1. Introduction

Hybrid Finance Blockchain (HYFI) is a Legally-compliant Permissioned Layer-1 Blockchain for the Tokenization of Real World Assets (Authentication, Provenance, Fractional Ownership, and Trading).

If you are new to Blockchain Technology, start with the Blockchain Engineering Playbook by Rohas Nagpal. And check out these vidoes.

HYFI is tokenizing these assets:

  1. Art: US$ 579.52 Billion
  2. Carbon Credits: US$ 25.35 Billion
  3. Copyright Licenses: US$ 172.5 Billion
  4. Private Equity: US$ 11.7 Trillion
  5. Rare Collectibles: US$ 370 Billion
  6. Real Estate: US$ 326 Trillion
  7. Structured Products: US$ 7 Trillion
  8. Whisky Casks: US$ 300 Billion (5 years)

1.1 HYFI is a permissioned blockchain

  1. How HYFI provides Better Security: As a permissioned blockchain, the HYFI network is limited to verified participants. This reduces the threat of malicious actors and hacking attempts.
  2. How HYFI provides Improved Scalability: As a permissioned blockchain, HYFI can handle more transactions per second than many public blockchains. This makes HYFI suitable for high-volume applications.
  3. How HYFI provides Enhanced Privacy: As a permissioned blockchain, HYFI members have control over who can access the network. This helps to keep sensitive data confidential.
  4. How HYFI provides Faster Consensus: HYFI uses a distributed consensus between identified block validators. This is similar to PBFT (Practical Byzantine Fault Tolerance). There is one validator per block, working in a round-robin type of fashion.
  5. How HYFI provides Efficient Resource Management: As a permissioned blockchain, HYFI optimizes the use of network resources, reducing costs and improving performance.
  6. How HYFI provides Customizable Rules: As a permissioned blockchain, HYFI tailors the network's rules and governance/ This enables greater flexibility and control.
  7. How HYFI provides Legal Compliance: As a permissioned blockchain, HYFI is designed to comply with regulatory requirements - KYC, AML, CFT, Consumer Protection, Data Privacy, Right-to-be-forgotten Regulations, and Freezing of assets.

1.2 Legal & regulatory compliance

Hybrid Finance (HYFI) Blockchain supports regulatory compliance in 7 ways:

1. How HYFI supports KYC (Know Your Customer)

HYFI nodes are operated by verified entities from FATF-compliant jurisdictions.

Regulators nodes are available for real-time monitoring of all activities on the HYFI network.

HYFI is a permissioned blockchain and each address is given permissions based on the level of KYC.

2. How HYFI supports AML (Anti-Money Laundering)

HYFI nodes are operated by verified entities from FATF-compliant jurisdictions. These entities have robust policies for customer identification & verification, risk assessment, and monitoring & reporting of suspicious transactions.

Regulators nodes are available for real-time monitoring of all activities on the HYFI network.

3. How HYFI supports CFT (Countering the Financing of Terrorism)

HYFI nodes are operated by verified entities from FATF-compliant jurisdictions. These entities have robust policies for due diligence, transaction monitoring & suspicious activity reporting.

Regulators nodes are available for real-time monitoring of all activities on the HYFI network.

4. How HYFI supports Freezing of Assets

Assets can be frozen on the HYFI network, through the use of specific permissions, based on orders from courts & enforcement agencies.

This enables added security, fraud minimization, and control over the movement & usage of assets within the network.

5. How HYFI supports Consumer Protection

Consumer protection is provided through responsible address allocation & permission management.

The allocation of custodial addresses and management of permissions reduces the risk of unauthorized access & loss of funds, providing a safer experience for users.

Role-based asset controls allow for business, compliance, and regulatory oversight.

6. How HYFI supports Right-to-be-forgotten Regulations

Off-Chain Data Purging allows for the selective removal of off-chain data from local storage to meet right-to-be-forgotten regulations.

7. How HYFI supports Data Privacy

Stream Read Restrictions enable publishing and retrieving items only visible to nodes with appropriate permissions.

Fully encrypted peer-to-peer connections prevent intermediate routers from seeing any private data.

