BrickFi

BrickFi is an innovative platform designed to bridge the gap between traditional finance (TradFi) and decentralized finance (DeFi) by facilitating the tokenization of real-world assets (RWAs). By leveraging blockchain technology, BrickFi aims to make assets such as real estate, luxury goods, and commodities more accessible, liquid, and integrated within the DeFi ecosystem.​

Inspiration and Problem Statement

The traditional investment landscape for RWAs is often characterized by:​

Limited Liquidity: Assets like real estate and commodities are not easily tradable, leading to capital being tied up and inaccessible.​

Restricted Accessibility: High entry barriers often limit investment opportunities to high-net-worth individuals.​

Lack of DeFi Integration: Existing RWA tokenization platforms often lack on-chain derivatives, preventing long/short trading strategies.​

Centralization Issues: Many platforms rely heavily on centralized entities like custodians and Special Purpose Vehicles (SPVs), which conflicts with the decentralized ethos of DeFi.​

Unique Selling Propositions (USPs)

BrickFi distinguishes itself through:​

Bridging TradFi and DeFi: By tokenizing RWAs, BrickFi enables direct investment in tangible assets. Additionally, the creation of synthetic assets allows users to gain price exposure without full ownership.​

Fully On-Chain and Decentralized: Utilizing the ERC3643 standard, BrickFi eliminates the need for SPVs or custodians. Asset listers can tokenize assets directly after completing Know Your Customer (KYC) procedures, without requiring centralized approval.​

Technical Stack

Frontend Framework: Next.js 15​

Decentralized Exchange Integration: Uniswap v4 Hook for custom incentive mechanisms and liquidity pool creation; SuperchainERC20 for cross-chain liquidity pools​

Blockchain Infrastructure: Polygon, incorporating Chainlink data feeds and Polygon ID for identity verification​

Compliance Auditing: Hash Key Chain​

Detailed Workflow

KYC/AML Verification

Purpose: Ensures regulatory compliance and prevents fraudulent property listings.​

Process: Users verify their identity through a Zero-Knowledge KYC system (e.g., Polygon ID), which issues an on-chain proof without revealing personal details. Upon approval, users can list RWAs permissionlessly.​

Providing Property Details

Purpose: Ensures market transparency and accurate asset valuation.​

Process: Users submit key property details such as location, valuation, and relevant documents. The system verifies the legitimacy and proper appraisal of the asset. Optionally, property details can be stored as metadata on-chain using IPFS or Arweave for enhanced transparency.​

Proof of Legal Documents

Purpose: Ensures that the listed property is legally binding to the ERC3643 token, preventing fraudulent claims.​

Process: Users upload legal proof of ownership (e.g., title deeds, notary approvals). Zero-Knowledge Proofs verify authenticity without exposing sensitive data. A legally binding smart contract is signed, ensuring the property cannot be sold off-chain separately.​

Oracle Integration for Asset Pricing

Purpose: Maintains the on-chain RWA token price pegged to the real-world asset value, ensuring synthetic assets reflect accurate, real-time market conditions.​

Process: Oracles source data from trusted providers like Chainlink. The price feed is updated periodically to prevent manipulation, allowing tokenized RWAs and synthetic assets to adjust dynamically based on oracle updates.​

Tokenization Using ERC3643

Why ERC3643?: This standard is compliance-focused, supporting permissioned transfers and on-chain identity verification, making it ideal for real-world assets as it allows whitelist-based trading and fractionalization.​

Process: The ERC3643 RWA token is minted based on the asset’s valuation. Ownership rules are enforced on-chain, eliminating the need for custodians. Fractional ownership enables smaller investors to participate.​

Creation of Synthetic Tokens (sRWA)

Purpose: Allows users to trade RWA price movements without actual ownership, adding liquidity to the RWA ecosystem through decentralized derivatives.​

