Smart Contract for Graphite

We developed 4 unique smart contracts for Graphite, which form the key features of the Graphite blockchain. These smart contracts enable the implementation of the Reputation-Based System, Account Activation, KYC (Know Your Customer) and KYC Filters. These elements work together to create a secure, transparent, and user-friendly ecosystem.

Graphite's Reputation-Based System involves:

• Account activation (i.e. wallet confirmation), whereby a user pays a small fee in order
 to perform outgoing transactions.
• Effective and secure KYC verification through off-chain interactions.
• Transaction filters for counterparty accounts based on KYC.

The features described above ensure that one user has one account, not multiple.

Graphite users need to activate their wallets in order to get network permission to send outgoing transactions, otherwise they will be rejected by the network. Users need to pay a small fee in order to activate their account.

This feature decreases the number of one-off accounts used for fraudulent activities and contributes to the "One User = One Account" policy.

The need for account activation is the result of how wallet addresses work on a blockchain. A common problem with a blockchain is that wallet space is often congested with millions of wallets that were used for a small, often illegal, one-off transaction.

To prevent such cluttering from occurring, a user needs to activate their account by paying a small fee to create a blockchain record showing that this specific address is now activated. Upon activation, an account is granted permission to send transactions to the Graphite blockchain.

Activated Wallet Address

Can accept transactions

Can send transactions

Not yet Activated Wallet Address

Can accept transactions

Can NOT sent transactions

Graphite has a secure KYC (Know Your Customer) procedure with three levels of verification.

Compliant KYC centers perform KYC verification using the standard document criteria.
 For each new verification, a KYC center is randomly chosen and the verification takes place off-chain directly between a user and the respective KYC center.

Upon completing a KYC verification, users can have 1 of 3 KYC tiers:

• as An email address is confirmed.
• The person’s name and physical address are confirmed.
• The person’s identity is confirmed with a video. 

The KYC level of each wallet address is publicly stored on the blockchain and is able to be viewed by anyone at any time, but private data such as names, emails, etc., is never published on the blockchain and is kept entirely off-chain.

This system is essential for legal compliance and fraud prevention within the network.

Graphite users can protect themselves from suspicious transactions by setting KYC-based filters. These filters allow users to reject incoming transactions from accounts with lower KYC levels, ensuring that they only engage with trusted parties. This feature further reinforces the network's emphasis on security and reputation.

For incoming transactions, a user can create filters to:

• Accept all transactions.
• Only accept transactions from activated accounts.
• Only accept transactions from users with a KYC tier no less than that selected (i.e. Tier 1, 2 or 3).