The Shyft Network is a blockchain-based solution for centralized and decentralized technologies, like decentralized finance (DeFi). It’s a technology layer that aggregates and embeds trust into data stored on private and public ecosystems.
It essentially creates a protected data transaction layer for industry and the public sector, bringing, among other things, digital identity into the 21st century. In this article, we explore the Shyft Network technology and one of it’s most relevant use cases: compliant DeFi.
What Is Shyft?
In a hyper-networked world, effective online trust solutions can offer users and organizations sufficient protections while providing a framework in which all parties could be assured freedom from censorship, fraud, and unsanctioned use of shared data.
We believe that your information is only as secure as the weakest link in the chain of connected services and devices which handle it. That’s where Shyft Network comes in.
Shyft Network was designed as an interoperable standard for use cases that require multiparty trust and validation. We took a fundamentally different approach to data and identity thanks to its founders’ long history with Bitcoin, dating back to early 2010.
The Shyft Network enables identity verification, validation, and the sending of credentials and other data across multiple different blockchains and networks.
The true goal of identity entails not having to give entities your information to verify who you are every time you open a new account. The question we asked is, How do you derive digital identity? We baked identity into the network.
Shyft Network never keeps or touches any personal identifiable information on the blockchain.
We ensure that privacy of the data itself is only stored across the participants with whom you already work. Since no data sits on the network, we created an encrypted way of validating institutions to certify or validate on your behalf without violating your privacy.
Since Shyft manages identity information in a receipt-esque system, a digital receipt acts as proof that you have hitherto worked with another participant or entity on the network. Moreover, there’s a revocation process, where the protocol can invalidate a former receipt, depending on the compliance requirements, which differ across jurisdictions and situations.
With a focus on the requirements of the Financial Action Task Force (FATF), as well as the KYC compliance issues that the blockchain ecosystem faces today, we’ve set out to ensure identity information is secure so that exchanges can forward customer data without violating privacy.
Technologically speaking, the Shyft Network’s identity solution can be thought of as an OAuth2-type interface for Web 2.0 and 3.0 applications with 2FA applications. Users can negotiate the exchange of their information, giving them control over their data.
By enabling the secure and auditable messaging between users and trusted parties, the Shyft Network empowers these parties to onboard new users in accordance with global compliance. The trusted parties can then, assuming user consent, send proof of relevant information about users to other parties by request. User data can be protected by their personally identifiable data through an opt-in framework.
Our focus is on institutions and public networks. We work with everyone from banks, institutions, exchanges, regulatory bodies, as well as central banks and governments, bridging the crypto ecosystem to the traditional world.
Who Uses Shyft?
The Shyft Network is composed of certain types of participants: Trust Anchors, Data Owners, Data Consumers, and Shyft Ring Nodes.
Trust Anchors custody regulated data, which they receive from consenting Data Owners, and maintain, review, read, write, confirm, and validate it. This data forms the basis of a user’s digital identity. Trust Anchors are regulated entities, such as financial institutions, cryptocurrency exchanges, regulatory bodies, and social media networks, which can set their own rules and work with other actors in the Shyft Network ecosystem, while individuals enjoy data rights.
Data Consumers are those third-party services that do not custody “hard data” and are not regarded as fully-trusted parties on the Shyft Network. Data Consumers will offer Data Owners pre-approved services that require attestations of trusted data. When they request information from the network, they pay a small fee to the Data Owners and Trust Anchors in exchange for the attested information.
Data Owners can be individuals or entities that sign up for a service at a Trust Anchor or Data Consumer. These individuals or entities have the authentication-based right to control, share, and revoke private data via their private keys. Only they have access to these private keys, and can grant access to their data via Shyft’s consent-based framework, whereby they are incentivized to share their data.
Data Owners receive offers from Data Consumers for pre-approved services that require proof of trusted data. Data Consumers pay a small fee to the Data Owners and Trust Anchors for valid information.
The Shyft Ring
The Shyft Ring is the public-facing blockchain-enabled software for global consensus. A fork of the Ethereum codebase, we’ve incorporated our own extensions. Shyft Ring participants validate the entire state of the network as local connection nodes for non-full-node users, and complete PoW hashes to propagate blocks and establish security. The validators are incentivized based on the workload distribution necessary for optimal efficiency of the Shyft Network.
Key Network Features
The Shyft Block Explorer
Certain blockchain networks rely on a single block explorer. Ethereum, for instance, relies upon just EtherScan. Shyft, however, provides all nodes on the network with the tools to launch their own block explorers. This removes a potential point of failure. The Shyft Block Explorer offers a feature set previously unavailable to the ecosystem, like the option to view the individual transactions that make up “internal transactions,” which composes a critical part of the token economy.
