Verification Layer

The HYRO Protocol verification system provides comprehensive validation and monitoring through a combination of challenge-based qualification and oracle-driven performance tracking. The current implementation focuses on challenge-based manager verification with real-time performance monitoring, while advanced verification features are planned for future phases.

Challenge-Based Verification System

Meritocratic Qualification The protocol uses challenge-based verification to ensure only qualified managers can access vault capital:

Transparent Performance Tracking: All trading activities are recorded and verified on-chain
Objective Qualification Criteria: Managers must demonstrate profitable trading within defined risk parameters
Real-Time Monitoring: Continuous tracking of challenge progress and rule compliance
Automated Disqualification: Immediate removal from challenges upon rule violations

Challenge Template Parameters Verification criteria are defined through challenge templates with standardized parameters:

Profit Targets: Required profit percentages for successful completion
Risk Limits: Maximum daily drawdown and total loss thresholds
Trading Requirements: Minimum trading days and activity levels
Performance Metrics: Win rates, average trade duration, and position sizing

Oracle-Driven Performance Monitoring

Real-Time Data Processing The oracle system provides continuous verification of trading performance:

NATS Message Queue: Reliable delivery of challenge update messages
Performance Aggregation: Real-time calculation of profit/loss, drawdown, and trading metrics
Rule Enforcement: Automated validation against challenge parameters
State Synchronization: On-chain updates based on off-chain trading data

Challenge Update Flow The verification process follows a structured pipeline:

Data Collection: Oracle receives trading performance data via NATS
Validation: Message format and required fields are validated
Template Verification: Confirms challenge belongs to managed template
Performance Calculation: Computes current profit/loss and risk metrics
Rule Checking: Validates against drawdown limits and profit targets
State Update: Updates challenge status on-chain based on results
Response Publishing: Publishes processing results for monitoring

Verification Criteria

Financial Performance Validation The system validates multiple financial metrics:

Profit Targets: Achieved profit percentage vs required targets
Drawdown Limits: Current drawdown vs maximum allowed levels
Loss Thresholds: Total losses vs maximum loss limits
Balance Tracking: Starting balance, current balance, and performance calculations

Trading Activity Validation Trading behavior is monitored for compliance:

Minimum Trading Days: Required number of active trading days
Position Sizing: Validation of position sizes against limits
Trading Frequency: Monitoring of trading activity and consistency
Risk Management: Adherence to defined risk parameters

Rule Violation Detection The system automatically detects and responds to rule violations:

Drawdown Violations: Immediate detection of excessive losses
Profit Target Failures: Tracking of progress toward profit goals
Trading Day Requirements: Monitoring of minimum trading activity
Risk Limit Breaches: Detection of position size or leverage violations

On-Chain State Management

Challenge Account Structure Challenge verification is managed through comprehensive on-chain accounts:

1pub struct Challenge {
2    pub challenge_id: String,           // Unique challenge identifier
3    pub stage_id: u16,                 // Template stage identifier
4    pub stage_sequence: u8,            // Template sequence number
5    pub stage_type: StageType,         // Challenge type (evaluation/funded)
6    pub effective_from: u64,           // Challenge start timestamp
7    pub starting_balance: u64,         // Initial challenge balance
8    pub latest_balance: u64,           // Current challenge balance
9    pub profit_target: ProfitTarget,   // Profit target parameters
10    pub trading_days: TradingDays,     // Trading day requirements
11    pub maximum_loss: MaximumLoss,     // Maximum loss parameters
12    pub daily_drawdown: DailyDrawdown, // Daily drawdown limits
13    pub user: Pubkey,                  // Challenge participant
14    pub status: ChallengeStatus,       // Current challenge status
15    pub payout: u64,                   // Calculated payout amount
16    pub created_at: u64,               // Creation timestamp
17    pub updated_at: u64,               // Last update timestamp
18}

Status Transitions Challenge status is managed through defined state transitions:

Initialized: Challenge created and ready to begin
Active: Challenge in progress with ongoing trading
Completed: Challenge successfully completed with profit target met
Failed: Challenge failed due to rule violation or loss limit breach

Oracle Integration

NATS-Based Architecture The oracle system provides reliable verification data processing:

Message Persistence: JetStream ensures message delivery and processing
Template Discovery: Automatic discovery of managed challenge templates
Challenge Monitoring: Continuous monitoring of active challenges
Data Transformation: Conversion of off-chain data to on-chain format

Verification Data Flow The oracle processes verification data through a structured pipeline:

Message Reception: Oracle receives challenge update messages
Data Validation: Validates message format and required fields
Template Verification: Confirms challenge belongs to managed template
Performance Calculation: Computes current performance metrics
Rule Validation: Checks compliance with challenge parameters
State Update: Updates challenge status on-chain
Response Publishing: Publishes processing results

Security and Reliability

Data Integrity The verification system ensures data integrity through multiple mechanisms:

Cryptographic Validation: Oracle keypair provides authentication
Template Verification: Confirms challenge belongs to managed template
Message Validation: Comprehensive validation of all message fields
State Consistency: Atomic updates ensure consistent on-chain state

Error Handling Robust error handling ensures reliable verification:

Validation Errors: Invalid message format or missing fields
Template Errors: Challenge doesn't belong to managed template
Blockchain Errors: Transaction failures or network issues
Retry Logic: Automatic retry with exponential backoff
Dead Letter Queue: Failed messages for manual review

Monitoring and Observability Comprehensive monitoring provides visibility into verification processes:

Health Checks: Regular health status reporting
Performance Metrics: Processing times and success rates
Error Tracking: Detailed error logging and categorization
Audit Logs: Complete audit trail for compliance

Future Verification Enhancements

Advanced Verification Engine (Planned) Future phases will include comprehensive verification features:

Pre-Execution Validation: Trade validation before execution
Multi-Source Data Validation: Cross-validation from multiple sources
Advanced Risk Metrics: Sophisticated risk calculation and monitoring
Integration with External Oracles: Pyth, Switchboard, and other oracle networks

Enhanced Compliance Advanced compliance features will include:

Regulatory Reporting: Automated compliance reporting
Audit Trail Enhancement: Comprehensive audit capabilities
Risk Monitoring: Advanced risk detection and alerting
Performance Analytics: Detailed performance analysis and reporting

The verification system provides a robust foundation for challenge-based manager qualification while maintaining transparency, security, and reliability throughout the verification process.