Hazel_Whitepaper_EN

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Background

The Internet has realized the efficient transmission of information where the concept of Internet of Everything and its application have greatly changed human life. As the next-generation "Internet of Value", blockchain is expected to deliver and exchange value as accurately, efficiently and safely as information while the digital assets based on the native blockchain system are important carriers in transmission of value.

As an objective measurement of value, price is an important basic component for realizing value exchange. With the rapid development of blockchain, whether value can be exchanged at low cost safely and efficiently has become a core standard for measuring the application value of blockchain. Therefore, as it were, the measurement of application value of blockchain is inseparable from the objective measurement of assets on any chain.

Product Introduction

Hazel is a blockchain-oriented prediction service which features decentralization, or more specifically, a new generation of verifiable oracle machine based on Polkadot. It aims to exactly support the on-chain operation of enterprise-level Internet applications with high-concurrency through consensus mechanisms, smart contracts, trusted computing, privacy protection and the interaction of on-chain and off-chain data.

We expect to provide a data-driven prediction service based on the asset-backed events and a data-correction mechanism based on fact checking. This mechanism could resolve fundamental problems about trusted source of data of blockchain through endorsement of facts.

With the rapid development of blockchain in recent years, the encrypted world on the chain has gradually become an independent economy parallel to the real world. But we firmly believe that this will not be the ultimate star sea of the blockchain, and the world on the chain and off the chain will inevitably move towards integration, and truly change the mode of human information and value interaction through Metaverse and other forms. As a bridge between the on-chain and off-chain, the oracle has become an important component of the underlying infrastructure of the blockchain, and its importance will have a long-term impact on the integration process of the blockchain and the real world.

In the field of oracles, although weakly centralized oracles services represented by ChainLink have emerged at this stage, there are still problems such as relying on the subject's credit endorsement, the potential risk of malicious actions by the centralized mechanism, and the high cost of use. Therefore, we believe that there is still a huge market space in this field, and better oracle products can better solve the current problems in the market.

HazelWord expects to provide a data prediction service based on event asset mortgage and a data correction mechanism based on fact verification in the Polkadot ecosystem. Solve the fundamental problem of blockchain trusted data sources through fact endorsement.

The realization of effects mentioned above needs to meet 2 basic conditions:

• To establish a mapping relationship on price of facts through the pledging of assets

• To realize spontaneous correction of event data through market arbitrage

Technology Architecture

Product Architecture

Description Product Characteristics

TEE encryption oracle

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• Application contract：On-chain applications deploy and run smart contracts on the blockchain

• HazelWord Open Oracle contract：HazelWord smart contract deployed on the Polkadot blockchain

• HazelWord example：A trusted HTTPS/RPC client implemented in TEE, which processes web requests and returns a certified response result

• Configuration Management Service：Configure user contract permission to use service permissions and configurations

• HazelWord Service：The HazelWord service management dispatch center manages HazelWord Open Oracle contracts and HazelWord instances, and dispatches Oracle contract requests to Oracle instances for execution

• Web data source：The data source web server can be publicly verified without permission, or verified with permission.

Quote Vault

In order to reduce the cost of ordinary users participating in quotation, it has truly become a decentralized quotation model. HazelWord provides users with automated quotation arbitrage capabilities by providing different on-chain strategy Quote Vault, which improves user asset income while solving the initial cold start problem of the agreement, and also provides more guarantees for the safety of the Hazel agreement.

Private Data Application Market

Diversified Event Data Types

In addition to traditional cryptocurrency price data, HazelWord can issue on-chain assets of any event and pledge the assets of the event results to realize the prediction of any event data in the offline world, and truly realize the diversified data on and off the chain. get through.

Anti-risk ability

The proposal aims to charge the lowest fees while maintaining CoC (cost of corruption)> PfC (profit from corruption). Tokens which function voting have fundamental value because contract participants will be charged eventually to compensate voters for their work to ensure system security. Therefore, the current value of the token should reflect the present discounted value of all the fees expected to be charged to the contract in the future. The market value τ of tokens (measured by the price multiplied by the supply or pτSτ) should be equal to the sum of all expected repurchase fees Ft charged on PfCt in the future at the discount rate r:

Since any fee Ft is a function of the total value guaranteed by the system during the time period t, the market's expectation for all fees in the future is a reflection of the market's expectation for the growth of the total value guaranteed by the system. It means that if the usage of the system expected by the market actually grows, the price of tokens at present should reflect this expectation. It also implies that the price of tokens p can be maintained above the required psafe level without charging any fees initially. In other words, the inequality of CoC>PfC can be maintained entirely in accordance with growth expectations. If the usage of the system does not increase as expected, fees will eventually be charged in a stable state in the future. However, this structure is intellectual in that when the system's growth is expected to be greatly high, no fees or minimum fees will be charged at the initiate stage of the system, which should help encourage early adopters to use the system. In the stable state in the future, when the growth of usage of the system slows down or stops, users will be compensated for voting with their capital costs (the cost of buying and holding voting tokens).

