What is MonitorChain?

MonitorChain is an on-chain Ethereum smart contract subscription feed tied to security alert detecting block explorer node, designed for use as an oracle by cryptocurrency exchanges and token smart contracts. Ethereum blockchain activity is recorded and analyzed in real time by a combination of encoded rules and heuristics to detect suspicious activity that indicates the presence of potential fraud. When an exploit or theft occurs, MonitorChain securely sends notifications to subscribers over the Ethereum network including actionable information related to the incident, addresses and tokens impacted, and severity in a format that can easily be programmatically integrated to both smart contracts as an oracle, as well as centralized systems via API, to allow instant preventative protective action to be taken, such as temporary token contract freezes and exchange trading suspensions.

Use Cases

For Exchanges

MonitorChain provides instant alerts the second fraud occurs, protecting the exchange from being the dumping ground for hackers and thieves to launder their ill-gotten coins. Combining expert defined alert conditions with heuristic triggers, the moment a potential hack or theft occurs, MonitorChain sends an on-chain notification to subscribers over the Ethereum network. These alerts can be directly integrated with smart contracts or exchange management platforms to take protective action such as halting trading of specific markets, notifying key personnel, or disabling deposits and withdrawals of effected tokens without impacting the rest of an exchange. Easy to use and integrate, MonitorChain is an essential security component for any centralized or decentralized cryptocurrency exchange.

For Token Creators (ICOs)

MonitorChain allows a degree of protection and control for token creators should a crisis occur. With instant alerts, MonitorChain can be used to take protective action such as invoking freeze/destruction functions, notifying exchanges to halt trading, and informing key personnel for timely PR responses. Custom monitoring rules and sender authorization expand the utility for token creators, allowing MonitorChain to provide further assistance in mainnet migrations, insider trading prevention, and detecting market manipulation.

For Traders and Cryptocurrency Investors

When hackers steal or counterfeit tokens, the first thing they do is send them to exchanges and dump them to unsuspecting investors. MonitorChain provides instant alerts the second fraud occurs, protecting traders from purchasing these tokens and being stuck bag holding. MonitorChain gives traders an inside edge, allowing them to know whether rapid price movement on altcoin markets is due to fraud. It can also be integrated into trading bots, to prevent programmatic issues of bots incorrectly buying into the price dump of a major hack/theft. This is in addition to the indirect benefits traders and investors receive through use of MonitorChain by the exchanges and tokens they trade on and own.

How Does MonitorChain Work

MonitorChain is comprised of the following components: MonitorChain Smart Contract (MCSC), Monitor, Tracker and AccessInterface library (AIL). MCSC is the main part of the MonitorChain system and is a central point of integration for MonitorChain components. Information from other components flow towards it but primarily, all other stakeholders get data by querying its functions. It serves as an Oracle that can be queried by other smart contracts or off-chain applications to get information about the statuses of specific tokens or blocked addresses. It also controls access to the token statuses and blocked addresses and governs the process of token status changes. Monitor is the component that listens, through a proper Ethereum node endpoint provider, for transaction related events which are submitted to the Ethereum blockchain. For each token transaction that is executed, Monitor performs transaction validation. Validation is based on the general token validation rules which include checking of the considerable total supply increase, transaction of an amount that exceeds sender’s balance, very big token transaction etc. The accounted rules are modeling the exploits that have already been discovered. But it also covers future exploits since it is monitoring the total supply and the transferred amounts of the token.

Given that each token smart contract has its own specific implementation, monitor can perform token specific validation. This can include change of a hard cap value predefined in the contract, violation of the token release rules encoded into the contract, massive transfers from the token reserve addresses etc. Such per token monitoring requires specific token smart contract audit and development of dedicated validation scripts. Based on the level of detected validation error, Monitor sends the status change to MonitorChainSC that includes token address, error level and error description text. Error levels are currently defined in the following way: 0 – Good, 1 – Notice, 2 – Warning, 3 – Severe, 4 – Emergency. Once the problematic transaction has been detected by Monitor, it sends the transaction destination address to MonitorChainSC and spawns the Tracker component. Tracker is responsible for tracking the transaction tree whose root is the detected problematic transaction destination address. During tracking, Tracker triages the involved addresses based on previous transactions of other tokens, interactions with well-known DApps and the transaction amount value to identify whether the address should be blocked. AIL is the helper library that should be utilized by MonitorChain users to access MCSC. It contains two parts, AIL contract, which implements the smart contract functions available for the client and AIL library that enables Node.js developers to call MonitorChain programmatically.

Subscriber Benefits

Tokens and exchanges alike can use MonitorChain to show a commitment to security and fraud reduction. This has the potential to have far ranging benefits beyond direct financial loss mitigation in exploits, but to reduce insurance premiums and even have a positive impact on future governmental regulation, as it would demonstrate that these companies are effective at and dedicated to protecting investors.

In addition to standard protective Monitoring, subscribers to MonitorChain are provided a trust seal to display on their websites to convey trust to users.

Beyond the listed set of features, the MonitorChain team works directly with token creators and exchanges to set custom alert conditions, specific monitoring rules and alert thresholds based on business needs, allowing for complete customization.

Resources and Further Reading

MonitorChain Homepage

Self Serve DApp

Information for Exchanges

Information for Token Creators and ICOs

Information for Cryptocurrency Traders and Investors

MonitorChain Interface Library GitHub

MonitorChain Blog