Risk & Compliance Framework

This framework ensures regulatory adherence, investor protection, and market stability, positioning Azoth as a compliant and secure gateway for institutional and retail participation in RWA markets.

1. Dynamic Risk Circuit Breakers

Price Anomaly Detection:

Trigger trading suspension if the price of asset tokens deviates >15% from real-world valuation (verified via Chainlink oracles).

• During suspension, only limit orders within ±3% of the oracle price are allowed.

• Tiered Liquidation System:

User Tier	Margin Requirement	Liquidation Threshold	Liquidation Method
Retail Investors	120%	110%	Dutch Auction (48-hour window)
Institutional Users	150%	130%	OTC Negotiated Liquidation

2. Compliance Transaction Engine

• Tiered KYC/AML Controls:

  graph TD  
    A[User Login] --> B{Asset Type}  
    B -->|Security ABTs| C[L3 Verification: Identity + Tax Residency Proof]  
    B -->|Commodity ABTs| D[L1 Verification: Phone + Email]  
    C --> E[Dynamic Trading Limit: ≤30% of Net Worth]  
    D --> F[Daily Cap: $100,000]  

• Jurisdictional Adaptability:

  • Automatically block IP addresses from sanctioned regions.

  • Switch compliance rules based on user GPS location (e.g., restrict U.S. users from trading unregistered ABTs).

3. Insurance Fund

• Funding: 5% of all ABT transaction fees are allocated to the insurance pool.

• Payout: Up to 90% compensation for losses caused by extreme events (e.g., asset seizures, oracle failures).

4. Audit & Transparency

On-Chain Legal Docs: Every AZT’s legal agreements and audit reports (e.g., KPMG/PwC) are stored on IPFS, with hashes immutably recorded on-chain.

Real-Time Monitoring: AI-driven surveillance for suspicious trading patterns (e.g., wash trading, front-running).