Process: A synthetic RWA (sRWA) token is minted as a derivative asset, mirroring real-world price movements within the DeFi space. Users can take long or short positions without needing actual ownership.​

Community Liquidity Provision (LP Model)

Purpose: Ensures that sRWA trading has sufficient liquidity, promoting decentralization by involving the community.​

Process: Users provide liquidity pairs (e.g., USDC & sRWA) into the synthetic trading pool. Liquidity providers earn trading fees and incentives, with liquidity depth determining the ease of sRWA trading.​

Trading Fees Reward System

Purpose: Incentivizes RWA listers and encourages users to provide liquidity for synthetic trading.​

Process: Trading fees (e.g., 0.3% per trade) are distributed among liquidity providers and RWA listers. Liquidity providers receive the majority of the fees, while listers earn a percentage as an incentive, aligning interests between listers, traders, and LPs.​

Through this comprehensive workflow, BrickFi aims to democratize access to real-world asset investments, enhance liquidity, and seamlessly integrate RWAs into the DeFi ecosystem, all while ensuring compliance and decentralization

Core Technology Stack Frontend: Next.js with React 19, TypeScript, and Tailwind CSS Smart Contracts: Solidity (v0.8.17+) deployed on HashKey Chain Testnet (Chain ID: 133) Web3 Integration: ethers.js v6.13.5 for blockchain interactions Development Environment: Hardhat for contract compilation, testing, and deployment

Architecture and Design Patterns The project follows a modular architecture with several key components: Smart Contracts Layer: KYCVerifier.sol: Handles identity verification with custom error handling and cryptographic verification PropertyAttestationVerifier.sol: Manages property attestations with on-chain verification PropertyPriceOracle.sol: Provides property pricing data (originally designed for Chainlink integration) VerificationSBT.sol: Implements Soulbound Tokens (ERC-5192) for non-transferable identity verification

Service Layer: AttestationService: TypeScript service for interacting with property attestation contracts KYCService: Manages user verification workflows with fallback to mock implementations SBTService: Handles Soulbound Token operations for verification credentials

Frontend Components: React components following a modular design pattern Integration with Web3 wallets via ethers.js OCR-powered document scanning using Tesseract.js Notable Technical Innovations

Hybrid On/Off-Chain Data Model: Sensitive user data remains off-chain with only cryptographic hashes stored on-chain Implemented cryptographic signature verification for KYC attestations

Fallback Mechanism for Network Issues: Graceful degradation when blockchain networks are unavailable Mock implementation for development and testing environments Smart error handling that detects specific blockchain errors

Custom Error Handling: Implemented custom Solidity errors for gas-efficient error management Detailed error reporting pipeline from smart contracts to frontend

Document Scanning: Used Tesseract.js for OCR to extract data directly from identity documents Implemented image preprocessing techniques for better OCR results

Partner Technologies HashKey Chain: Deployed on HashKey Chain Testnet (Chain ID: 133) for lower fees and faster transactions compared to Ethereum mainnet

OpenZeppelin Contracts: Used for secure implementations of standard patterns: ERC721 for NFTs Ownable for access control ReentrancyGuard for protection against reentrancy attacks ECDSA for cryptographic signature verification

Hardhat: Used for contract development, testing, and deployment with custom configurations for multiple networks Hacky but Effective Solutions

Smart Contract Versioning Without Proxies: Used a deployment record system instead of complex proxy patterns Maintained backward compatibility with simple version tracking

OCR Processing with Canvas Preprocessing: Used HTML Canvas for image manipulation before OCR processing Improved OCR accuracy with custom preprocessing techniques

Adaptive Web3 Provider Detection: Service initialization with fallback to mock implementations when blockchain is unavailable Network detection and switching guidance for users on incorrect networks

The project tackles the challenging problem of tokenizing real-world assets by creating a bridge between traditional property ownership and DeFi. It navigates regulatory requirements through KYC verification while maintaining user privacy by keeping sensitive data