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Source: Lawyer Liu Honglin
I found that many friends would think that Meme coins almost occupy the “top stream” position in this bull market.Why?Because it has several unique traits.
First of allLow threshold.Meme coins do not require complex technical background and substantial application support like mainstream currencies, and do not even need to read the project white paper.As long as the name is attractive, the story is interesting enough, and some online hotspot packaging can easily enter the market.For many novice investors, this logic of “everyone can understand” makes them more willing to participate.
followed byHigh transmission.The core gameplay of Meme coins is “entertainment-driven”, which quickly becomes popular with the help of viral spread of social media.Whether it is the “Doge” meme on Twitter or the fancy spin-offs in the Telegram group, the spread of Meme coins does not rely on traditional marketing methods, but relies more on the spontaneous promotion of the community.Low cost, but explosive effect.
Finally,Emotional amplification effect.Meme coins are not just synonymous with speculation, they are more like an “amplifier” of market sentiment.When the market is bullish, Meme coins are often sought after by investors; and when the market is down, it can also relieve investors’ anxiety by “playing with memes”, so that people have reason to stay in the market and wait for the next oneBull market.
In general, the popularity of Meme coins is a track with emotion, communication and community drive as the core outside of technology. Because of this, it has become an undisputed “top stream” in this bull market.
There is a market where there is demand. In order to make cryptocurrency players more conveniently trade Meme coins, Memecoin full-chain trading platform applications such as DEXX are born.According to relevant information, DEXX supports multi-chain asset transactions such as SOL, ETH, TRX, BASE, and BSC, and provides functions such as on-chain mobile stop-profit and stop-loss, hotspot push, order-following transactions, etc.Compared with mature full-chain trading platforms such as old-fashioned Banana Gun and Unibot, DEXX’s main differentiation is silky and even has the reputation of “Binance on the Chain”.
However, I found that everyone generally has a wrong understanding, thinking that decentralized projects like DEXX are a “technology-driven” market and do not need to pay too much attention to legal and compliance issues, but the ideals are full, but the reality is very rigid.feel.
Some time ago, DEXX encountered a serious attack, resulting in large-scale stolen user assets.According to investigations by blockchain security companies such as Slow Mist, the main reason for this incident is that the platform improperly manages users’ private keys.The user’s private key is stored in plain text on the official server, and there is a lack of sufficient encryption protection during transmission.This means that an attacker may intercept the user’s private key during transmission and thus obtain asset access.This private key management method obviously does not meet the industry’s basic requirements for decentralized security, and greatly increases the risk of user assets being theft.
Similar cases are actually not uncommon in the Web3 field, but the scale and influence of the DEXX incident are particularly huge.Although DEXX does not directly handle fiat currency transactions or user identity information, its management loopholes in user assets will inevitably arouse doubts and attention from regulators.In fact, regulators in many countries are turning their attention to the DEX field, and the legal constraints on these platforms will only become more stringent in the future.
When Honglin lawyers discuss the DEXX incident with industry friends, there is a particularly interesting technical detail that we have been discussing: Why do service providers like DEXX choose to master the user’s private key instead of authorizing it with a decentralized wallet contract?How to complete the transaction?
After all, from a decentralized perspective, wallet contract authorization is obviously more in line with the concept and can greatly reduce the risk of private key leakage.But after careful consideration, there are actually several reasons behind this.
The first isConvenience of operation.For many users, especially newcomers who have just entered the circle, letting them understand wallet authorization and transaction signature operations is tantamount to letting them understand blockchain technology.In contrast, if the private key is escrowed to the platform, the transaction logic is completed in the background, which is much easier for users.Of course, service providers also hope that the simpler the user experience, the better, and lowering the operating threshold will naturally become a priority.
The second isFlexibility and intervention capabilities.Centralized management of user private keys allows platforms to take measures faster when transactions are abnormal, such as revoking a wrong transaction, freezing suspicious assets, and even “rescuing” user funds in the event of a hacker attack.Although this is a bit contrary to the concept of decentralization, from an operational perspective, this “rapid response” is actually a risk guarantee for service providers.