Quotation Process

Hazelword provides the idea of a multi-party game, using quotation, arbitrage verification, quote vault, price chain, trusted TEE module, security module, DAO autonomy and other modules to form a safe real-time decentralized oracle system, The following is the main process part of ETH/USDT trading pair mining:

Quotation flow chart

Participant Description:

Quoter: Participants who provide quotes, including three parts:

1. All quote miners

2. Quote vault

3. Take orders and quote validators

Verifier: If a quotation deviates from the market price, the verifier can trade with the quotation asset to obtain the benefit of the difference. While eating the quotation of the quotation, the verifier needs to provide a compensation quotation for the quotation price as Provide more honest quotation data, making the price infinitely close to the real market price. Contains two parts:

1. All verifiers

2. Verifier Quote vault

Quote Vault: The Quote Vault is divided into two parts

1. The Quote Vault mentioned in the appeal

2. The verifier Quote Vault, the function of changing the Quote Vault is to provide honest quotations for mining and find that the quotations that deviate from the market are corrected and profited. The function of this module is mainly in two aspects:

1. It is convenient for anyone to participate in the system to obtain benefits

2. Participants and institutions jointly maintain the security of the system

TEE module: Provide reliable external prices for Quote Vault use.

Price chain: According to the mining rules, every T1 time period, all valid quotations (quotes that have not been taken) within this period of time are used to generate the final price of the block N of the transaction pair according to the weight.

Price caller: Only need to pay a certain fee or purchase a certain number of queries to get the current price of all trading pairs in the current block, and any contract or account can become a price caller.

Quotation mining has been price verified

Taking ETH/USDT as an example, a miner intends to quote 1ETH=2000USDT. He needs to transfer the quoted assets ETH and USDT to the quoted contract, the scale is xETH and 2000xUSDT, the commission paid is λx2000HZL, and he participates in mining according to the commission scale paid. Get HZL. Anyone can become a miner at any time, and the price and scale are independently set by him (greater than or equal to the minimum quotation unit). At the same time, the Quote Vault will use the quotation funds in the pool to automatically provide quotations according to the storage user's choice. After the miner submits the asset and price to the quotation contract, any validator believes that there is room for arbitrage at the price, and can trade ETH or USDT according to the quotation in the quotation pool 1ETH=2000USDT. This mechanism ensures that the quotation is either a fair price in the market or an equivalent price recognized by the quoter (that is, 1ETH and 2000USDT are equivalent). Of course, the verifier is two-way, and the execution power eats the quotation 1ETH=2000USDT At the same time, you need to provide your own quotation. This process is the price verification period.

Of course, during the mining cycle T1, there may be price fluctuations. Therefore, if miners want to minimize their own costs, they need to report the price that is least likely to be traded during the verification period, which means that the miners’ quotation has a certain degree of future price. For the prediction and discovery function, for the verifier, whether arbitrage depends on the deviation between the quoted price and the market equilibrium price. We call the minimum deviation of the action taken by the verifier as the minimum arbitrage space. This value depends on the length and length of the verification period. transaction cost.

Price chain Generation

According to the Quotation Mining Agreement, the price of a transaction pair quoted by the bidder in this T1 cycle is A1, A2, A3...AN, and the quantity is n1, n2...ni. In the agreement, the verifier is After the price of a quoter is traded, a new price needs to be forced to be quoted. For example, A2, A3 is found by the verifier to have arbitrage space, then after the transaction, a new quote will be provided B2=y1A2,B3=y2A3, of course, if other verifications feel that B3 There is also arbitrage space, then B3 will be taken and a new quotation C3=y3B3 will be provided. By analogy, a continuous price chain with T1 as the maximum quotation time interval is formed: A1—B2—C3...AN , When this time period T1 ends, it will be calculated within the changed block, so the price of the transaction pair P=∑Ai*ni/Ni

Safety

The Quote Vault is an important link in the security system. The TEE module will run transparent and safe code blocks to return information from multiple trusted institutions, and make the smallest quotation based on market conditions, mainly to maintain continuous and stable price mining. In addition, The verifier Quote Vault can continuously monitor the quotations in the quotation market that do not conform to the market conditions, and accurately make arbitrage behavior. Theoretically verify that the amount of the Quote Vault is directly proportional to the cost of doing evil. When the value of the Quote Vault increases, the cost of doing evil will increase. At the same time, anyone who finds arbitrage space will spontaneously maintain the Hazelword quotation market. For example: we set the take-to-order factor β=2, the Quote Vault p=1000ETH, the time period T1=1 minute, and the initial quotation is x=10ETH, then in the case of all transactions, x1=2020ETH, x2=4040ETH, x3=8080ETH. .. By analogy, the attacker will either be exposed to great arbitrage opportunities in the market (the scale increases by a series, this kind of attack is almost ineffective), or continue to use extremely high-scale assets to conduct self-transactions based on market prices in order to delay The chance of price being adopted, if one block of the current chain can contain 10 transactions, then about 10 blocks in 1 minute can provide one hundred valid transactions, 1010^100=2*10^300ETH, which will be a no The possible number and resistance to attack are also beyond the reach of most centralized data source oracles.