And here we are, the finish line….
In the final article of the series, we explain the benefits of our self-hosted blockchain data stack for our users, which include:
- Auditable and accurate transaction data
- Proof of completeness
- Speedier iteration and update cycles
- Evolving with the future of crypto
Earlier in the series:
Part 1: The unique challenges of retrieving accurate transaction histories from chains – Public block explorers and third-party data indexing companies cannot provide accurate and complete transaction histories suitable for accounting and audit.
Part 2: Cryptio’s approach to auditable accounting – Our purpose-built technology is designed to give you one ledger of truth.
TLDR: Cryptio’s proprietary data layer ensures your data is accurate and complete. Unlike block explorers or third-party data providers, we can adapt our data stack to accounting-specific developments in the crypto industry.
Let’s explore each benefit.
Auditable and accurate transaction data
Our users depend on auditable data to reconcile month-end processes and calculate unrealized gains and losses, among other accounting and tax computations. Without accurate and complete data, these calculations are also inaccurate. Therefore, providing complete and accurate data is imperative for Cryptio.
Our purpose-built technology is designed to pull auditable transaction histories from chains.
We run our own nodes on different chains so that we can retrieve complete and accurate histories for all transaction types, including internal transfers. Our purpose-built indexers filter the raw blockchain data for the information needed by accountants and auditors.
Proof-of-completeness reporting
To ensure the completeness of transaction histories, we perform balance checks on the data that is uploaded to our platform.
The transactions returned to our platform are checked against the transaction histories stored on our nodes. Since nodes store the entire ledger, we can spot balance discrepancies and find missing transactions wherever they occur.
Our balance checks work like this:
- Pick a public address.
- Check the node for the balance.
- Use Cryptio's indexed transaction-level data to recompute client balances.
- Compare clients' balances on our platform and our nodes.
If the on-chain balance matches the balance on our platform, then the returned transaction history is complete. We can generate a report of this balance check that serves as proof of completeness for our users.
Where there are discrepancies, our algorithms can detect what is the cause. Usual suspects include:
- Rebasing tokens (Eg. Aave aTokens, Ampleforth)
- Tokens with off-chain elements (Yearn LP tokens)
- Unusual token standards (Especially on non-EVM chains)
There are workarounds that allow us to pull transactions from each of these problem areas.
Where Cryptio differs from third-party indexing data providers is that we turn the accounting ‘black box’ into a clear window.
Furthermore, the discrepancies are far less likely to appear in the first place as we run tests on our database, to proactively identify and fill transaction data gaps.
This gives assurance to auditors about the reliability and accuracy of our data. If there is an immaterial discrepancy, we do not halt the audit.
There is no incentive for third-party indexers to fill in these gaps, especially with niche use cases like crypto accounting and finance. Even if they did, it would take months to deploy these updates.
Indexing blockchains at lightning speed
Cryptio is best positioned to be the quickest to provide auditable integrations to new chains.
Other solutions may seem to have better coverage (support of more obscure chains), however, the quality of this data is questionable. Given our commitment to indexing chains in-house, we have developed expertise in this area and often work directly with the foundations to bring auditable transaction data to the market.
And we've learnt how to do this at speed.
How Cryptio indexes on-chain data quickly:
- Low traffic: we run nodes on high-end hardware and permit only the traffic we generate between our node and our indexer.
- Node type: certain node types are more effective at reading blockchains. For example, an Erigon node allows us to quickly read Ethereum and other EVM-compatible chains.
- Programming language: we use Rust since it allows us to break down the workload of building and maintaining our data pipeline into smaller tasks, allowing our engineers to resolve various problems simultaneously.
- Efficient data processing: when controlling the stack end-to-end, it is best to work only with strictly necessary data. The fewer data to transform and load, the faster the indexing. With our custom indexers and API purpose-built for an accounting use case, we can select just the data we need.
As thousands of new smart contracts are constantly developed, we are able to build integrations and index on-chain transaction histories quickly - without compromising on data quality.
Future-proof: keeping up with the smartest smart contracts
The crypto industry is constantly evolving and new use cases are being developed continuously. The technology used to track crypto transactions needs to be updated every time there is a development in the industry. For example:
- New kinds of smart contracts (Uniswap V2 → V3)
- New token standards (NFT, Soulboundtokens)
- New wrapping implementations (wETH accounting)
Block explorers and third-party indexing solutions often do not update their indexers to reflect these additions since it takes a lot of resources to do it. If they do, the updated data takes a long time to reach users, which isn’t suitable for accounting and audit software.
Whenever third-party indexing companies patch their indexers, often, the data isn’t fully updated until months later. This isn’t suitable for our users who need accurate data month-by-month to complete month-end processes.
With our self-hosted data stack, we can patch our indexers to recognize the data from the latest on-chain developments. As the market evolves, so does our technology, making it future-proof.
Conclusion
Our purpose-built accounting and reporting solution, therefore, gives us an edge over other tools on the market, like public block explorers and third-party data indexing companies. These other options cannot give you the accuracy and completeness of data you need to complete accounting and audits on digital assets.
The proof-of-completeness reports we offer our users is an important step in the process of pulling auditable transaction history data that can be used to generate enterprise-grade reports.
The crypto industry needs auditability and accountability before it can realize its full potential - and we are making that happen.
