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https://github.com/pulkit1822/fiat-to-usdc-system
The repository provides a comprehensive system for converting fiat currency to USDC, featuring user registration, KYC compliance, transaction processing, and treasury management. It utilizes a microservices architecture and is built with TypeScript and Solidity, ensuring security, scalability, and real-time monitoring.
https://github.com/pulkit1822/fiat-to-usdc-system
blockchain fiat reconciliation-algorithm solidity typescript usd-coin-conversion
Last synced: about 1 month ago
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The repository provides a comprehensive system for converting fiat currency to USDC, featuring user registration, KYC compliance, transaction processing, and treasury management. It utilizes a microservices architecture and is built with TypeScript and Solidity, ensuring security, scalability, and real-time monitoring.
- Host: GitHub
- URL: https://github.com/pulkit1822/fiat-to-usdc-system
- Owner: Pulkit1822
- Created: 2024-11-11T11:20:57.000Z (about 2 months ago)
- Default Branch: main
- Last Pushed: 2024-11-25T07:44:15.000Z (about 1 month ago)
- Last Synced: 2024-11-25T08:23:24.296Z (about 1 month ago)
- Topics: blockchain, fiat, reconciliation-algorithm, solidity, typescript, usd-coin-conversion
- Language: TypeScript
- Homepage: https://hackmd.io/@w6REMvJFTdGMoi6OYeBEuQ/Bys_tPyMkl
- Size: 5.07 MB
- Stars: 1
- Watchers: 1
- Forks: 0
- Open Issues: 0
-
Metadata Files:
- Readme: README.md
- Funding: .github/FUNDING.yml
Awesome Lists containing this project
README
Distribution System for Fiat to USDC Conversion
---
## Index
1. **Introduction**
- Problem Statement
2. **Core Challenges**
- Reliable Distribution of Funds
- Accurate Reconciliation
- Handling Edge Cases
3. **System Architecture Overview**
- Key Components and Their Roles
4. **Key Components**
- Treasury Wallet
- Fiat Bank Account (Onramp)
- Liquidity Pool
- User Wallets
- Reconciliation System
- Transaction Monitoring System
5. **Transaction Flow**
- User Sends Fiat to Bank
- Fiat Deposit Notification
- Fiat to USDC Conversion
- USDC Transfer to User’s Wallet
- Confirmation and Reconciliation
6. **Technical Component Architecture**
- Backend Services
- Database and Ledger
- API Layer
7. **Reconciliation Algorithms**
- Automated Reconciliation
- Manual Reconciliation and Audit
8. **Error Handling Strategies**
- Transaction Delays
- Discrepancies in Amounts
- Failed Transfers
- Real-Time Monitoring and Alerts
---
## 1. Problem Statement
The goal is to create a robust system that enables users to seamlessly convert fiat currency into USDC (USD Coin) by transferring fiat to a designated bank account. The system will handle the entire process—from tracking the fiat deposit to delivering the USDC to the user’s specified wallet—with a focus on security, accuracy, and reliability. This solution must include automatic rebalancing to maintain liquidity, prevent discrepancies, and ensure efficient fund distribution.
---
## 2. Core Challenges
**1. Reliable Distribution of Funds**
Ensuring that users receive the correct amount of USDC in their wallets once fiat is received in our bank account is critical. The system must achieve high accuracy, maintain low latency, and process transactions securely.
**2. Accurate Reconciliation**
Maintaining an accurate, traceable link between fiat deposits and USDC distributions is essential to avoid discrepancies. This includes reconciling data from multiple sources—bank records, blockchain transactions, and internal ledgers.
**3. Handling Edge Cases**
The system must gracefully manage potential issues like transaction delays, discrepancies, and failed transfers. Each edge case must be detected, monitored, and resolved to ensure a seamless user experience.
---
## 3. System Architecture Overview
In designing this system, I focused on creating a modular and secure structure to handle each stage of the fiat-to-USDC process. The main components include a centralized treasury wallet, a fiat bank account, a liquidity pool, user wallets, and a series of services for reconciliation, transaction monitoring, and error handling.
### 4. Key Components and Their Roles
**1. Treasury Wallet**
- This wallet holds the USDC required for user payouts. Since the treasury wallet is central to the system, I would secure it with multi-signature (multi-sig) technology or advanced security protocols to protect against unauthorized transactions, especially for large amounts.
**2. Fiat Bank Account (Onramp)**
- This is the entry point where users transfer their fiat currency. The system needs to detect deposits as they arrive—this can be achieved through a webhook, API integration with the bank, or batch reconciliation if real-time detection isn’t available.
**3. Liquidity Pool**
- The liquidity pool ensures there’s always enough USDC for conversions without depleting the treasury. The pool can draw from external liquidity sources or use internal reserves to rebalance as needed.
