to harness off-chain data from various sources, including GitHub and social media, and utilizes web crawlers for real-time data acquisition. Storage solutions are diversified, featuring for example MongoDB for structured risk parameters, ensuring robust data persistence and retrieval. The AWS is orchestrated via Kubernetes, utilizing EBS for scaling. The frontend is made with React.js libraries to render the data in an intuitive dashboard, interfacing with the OAuth2 service for secure user authentication.

Requested Budget

$99.2K

Team

The development team of 15 is led by Marijo Radman, who has more than 10 years of experience in corporate development, having worked for major German corporations such as AUDI, ZF Group, and E.ON. He has led intricate multibillion-dollar projects and managed teams of over 70 individuals in the area of electromobility and won prizes at various web3 hackathons, including Miami Wormhole, Avalanche Summit Barcelona, and ETH Amsterdam. Our development team includes senior and junior developers from top European technical universities such as Technical University Munich, Koc University Istanbul, and FER Zagreb. They bring a wealth of applied research experience from institutions like Frauenhofer IIS and IEEE, and practical experience from renowned organizations like Oracle, SAP Labs, ING, Cisco, and Dassault Systems. Our infrastructure lead Vedran Zivicnjak has over 15 years of experience in DevOps and previously built critical national IT infrastructures in telecommunications.