FinallyDifficulty in technology implementation.Although the method of wallet contract authorization is good, it is not easy to implement. Especially in a multi-chain environment, the complexity of contract compatibility and authorization logic will suddenly increase.There are more centralized hosting solutions, which reduces the cost of development and maintenance of service providers.
Ultimately, these choices are a trade-off between user experience, platform flexibility and technical cost by service providers.Although it may be more efficient in the short term, it also lays hidden dangers for safety and compliance, and the DEXX incident undoubtedly proves that once these hidden dangers break out, the cost will be extremely heavy.This contradiction between technology and industry choice is not only a problem exposed by the DEXX incident, but also a development pain point in the entire Web3 field.How to find a balance between user experience and decentralization is the key to in-depth thinking for entrepreneurs and technical teams.
Mankun Lawyer Compliance Advice
Based on the DEXX incident and the current industry status, as a lawyer in the Web3 field, Mankun lawyer hopes to provide entrepreneurs with more specific and practical suggestions to help everyone find a balance between technology, compliance and security:
first,Clarify legal responsibilities and design compliance structures.When starting a project, entrepreneurs need to develop clear compliance strategies for the regulatory environment of the target market.For example, if the project plans to enter the U.S. market, you need to pay attention to whether the trading token will be classified as securities and whether it involves the requirements of the Securities Trading Act.At the same time, in platform design, it is possible to set up an independent technical service company to separate transaction functions from user data to reduce the risk of direct contact with user assets.This not only protects entrepreneurs from regulatory accountability, but also establishes a good compliance image for the platform.In addition, the platform should clarify the legal responsibilities of each party in the user agreement, especially the resolution mechanism when asset losses or transaction abnormalities.Through these architectural designs, uncertainty caused by policy adjustments or market fluctuations can be minimized.
Second,Prioritize the use of decentralized solutions in security design.One of the biggest lessons of the DEXX incident is the vulnerability of centralized private key hosting.If the platform can adopt decentralized technology, such as signing multiple wallets or smart contract authorization, it can not only improve the security of user assets, but also reduce the systemic risk of single point failure.At the same time, the platform should also pay attention to the security management of the system architecture, including: regularly inviting third-party authoritative institutions to conduct comprehensive audits of smart contracts and technical architectures; establishing reporting and response mechanisms for security vulnerabilities to promptly repair potential problems; designing redundantsecurity measures such as multi-level transaction verification systems to prevent large-scale attacks.In addition, with the popularization of cross-chain transactions, entrepreneurs need to pay special attention to the design and security testing of cross-chain bridges, because cross-chain bridges have become one of the main targets of attackers in recent years.
again,Balance transaction freedom with compliance transparency.Although the attraction of a decentralized trading platform lies in the high degree of freedom of users, completely letting go of management may also bring huge legal risks to the platform.Entrepreneurs can introduce on-chain intelligent analysis tools to avoid regulatory issues by monitoring high-risk transaction behaviors in real time.For example, abnormal accounts or large-scale transfers that may involve money laundering, terrorist financing can be identified and marked, and the platform’s response to illegal acts can be clarified in the user agreement.In addition, introducing a moderate KYC mechanism in high-risk user usage scenarios, especially for identity verification for large-scale transaction users, can balance protecting user privacy and meeting regulatory requirements.
at last,Create a mechanism for user trust and brand protection.Entrepreneurs should realize that compliance and security are not only the bottom line of the law, but also the cornerstone of user trust.Regularly disclosing the platform’s security audit results and compliance practices to users can enhance users’ trust in the platform.At the same time, by cooperating with industry associations or technology alliances and participating in the formulation of industry standards, the platform’s market position can also be further enhanced.
Conclusion
Through these suggestions, we hope that entrepreneurs can learn from the DEXX incident.In a technology-driven market, legal compliance and security are not only the cornerstone of success, but also the key to avoiding risks and achieving long-term development.Lawyer Mankun is willing to protect every Web3 entrepreneur and jointly create a healthier and sustainable industry ecosystem.
