Mauve: Compliant DEX for Coinbase Investments

The aftermath of the FTX incident has spread to the entire global financial market. The reputation of Web3 has been greatly hit by this incident, and the supervision of DeFi is even far away.

Everyone has different views on how to rebuild the image of the entire industry and restore public confidence. There are not only the establishment of proof of reserves like Binance, which is directly open and transparent to the world, but also the "Crypto435" initiative like Coinbase, which conveys the voice of the encryption industry to Washington and U.S. state legislators and regulators, and promotes and influences them. The way the future of cryptocurrency and DeFi is being decided.

There are still some people who think that instead of waiting for the regulation to make a decision, it is better to make changes themselves: they choose to make DeFi compliant.

Bringing Compliance to DeFi with Violet ID

Mauve is an AMM DEX that will be built on a non-custodial architecture carried by smart contracts that have undergone strict audits and time tests, enabling users to keep their funds in their own hands and earn LP income through the liquidity pool .

These things are not special, Other DEXs can do the same. The real killer feature of Mauve is to provide fully compliant transactions while having high privacy and providing non-custodial services without trust.

Mauve takes KYC as the premise and strives to achieve full compliance. For such a vision, identity verification and user compliance check services are particularly important. The user identity information service Violet ID created by the company is completed.

Basic KYC is essential, in addition, Violet ID’s compliance check has 3 items:

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Sanction check

Compared with major international sanction lists (US, UK, UN, EU) to prove that the user is not Will bring sanctions risk to Web3.

KYT (Know Your Transaction)

Comprehensive and continuous on sanction lists and illegal activities On-chain data analysis and screening. Proving that the user is a safe counterparty while maintaining on-chain privacy.

Geofencing

Confirm the location at the time of registration and the location at the time of transaction, Evidence that the user complies with the terms of service (e.g. not a US user) and has not moved to a geographically sanctioned region.

All user data used by Violet ID is encrypted and stored off-chain and will not be uploaded to the chain. Violet ID will only send binary compliance identification on the chain. And in this way, it brings on-chain compliance that users absolutely cannot bypass.

Through smart contracts, Mauve's Each transaction will only be executed when the user meets two conditions at the same time:

1. Use 2FA (two-factor authentication) to verify the registered identity;

2. Pass the compliance check every 24 hours.

Mauve combines the compliance guarantees of traditional finance with the advantages brought by DeFi. They call this form "protected (protected) DeFi" , hoping to let high-quality users who are still on the sidelines and meet high compliance requirements enter the DeFi world.

On March 9, 2022, Mauve completed a financing of US$15 million, with Coinbase Ventures and Brevan Howard, one of the world's largest macro hedge funds, participating in the investment. Mauve is scheduled to go live in summer 2023.

What is the significance of compliant DeFi?

In the FTX incident, user funds were misappropriated by centralized institutions, resulting in thunderstorms and insolvency . DeFi, which has the characteristics of self-hosting and decentralization, has been given the mission to solve the centralization problem since the beginning, but the promotion of DeFi is full of dangers.

Tornado Cash developer Alexey Pertsev was arrested by the Dutch police in August 2022 on suspicion of assisting money laundering and has been in custody since then. extend. Although most of the current DeFi products are alive and well, the height limit pole on the driveway is always there, and we will all touch it one day.

DeFi still has room for growth of dozens or even hundreds of times. In order to meet the upcoming growth, DeFi must interact with the traditional financial market, so that traditional financial users can reach themselves. Many traditional financial institutions have said that their main hesitation is regulatory and compliance issues, and institutions need compliance guarantees that can be embedded in the blockchain.

Promoting compliance, integrating supervision, and attracting institutions, the industry has been talking about it for several years, but how to make DeFi compliant has always been an issue A tough problem, and Mauve was born for it.

True believers in decentralization may think that Mauve, who actively caters to supervision, is a "leading party" and does not want Mauve to The proposed "protected DeFi" becomes the future of this industry. However, the arrival of real decentralization and real DeFi may require a 10-year wait. While retaining the essence of DeFi as much as possible, the immediate sacrifice may not be necessary, but it is by no means unacceptable.

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