1.3 HYFI Security Features

Hybrid Finance (HYFI) Blockchain has several security features to protect users and their data:

  1. Only authorized users and nodes can participate in the network and access its data, making it secure from unauthorized access.
  2. The P2P connections in HYFI Blockchain are fully encrypted, preventing intermediate routers from seeing any private data.
  3. HYFI Blockchain offers flexible private key management options, including support for external private keys and multi-signatures for all transactions.
  4. In the HYFI blockchain, cold nodes play a crucial role in enhancing the system's overall security. By keeping private keys offline, users can minimize the risk of theft or unauthorized access to their assets.
  5. HYFI supports full multi-signature support and external key management, which enables users to securely manage their assets using hardware security modules (HSMs). This allows users to store their private keys in a secure and encrypted manner, which provides an additional layer of protection against potential threats.

1.4 HYFI Scalability Features

Some of the scalability features of Hybrid Finance (HYFI) Blockchain are:

  1. HYFI supports millions of addresses, assets, streams, and unlimited transactions / stream items, and can handle unlimited nodes in the network.
  2. With the capability to process more than 1000 transactions per second, HYFI can handle large volumes of transactions.
  3. HYFI blockchain's block time is as low as 2 seconds, which helps to reduce latency & improve overall efficiency.
  4. The HYFI Blockchain provides ample storage space with each transaction being able to store up to 64 MB of data.
  5. Streams in the system support various data structures such as key-value, identity, and time series, making it easy to store and search for information.
  6. The scalability of the HYFI Blockchain is improved through Selective Stream Indexing and Selective Data Retrieval.
  7. With Selective Stream Indexing, the indexing of streams can be controlled for enhanced performance & reduced disk usage.
  8. Selective Data Retrieval allows for the specific selection of off-chain items to be retrieved from the network, conserving bandwidth and disk space.

1.5 HYFI Cold Nodes

A blockchain cold node is a node that is offline or disconnected from the network. It does not actively participate in the validation of transactions or blocks.

Cold nodes are used for the storage of sensitive information, such as private keys, which are crucial for accessing and managing blockchain assets.

In the Hybrid Finance (HYFI) Blockchain, cold nodes play a crucial role in enhancing the system's overall security. By keeping private keys offline, users can minimize the risk of theft or unauthorized access to their assets.

1.6 Integrating HYFI with other applications

Hybrid Finance (HYFI) Blockchain can be integrated with other applications through its unified JSON-RPC API.

The API for customer applications in HYFI works by providing a secure and convenient interface for developers to interact with the blockchain and build custom applications.

The API is designed to cleanly separate the application from the node and is compatible with any API library developed for Bitcoin Core.

This makes it easier for developers to build applications that interact with the HYFI blockchain and add new functionality to the platform.

The API allows developers to easily access and utilize the various functions and services available in HYFI, such as issuing and transferring assets, managing permissions, and retrieving information about the blockchain and its transactions.

By providing a simple and flexible API, HYFI enables developers to create a wide range of custom applications, from simple web interfaces to complex decentralized applications (dApps), that can interact with the blockchain in a secure and efficient manner.

1.7 Freezing of funds on HYFI

Funds can be frozen in Hybrid Finance (HYFI) Blockchain through the use of specific permissions and conditions set by the address owner or administrators of the blockchain network.

This allows for added security, fraud minimization, and control over the movement & usage of assets within the network.

1.8 HYFI Data Streams

Data streams are a way to securely publish & retrieve items in the blockchain. These items can be visible only to nodes with the appropriate permissions, and they allow for the creation of channels where specific groups of participants can access and interact with certain data.

Data streams provide a mechanism for organizing & managing data within the blockchain in a secure and scalable manner, making it possible for a wide range of use cases, including but not limited to, content distribution, copyright licensing, and secure data sharing.

Technically speaking, data streams enable a blockchain to be used as a general-purpose append-only database, with the blockchain providing time stamping, notarization & immutability.

The Hybrid Finance (HYFI) Blockchain provides ample storage space with each transaction being able to store up to 64 MB of data.

Streams in the system support various data structures such as key-value, identity, and time series, making it easy to store and search for information.

1.9 HYFI Smart Filters

A Smart Filter is a piece of code that is embedded in the blockchain, and which allows custom rules to be defined regarding the validity of transactions or stream items.

