Blockchain

A blockchain usually has the attributes of being replicated and controlled by nodes. It resembles an immutable accounting ledger. It maybe behind firewalls or open to all. The blocks follow code logic.

Code risk (1)
Is all the code open source?
1.57 Open source allows audit and test actors to check its integrity
Will the blockchain be forking in the future?
1.63 Forking is where a blockchain breaks into two due to consensus disagreements
Does the community have a disclosed bug bounty program?
1.135 BBP's help incentivize the community to ensure the protocols are safe and secure, especially where layers are used for scaling or efficiency purposes
Governance risk (3)
Is the probability of a 51% control unlikely?
3.60 If nodes can control the blockchain, its integrity can be damaged
Public Conduct risk (4)
Is there an ESG policy that states how much energy is consumed for each block?
4.62 Proof of work and mining can be energy intensive. As with all replicated data, an excessive number of systems storing the blocks could use an inefficient amount of energy.
Reputation risk (16)
Is the community very active?
16.55 An active community gives comfort the blockchain is here to stay
Is the eco system consensus positive?
16.89 A strong consensus will ensure longevity of the blockchain and its protocols.
Does the actor disclose all of the following...
Operated by BinariiLabs
Ireland
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No financial advice

These global standards, best practice guidance and risk due diligence questions are an attempt to make DeFi a level playing field. They are not intended to provide any investment advice. Claims made in this website do not constitute investment advice and should not be taken as such. In the meantime, it would be very useful if the jurisdictional regulators would start working together and treating these new financial related projects as a different form of instrument. The Howey Test (1946) was designed in an era of deeds of title and paper bearer certificates. DeFi can be humanless and profit is not always the motive for using protocols. TradFi Derivatives for example are based on underlyings of real assets like the fair value of incorporated companies whose value is derived from fiat currencies which are themselves derivatives on an underlying like gold or a printing machine. Fiat is seen to be a real asset which it clearly is not. The new DeFi world matches actors with agendas. Most of the time the agenda is to do things better and faster. Defi enables everyone including the bankless and unserved members of the community to transact without having to understand how to use Excel or have an MBA from an elite university or be able to able to decipher the millions of pages of legal text opinions as to whether a bitcoin is a currency, a security, a commodity, a derivative, an underlying, a valueless number, type of gambling or something that will just go away. While we wait for a consensus by the old guard, the new guard will create their own computer based standards. Our aim is to turn these standards into bots or smart contracts that do all of this behind the scenes. Image a world where the community agree on how to transact and just do it without a parental overseer who is always a bit behind the curve...

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