CoinMarketCap takes a deep dive into a new project that aims to reduce the fallout from hacks in the crypto space.
HAPI is a security infrastructure provider for decentralized finance (DeFi) and cryptocurrency projects. Developed by the Ukrainian cybersecurity consulting firm Hacken Foundation and founded by the pseudonymous Dona Mara, it aims to disrupt crypto security.
The concept is rather simple: HAPI gathers data about all the hacks that take place in the industry and records all the compromised addresses. It then provides this data as a trustless security oracle to any interested parties, mainly centralized (CEXes) and decentralized exchanges (DEXes). As a result, any suspicious transactions can be immediately blocked, and malicious actors cannot cash out stolen assets.
HAPI went public via an initial dex offering (IDO) in March 2021. The HAPI tokens can be used to pay for access to the platform’s oracle data.
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How Does HAPI Work?
HAPI is a set of cross-chain smart contracts that can be embedded into DeFi products for improved security. Its oracle and decentralized autonomous organization (DAO) systems deliver software as a service (SaaS) in the DeFi environment to prevent hack attempts.
HAPI is a multichain token: it is minted as ERC-20 on the Ethereum (ETH) blockchain and also available as BEP-20 on the Binance Smart Chain (BSC). One of the key utilities of HAPI is to connect data submitters with security oracles.
According to the project’s roadmap, after creating a DAO in Q1 2021, the following steps will be to develop oracles, protected smart contracts and application programming interfaces (APIs) to allow CEXes and DEXes on Ethereum and BSC to access HAPI. As of May 2021, the project’s team has not yet released any products.
In parallel with the platform’s development, HAPI is working on increasing its presence in the industry by establishing strategic partnerships.
Now, a few words about tokenomics, fwiw.
The total supply of 1,000,000 HAPI, of which only 78,000 HAPI are available from day 0, is allocated as follows:
Team + partners………….………….24%
Private token sale…………………...43%
Public token sale……………………...3%
Liquidity pool…………………………12%
Farming rewards………………….....18%
The liquidity pool is the HAPI/ETH Uniswap pool, locked for one year. Farming rewards work differently: users will be getting HAPI for three years for staking HAI, another token created by the Hacken Foundation.
Tokens will be released according to the following 10-month curve:
Beyond staking and serving as a medium of exchange, HAPI tokens will be used in DAO governance and voting. In light of that, the fact that 67% of HAPI are in the hands of early investors and the team can potentially become a security concern.
Hapi MVP
As Hapi — with the release of its MVP — inches ever closer to its goal of creating a decentralized security oracle, there is the need to unpack the applicability of the technology.
The first thing that the MVP reinforces is that Hapi is far from a surveillance or an invasive system. Instead, the entire system functions like a cybersecurity layer that provides DeFi users and operators with the data they need to hamper the activities of hackers.
In essence, Hapi does not freeze transactions, nor does it block users from accessing a service — аll it does is issue security scores to wallet addresses. What service providers do with this information is totally up to them.
The MVP will capitalize on blockchains’ public ledger to analyze the potential threatс associated with wallet addresses. More specifically, the product autonomously ranks addresses, based on their tendency to engage in fraudulent activities.
This tiered system, also called the binary risk categorization, relies on a risk-scoring technology, which gauges the potential fraudulence of a wallet address based on previous interactions. The low-risk tier includes addresses linked to wallet services, merchant services, mining pools and low-risk exchanges.
This is followed by the medium-risk tier featuring wallet or smart contract addresses linked to DeFi, OTC brokers, gambling sites and crypto ATMs. There is also a high-risk tier that indicates if an address has had dealings with malicious organizations, mixers, darknet services, hackers and scammers. The last tier, called the severe risk level, highlights addresses involved in terrorist financing, counterfeiting and child pornography.
Other features of Hapi’s MVP are the Bulwark system, a reporting page,and a DAO.
The Bulwark system propagates data and notifications about illicit activities to all entities connected to the Hapi protocol. The Report Page allows centralized exchanges and DeFi protocols to report addresses based on the binary risk categorization system.
Note that the protocol’s governance system will incorporate the services of organizations specialized in the cybersecurity field. More importantly, development proposals will be executed by a committee consisting of Hapi’s team members and trusted third parties.
What Makes HAPI Unique?
HAPI tokenizes security audits, aiming to make them a ubiquitous standard feature within smart contracts, centralized and decentralized exchanges, and DeFi applications.
The HAPI token is the only means of payment inside the ecosystem. Data submission, oracle queries, audit reports — every transaction will require HAPI tokens.
HAPI claims to have superior expertise in the area of hacking because of its affiliation with so-called “white hat” hackers — cybersecurity professionals who use their hacking skills for a good cause by providing cybersecurity audits, improving security standards and raising general awareness about cyberthreats.
HAPI is not the first cybersecurity product of the Hacken Foundation: since 2018, the team, led by Dyma Budorin, has been maintaining CER.live, a security rating of crypto exchanges. It has gained wide recognition in the industry, including partnerships with Coingecko and Chainlink and a mention by Binance’s CEO Changpeng Zhao.
A month after launch, the HAPI token has not displayed a notable correlation with the overall crypto market, which traditionally tends to follow the price of Bitcoin (BTC). Over the long term, this dynamic could suggest that security and speculation are non-correlated trends in crypto.
Risks of Centralization
Despite the advantages it offers, the very premise of the project as a single security authority for the crypto industry — which itself is decentralized by design — can be a reason for concern.
If HAPI someday becomes the default security oracle for most exchanges and an integral part of smart contracts, it could become the actual security bottleneck and the most likely target for malicious attacks.
How Does HAPI Compare to Competitors?
HAPI is not the first security oracle on the market — a similar project called CertiK, launched in 2020, has achieved ten times the market capitalization of HAPI as of May 2021. Unlike HAPI, it focuses on real-time security audits and runs on its own delegated proof-of-stake (DPoS) blockchain.
It features the CertiKShield program, which is an insurance policy against all security threats associated with blockchain. If a user protected by the program loses their assets in a malicious attack or loses access to their private keys, they can be reimbursed by CertiKShield. The asset pool is maintained by Collateral Providers, who stake their tokens in return for rewards.
Unlike Certik, HAPI is not an open-source project. It does not feature a detailed whitepaper or a public git repository, and it has not yet been able to secure strategic partners the size of Huobi.
However, the project did manage to attract some attention from the community, including press coverage in the industry media outlets. One thing is certain: no one can ignore its creative logo.
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