TraceTo

  • Cryptoasset Report
  • November 21, 2018

Traceto.io is a decentralised Know Your Customer (KYC) service provider incorporating third-party identity verification providers, community feedback, machine learning and smart contract technologies.

Overview

Traceto is a distributed network of third-party identification verification service providers, community input and transaction-monitoring/fraud-detection via machine learning algorithms, that collectively assign individuals Know Your Customers (KYC) scores. This allows other entities to verify identity without viewing individuals’ personal identity documents, which remain encrypted. The team hopes Traceto can improve the KYC processes employed by token sales. These processes, in Traceto’s view, are frequently inconsistent, repetitive, or inadequate. Many token sales perform KYC procedures in-house or by manually inspecting identification information, usually in the absence of specialist knowledge or staff. The process can be viewed as an unwanted cost and teams aren’t always aware of the need to continually revalidate compliance. Keeping KYC in-house can also present a security risk, depending on how the collected data is stored. Streamlining KYC processes will help crypto businesses perform them more efficiently and, if done properly, reduce their risks of running afoul of regulators in the future. Traceto’s 30,000 ETH raise included the first token sale to be listed on The Gibraltar Blockchain Exchange (GBX), which raised ~13 million USD by June 29th 2018, with some 6,000 ETH equivalent of tokens available in the public sale.

Traceto’s core team has in excess of 50 years experience in regulatory technology and finance. Chionh Chye Kit, the founder and CEO of Traceto, is a cofounder and MD of Cynopsis Solutions, a RegTech100 company supporting the underlying KYC process. Chye Kit also founded and manages a regulatory compliance consultancy, CCK solutions. In addition to regular conference presentations and work on a crowd-sourced RegTech publication, Chye Kit advises Kyber.Network and has held senior posts in major financial firms, such as head of compliance in Asia for Macquarie Group. Dias Lonappan (CTO and co-founder) has experience developing applications on the Bitcoin blockchain. The CEO of Kyber.Network and Ethereum evangelist Loi Luu is a technical advisor to the project and the Kyber.Network has announced plans to integrate Traceto’s KYC processes.

Product Details

Traceto provides KYC services that ensure ongoing compliance by building, updating, and re-verify individuals’ KYC profiles using a community of network participants’ combined feedback. Those seeking to participate in token sales or use exchanges can benefit from the Traceto.io network via their DApp. One of Traceto’s founder’s existing businesses, Cynopsis, a Singaporean RegTech organisation with approximately 50 crypto clients, will act as an identity ‘service provider’ by reviewing provided identity information and updating scores. A network of verifier nodes on the Ethereum blockchain will contribute to the KYC processes by performing facilitating tasks, such as video One Time Password (OTP) verification. Verifier nodes also manage requests for user’s unencrypted identity information, should the user themself not grant regulators permission upon request, and perform other governance roles, such as voting to add or remove service providers. Typically, KYC regulatory compliance includes Counter Terrorism Funding (CTF) requirements, often enforced by screening state-issued IDs to ensure individuals are not flagged on international watch-lists. Anti-Money Laundering (AML) regulations demand information about how funds are appropriated and require ongoing reporting of any suspicious transactions.

A network of verifiers gatekeep user’s identity information on behalf of corporate requesters or regulators—verifiers themselves lack access to such information. Corporations running KYC processes on users compensate those processing the identity information and the community verifiers with the Traceto token, T2T. Corporate requestors (exchanges or token sales) pay for user’s KYC requests (and renewals) via the DApp in T2T in exchange for the user’s KYC score, associated to their public-key. To earn T2T through verification services, verifiers must first stake T2T. The reward depends on the amount of T2T staked, as well as time held and verifications performed. There is a limit to the amount of T2T a verifier can earn for any specific transaction and this limit can be modified upon a vote from the Verifiers, should they sufficiently agree.

Asset Details

The ERC20 compliant T2T tokens will be the sole means of payment for KYC service providers (initially Cynopsis) from corporate requesters and the reward token for the verifier community for their support of the network. Once a verifier starts verifying, they will be compensated in T2T, which will be locked for a ‘predefined’ time (the setting of which will be crucial since it presents an opportunity/capital cost to prospective verifiers). The Traceto team and advisors reserve 250 million (25%) of the 1 billion Traceto.io tokens (T2T) generated, subject to a 2 year lockup. 35% of tokens will be allocated to the company reserve, marketing, operations and administration; the remaining 40% will be distributed in the token sale. Of the 1 billion T2T to be created, 40% were made available throughout the token sale, with a total sale hard cap of 30,000 ETH. The private sale, completed June 2018, had a minimum contribution of 150 ETH. The public sale, with a minimum contribution of 1 ETH, saw 80 million T2T made available at 1 T2T = 0.0000875 ETH, worth ~3.15 million USD at the time.