Smart Filters are written in JavaScript and run within a deterministic version of Google’s V8 JavaScript engine, which is embedded directly within MultiChain 2.

This is the same JavaScript engine used in Chrome, Node.js, and many other platforms. It offers excellent performance by compiling JavaScript to machine code and optimizing that code as it runs.

For details, see: https://www.multichain.com/developers/smart-filters

2. Setting up a node

The HYFI blockchain provides multiple deployment options for users, which are environment agnostic.

This means it can be self-hosted in a data center, public or private cloud. The blockchain can also be accessed as a service, allowing for easy and quick addition of nodes.

2.1 HYFI nodes

Setup a server with the following minimum config:

  • 64-bit operating system: Linux (Ubuntu 12.04+), Windows (7, 8, 10, Server 2008 or later), Mac (OS X 10.11 or later)
  • 512 MB of RAM
  • 1 GB of disk space

Login as root and run these commands:

You will see something like this:

Email it to team@hyfidao.com

When we confirm, login to the node and run

You should get this response: Node ready.

Now run:

Now you can create addresses, assets, transactions, signatures and more.

Also see the MultiChain JSON-RPC API commands and various Multichain developer tutorials and guides

For future logins, use:

For stoping a node, use:

For re-starting a node, use:

2.2 RPC credentials

For API integration, you will need the RPC credentials:

2.3 HYFI Explorer

Instructions for setting it up on Ubuntu 20.04:

3. Addresses

For details on permissions management, see: https://www.multichain.com/developers/permissions-management/

For MultiChain JSON-RPC API commands, see: https://www.multichain.com/developers/json-rpc-api/

3.1 Address permissions

Each address can have one or more of the following 8 permissions:

  1. connect – to connect to other nodes and see the blockchain’s contents.
  2. send – to send funds, i.e. sign inputs of transactions.
  3. receive – to receive funds, i.e. appear in the outputs of transactions.
  4. issue – to issue assets, i.e. sign inputs of transactions that create new native assets.
  5. create – to create streams, i.e. sign inputs of transactions which create new streams.
  6. mine – to create blocks, i.e. to sign the metadata of coinbase transactions.
  7. activate – to change connect, send, and receive permissions for other users, i.e. sign transactions which change those permissions.
  8. admin – to change all permissions for other users, including issue, mine, activate, and admin.

Address allotment and permissions are significant in HYFI Blockchain as they play a crucial role in consumer protection.

By assigning addresses judiciously and managing permissions, HYFI Blockchain aims to ensure the protection of its users, especially those who are less tech-savvy.

The allocation of custodial addresses and management of permissions can help reduce the risk of unauthorized access or loss of funds, providing a safer experience for users.

When you create a testNet node, your primary address has connect, send, receive, issue permissions. Since HYFI has 100% KYC compliance, every address you create must be given permissions by an admin. Create a few addresses and email them to team@hyfidao.com along with details on what all permissions (send, receive, issue) should be given to each address.

3.2 Address types

Addresses can be custodial (the private key is stored in the node) or non-custodial (the private key is not stored in the node.)

3.3 Creating a custodial address

getnewaddress returns a new address whose private key is added to the wallet. This is a custodial address.

The output is an address.

3.4 Creating a non-custodial address

createkeypairs generates one or more public / private key pairs, which are not stored in the wallet or drawn from the node’s key pool, ready for external key management. These are non-custodial addresses.

For each key pair, the address, public key (as embedded in transaction inputs) and private key (used for signatures) is provided.

3.5 Creating a multi-sig address

Addmultisigaddress creates a pay-to-scripthash (P2SH) multisig address and adds it to the wallet.

Funds sent to this address can only be spent by transactions signed by nrequired of the specified keys. Each key can be a full public key, or an address if the corresponding key is in the node’s wallet.

Output is the P2SH address

4. Tokenizing Assets on HYFI Blockchain

Tokenization converts the rights or ownership of a real-world asset into a digital representation (token) on the Blockchain.Asset tokenization is expected to reach $16 trillion by 2030.

To learn more about Blockchain Tokenization, see this blog post.