Many key network functions have been regulated by a set of purpose-built smart contracts. Certain contracts facilitate KYC/AML checks, ensuring the needs of cross-jurisdictional regulators and required compliant entities.
The Shyft Safe is a smart contract powered bookkeeping software to manage and protect assets on the network so that users’ can self-custody the assets. A Safe asset is cross-attested into multiple blockchains, and addresses data invalidity and single-point-of-failure problems.
The SHFT Token
SHFT fuels the Shyft Network; think of it as gas that powers the engine. SHFT is a means of payment, a mechanism for bonding value, and an instrument for governance value capture. SHFT, depending on the use case, can be utilized in a multitude of ways which includes a monetary instrument and value capture system, as well as an authorization system for long-term validation.
SHFT is a currency for identity and data transmission, as well as a governance mechanism for coordination across ecosystems that enables entity-to-entity governance, compliant asset creation, and a system for compliant defi and other applications. Enabling a new side of the existing ecosystem will drastically expand the size of market participants and increase the size of asset participation across all decentralized projects, protocols, and marketplaces.
You can read more on the SHFT token here.
We built the Shyft Network with interoperability in mind, ensuring our protocol would work across the existing applications in the Ethereum environment and other networks. Therefore, we’d also be able to gain from a lot of the innovation happening.
For instance, certain blockchains might serve different business logics better than others. That’s why the Shyft Network must be compatible across blockchains. Shyft’s interoperability bridging layer works across other networks to leverage the advantages that these networks hold.
We create the layer that assigns and proves data. Collaborative interoperability is paramount to the Shyft Network vision so that projects can work across diverse ecosystems and ensure that they conform to certain requirements when necessary.
Here’s one example of what Shyft Network can do for the Oasis Network.
Shyft Network Use Case — Introducing Compliant DeFi
Our goal is to create the premiere, compliant and scalable DeFi ecosystem across centralized and decentralized markets.
Traditional financial institutions strictly adhere to Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating The Finance of Terrorism (CFT) guidelines. As permissionless, opt-in, trustless p2p networks without a central authority to enforce these requirements, blockchain-based networks often fail to do so.
The Current Problem
The current DeFi ecosystem is prone to trust issues since participants conduct activities anonymously, violating compliance requirements imposed on financial institutions.
- Large Liquidity Providers are blocked from interacting with the DeFi space because of regulatory constraints and lack of clarity on existing and upcoming regulations which requires them to obtain information on the source and destination of funds.
- Similarly, platforms within the DeFi space are blocked from accessing deeper capital markets because of the small opportunity space relative to the total potential addressable market assuming regulatory compatibility.
- Regulators are forced to comprehend the space through the lens of (potentially obsolete/irrelevant) loosely-matching, past environments that regulations have applied to previously.
The Shyft Network solution for DeFi
- Identity Verification. We provide an opt-in framework for gathering, storing, and sharing user identification data on a need-by basis. Our platform acts as a trust anchor and a bridge between users, DeFi platforms, and centralized organizations by providing the required data in a secure manner.
We can facilitate trustless transactions in a decentralized environment by helping the parties to comply with all the regulatory requirements imposed on centralized systems. The platform achieves this by acting as a Trust Anchor that validates the personal data and transaction details by publishing their proof on the blockchain.
- Creation of Compliant Assets and Asset Pools. Only verified individuals and organizations will be able to create compliant DeFi assets and asset pools such as loans, liquidity pools, derivatives, governance tokens etc.
The Shyft Network can function as a validator for DeFi participants. Verified players will have their addresses whitelisted, enabling them to participate, create, and have access to compliant assets.
Malicious and suspicious actors will be blacklisted as a precaution to other users, which is aimed at minimizing risk.
- Compliant Decentralized Credit Scoring. As part of its continuous development plan for 2021/2022, Shyft Network plans to deploy a blockchain-based credit scoring method that relies on users’ data stored on nodes rather than using their credit scores from the legacy financial system.
This framework will help generate better credit scores for an open and independent DeFi ecosystem. Our goal is to tackle the over-collateralization problem in DeFi, improve access to credit, and open the door for legacy lending institutions’ entry into the ecosystem.
Shyft empowers users to take data and assign or validate it against multiple different participants. It is a network based on trust so participants can derive identity or data for compliance requirements, and much more, so that crypto can thrive in the traditional world.
Bring crypto to the world with Shyft, and join the network today.
Shyft Network aggregates trust and contextualizes data to build an authentic reputation, identity, and creditability framework for individuals and enterprises.
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