Period: 1 August 2023 – 31 October 2023 (3 months)
Proposal: Open Bank Project Proof of Reserves - Proof of Concept
Amount: 30,000 USDC
Token allocation to contributors: We request up to 30,000 USDC to incentivize the dedicated team from Open Bank Project at Ethereum address 0xa3A7aA733DDdF1E89c76F0c3ff5F40908533Ad99
- Dylan - Project Manager
- Simon - API architecture
- Marko - API Support
- Cristh - Blockchain Development
- Tobias - DevOps Support
Idea: To build a Proof of Reserves system that can retrieve both on-chain and off-chain reserves using API3 oracles.
As the financial landscape evolves and decentralised finance gains traction, ensuring the accuracy and transparency of reserve holdings has become increasingly important. The API3 technology stack, known for its secure and decentralised oracles and more recent data feeds, provides an excellent foundation to build a Proof of Reserve system that offers real-time verifiability and trustworthiness.
The Open Bank Project is an official technical partner of API3. OBP is the API solution encouraging blockchain innovation in the financial services sector, particularly through the API3 Airnode.
At its core, the partnership enables banks to run an airnode to connect directly to any EVM-compatible blockchain using over 500 prebuilt banking and management API endpoints. This lets banks send open banking (account access & payment initiation) and other types of data to Web 3 applications, enabling blockchain developers to build dApps using this data.
The partnership made its debut at the Bitcoin Bankathon in El Salvador, where teams built applications that could help locals access better financial services. In this case, the airnode was also used to create direct connections between off-chain bank accounts and on-chain crypto wallets.
But with the decentralised and traditional financial worlds growing ever closer, additional use cases are appearing where off-chain data and players need to seamlessly connect to Web 3. In particular, proving both on-chain and off-chain reserves is becoming increasingly important for those dealing with cryptocurrencies, whether crypto exchange or bank.
The primary objectives of implementing a Proof of Reserve system using API3 oracles are as follows:
- Transparency and Verifiability: Establish a system that enables transparent and real-time verification of reserve holdings for banks, financial institutions, and decentralised protocols. This system will instil greater trust and confidence in the financial ecosystem.
- Integrity and Accountability: Provide a mechanism to ensure that reserve data is accurate and reliable – minimizing the risk of related fraudulent activities, bank runs, and systemic collapses – with a view to enhancing the integrity and accountability of the financial system.
- Seamless Integration: Leverage API3 and OBP capabilities to seamlessly integrate the Proof of Reserve system with existing financial infrastructure and decentralised protocols, ensuring compatibility and ease of implementation.
The purpose of this R&D project is to build a Proof of Concept (PoC) to present to:
- Cryptocurrency Exchanges
- Banking institutions involved in crypto
- Other interested parties
The OBP internal team will be responsible for conducting the necessary technical and market research, as well as for building the PoC.
To achieve the objectives outlined above, we propose the following steps for the creation of a Proof of Reserve system using API3 oracles:
System Design and Development: Collaborate with experts in the field to design a robust architecture for the Proof of Reserve system. This system should leverage the capabilities of bank data feeds and decentralised APIs to securely and reliably fetch reserve data from participating institutions and protocols.
Integration: Integrate the Proof of Reserve system with the API3 and OBP infrastructure and technology, enabling access to high-quality, decentralised data feeds. In particular, we shall utilise the security and decentralization features of first-party oracles to ensure the accuracy and integrity of reserve data.
Data Aggregation and Verification: Establish secure mechanisms for participating institutions and protocols to transmit their reserve data to the Proof of Reserve system using airnodes. We shall implement cryptographic techniques to verify the authenticity of the received data, ensuring its integrity without compromising sensitive information.
The expenses are focused mainly on the remuneration of the development team for the duration of the project and a total of 30,000 USDC will be paid to a TESOBE USDC account.
|Total Requested Funds||30k|