The full asset lifecycle in the Hybrid Finance (HYFI) Blockchain encompasses 7 stages of asset management, from creation to eventual redemption or destruction. These stages include:

1. Issuance
This is the first step in the lifecycle of an asset. It involves creating a new asset and issuing it to the intended recipient. The issuer can specify the initial distribution of the asset and any relevant details such as the quantity, denomination, and any associated metadata.

2. Transfer
After an asset has been issued, it can be transferred from one owner to another. This could be in the form of a simple transfer of ownership or a trade on an exchange. In the HYFI blockchain, asset transfer is a secure and transparent process, with the ownership records being securely maintained on the blockchain.

3. Exchange
The HYFI blockchain supports the exchange of assets between different parties. This means that assets can be traded on a centralized or decentralized exchange, making it possible for owners to trade their assets for other assets or fiat currencies.

4. Escrow
In some cases, assets may need to be held in an escrow account during a transaction. For instance, in a transaction involving the sale of a digital asset, the buyer may choose to hold the funds in an escrow account until the seller provides the digital asset. The HYFI blockchain supports secure and transparent escrow transactions, ensuring that assets are only released to the recipient when certain conditions are met.

5. Reissuance
In some cases, an issuer may need to reissue an asset. This could be due to a change in ownership or an error in the initial issuance process. Reissuing an asset in the HYFI blockchain is a straightforward process, and the new asset is created and issued to the new owner while the original asset is destroyed.

6. Redemption
Assets in the HYFI blockchain can be redeemed for the underlying asset or for fiat currency. Redemption can be initiated by the asset owner, who will receive the underlying asset or cash equivalent in return for the token.

7. Destruction
In some cases, assets may need to be destroyed. This could be due to the expiration of the asset or if it is deemed to be no longer necessary. The HYFI blockchain provides a secure and transparent process for destroying assets, ensuring that they are permanently removed from circulation.

When an Asset is tokenized on the HYFI Blockchain, the following parameters can be customized:

  1. the address which is creating the asset
  2. address to which the assets are to be sent on creation
  3. asset name
  4. whether additional units can be created
  5. whether it has per-asset send and/or receive permissions
  6. the smallest transact-able unit
  7. custom-fields parameter to provide extra information

For details, see: https://www.multichain.com/developers/asset-reissuance

4.1 Creating Tokenized Assets

A HyFi Tokenized Asset can be issued using:
issuefrom fromAddress toAddress name|params qty (units=1) (customFields)

On successful creation, a transaction id will be generated.

Information about an asset can be obtained using
getassetinfo asset-name

Note: In the above example, the asset name can be in any one of these formats:
Name: "Shinam Arora HTN Series 1"
Asset ref: e318239a3792a092ad60b7818b3efe88c781924a8ad2ce6f6940474192566984
Issue txid: 200-267-6371

4.2 Managing Tokenized Assets

JSON-RPC API commands

See the following sections on the MultiChain JSON-RPC API commands page
1. Asset management
2. Querying wallet balances and transactions
3. Sending one-way payments
4. Atomic exchange transactions – tutorial
5. Managing stream and asset subscriptions
6. Querying subscribed assets
7. Smart filters and upgrades

5. Transactions

Transactions can be one-way payments or atomic exchange transactions.

5.1 Sending one-way payments

One-way payments can be sent using sendassetfrom fromAddress toAddress asset quantity

On success, a transaction id will be generated.

You can get a list of all the asset balances for an address using getaddressbalances address

5.2 Atomic exchange transactions

Atomic exchange transactions are used to safely swap assets between counterparties.

Any MultiChain transaction can have multiple inputs and outputs, and each one can relate to a different address on the blockchain. This enables a single transaction to perform an asset exchange between two or more parties, for example sending a dollar-denominated asset from Alice to Bob, while simultaneously sending a Euro-denominated asset from Bob to Alice.

Because the exchange takes place in a single transaction, it comes with a guarantee of atomicity, meaning that all of the asset transfers take place simultaneously, or none take place at all. In the finance world, this type of transaction is termed delivery-versus-payment, or DvP for short.

Also see:

  1. https://www.multichain.com/developers/atomic-exchange-transactions
  2. https://www.multichain.com/developers/raw-transactions
  3. https://www.multichain.com/developers/json-rpc-api