**4. User Wallets**
- Each user has a designated wallet to receive USDC. The system sends the equivalent amount of USDC from the treasury or liquidity pool to these wallets upon successful fiat receipt.
**5. Reconciliation System**
- This system monitors and reconciles all fiat deposits and USDC distributions, ensuring that each transaction is accurately matched and recorded. The reconciliation process compares bank statements, blockchain transactions, and internal records to avoid any inconsistencies.
**6. Transaction Monitoring System**
- This module monitors USDC transfers on the blockchain to confirm that each transaction reaches the intended wallet successfully. In the event of a failed transaction, the monitoring system initiates a retry sequence.
---
## 5. Transaction Flow
The transaction flow is the backbone of this system. It represents each step from the moment a user sends fiat to the final reconciliation of USDC in their wallet. Here’s how each step would work:
**1. User Sends Fiat to Bank**
- When a user initiates a fiat transfer, they specify the bank account and provide a unique reference. The system tracks the transaction in real time, using bank APIs or webhooks to receive instant notifications whenever funds arrive.
**2. Fiat Deposit Notification**
- Once the fiat deposit is detected, the system verifies the transaction by checking the deposit reference and amount against user information. This confirmation step is critical to ensure that the right user receives the correct amount of USDC.
**3. Fiat to USDC Conversion**
- After verifying the fiat deposit, the system checks if the treasury wallet or liquidity pool has sufficient USDC to complete the transaction. If funds are insufficient, it initiates a rebalancing process. Then, based on current conversion rates, the fiat amount is converted into the equivalent USDC.
**4. USDC Transfer to User’s Wallet**
- The system transfers the calculated amount of USDC from the treasury wallet or liquidity pool to the user’s wallet on the blockchain. This transaction is recorded for accountability and transparency.
**5. Confirmation and Reconciliation**
- Finally, the system performs reconciliation by cross-verifying bank records, blockchain transactions, and internal logs. This ensures that every fiat deposit matches an outgoing USDC transaction, maintaining an accurate ledger for auditing and troubleshooting.
---
## 6. Technical Component Architecture
To develop a secure, scalable solution, I divided the architecture into key services that interact through APIs and automated workflows:
### Backend Services
- **Transaction Service**: Manages fiat-to-USDC conversions and interactions between the treasury wallet and liquidity pool.
- **Reconciliation Service**: Performs automated reconciliation to ensure fiat deposits and USDC distributions are accurately paired.
- **Notification Service**: Sends status updates to users and administrators about transaction progress or any issues.
### Database and Ledger
- **Database**: Stores transaction data, user information, and internal references.
- **Ledger**: Maintains an immutable record of transactions, enabling transparency and easy audits.
### API Layer
- **Bank API**: Integrates with the bank to detect fiat deposits and retrieve transaction data.
- **Blockchain API**: Interfaces with the blockchain to monitor USDC transfers, initiate retries, and confirm transaction status.
---
## 7. Reconciliation Algorithms
To maintain a high level of accuracy, the system includes both automated and manual reconciliation algorithms:
### Automated Reconciliation
- **Data Matching**: The system matches fiat deposits in the bank with corresponding USDC transactions on the blockchain.
- **Discrepancy Detection**: Any unmatched transactions trigger alerts for manual review.
### Manual Reconciliation and Audit
- **Audit Trail**: A detailed log of all transactions provides a backup for any unresolved discrepancies, making it easier to audit or troubleshoot.
---
## 8. Error Handling Strategies
Anticipating potential issues, the system incorporates error-handling strategies to manage transaction delays, discrepancies, and failed transfers effectively:
### Transaction Delays
- **Retry Logic**: The system retries USDC transfers if they’re delayed.
- **User Notification**: Sends alerts to the user if delays exceed preset thresholds.
### Discrepancies in Amounts
- **Resolution**: Triggers alerts for any discrepancies so administrators can investigate promptly.
### Failed Transfers
- **Automatic Retry**: Retries failed transfers up to a defined threshold.
- **Escalation**: Transfers that fail after multiple attempts are flagged for manual review.
### Real-Time Monitoring and Alerts
- **Health Checks**: Periodic checks to ensure system uptime and availability.
- **Alerts**: Critical issues trigger immediate alerts to the admin team for rapid intervention.
## Feedback
If you have any feedback, suggestions, or questions regarding this repository, please feel free to open an issue or contact me below on any of the platforms you prefer 😊
## Summary
By designing this system, I’ve addressed the challenges associated with reliable fund distribution, accurate reconciliation, and error handling in fiat-to-USDC conversion. Each component—from the treasury wallet to the transaction monitoring service—works cohesively to ensure secure, efficient, and traceable fund management. This design is scalable and ready for real-world application, providing a seamless user experience backed by robust error-handling and reconciliation processes.
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If you find this repository useful, don't forget to star it! ⭐️
### Written by [Pulkit](https://github.com/Pulkit1822)