From March 2021 to May 2021, NUS FinTech Society embarked on an industry project with Xfers' StraitsX team.
With the rise in popularity of cryptocurrency usage, there is a growing need for solutions to identify suspicious transactions and the need to educate the general public on the risks of digital assets.
According to a report from The Straits Times, there were 393 criminal cases related to cryptocurrencies in 2020 alone, totalling around $29 million dollars lost between 2018 and 2020.
With Xfers being the entity that issues the Singapore digital dollar, XSGD, which is 1:1 backed by the Singapore dollar, Xfers sees a need to develop publicly available resources to help educate the general public on digital assets and gain awareness on fraudulent activities.
The NUS FinTech project team was tasked to scope and build a solution.
With mentorship and guidance provided by the StraitsX team, the NUS FinTech team identified the following issues:
Lack of standard regulations on identifying suspicious transactions and addresses
A lack of standard regulations to identify suspicious transactions and addresses on the blockchain meant that the team needed to identify the parameters that would flag transactions or addresses as suspicious and assemble a standardised scoring metric for the riskiness of a token.
Lack of access to fraud detection tools
The market currently does not have an open-sourced solution available for users to analyse transactions and addresses readily. Hence, the team needed to design a solution that is open-sourced, accessible and user friendly.
With these challenges in mind, the team proposed a solution — An open-sourced web app that can analyze an Ethereum transaction, giving it a security score out of 10 based on multiple algorithmic factors including transaction volume, risk of tokens involved, sender history, and sender risk.
After weeks of prototyping and consultations with the StraitsX team, the team launched a prototype.
The prototype allowed any user to analyse a transaction or address on the blockchain and presented users with an output of a general risk rating.
Legal research by the team also led to a questionnaire on the application that can provide an indication of a token’s riskiness and the likelihood of the token being classified as a security.
Xfers would like to take this opportunity to commend the NUS project team consisting of Yin Ruohang, Keith Chan, Megan Yee, Simon Teo, Lai Yuen, Nicole Leong, and Ezra Daniel on their hard work on this project.
Xfers believes that the project has helped the students gain a better understanding of risk level and detection methods for blockchain transactions as well as the ability to qualitatively assess the risks of various digital assets.
Yap Jun Hao, Head of Engineering, StraitsX said,
Xfers remains committed to supporting the development of young talents who wish to foray into the blockchain space. For internship opportunities, visit our internships page.