Zipper Documentation
  • Introduction
    • Zipper Overview
    • Fabric Labs Ecosystem
      • Fabric
      • Polyester
      • Zipper
  • Core Concepts
    • What are zAssets?
      • What To Do With zAssets?
    • What Is Zipping/Unzipping?
    • What Are On-Chain Vaults?
  • Getting Started
    • Navigating Zipper.Trade
    • Connecting Your Wallet
    • Zipping: Step-by-Step
    • Unzipping: Step-by-Step
    • Zip/Unzip Fees
  • Developer Information
    • Zipper Architecture
  • Security and Compliance
    • Compliance Mechanisms
  • Vault Architecture
  • What Is TEE?
  • Glossary and Resources
    • Key Terms
    • Supported Blockchains/Tokens
    • Useful Links
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  • Compliance Mechanisms
  • 1. On-Chain Transaction Monitoring
  • 2. Immutable Smart Contracts
  1. Security and Compliance

Compliance Mechanisms

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Last updated 1 month ago

Compliance Mechanisms

Zipper integrates two key compliance mechanisms to ensure a secure, transparent, and trustless asset zipping (wrapping) and unzipping (unwrapping) process:

  1. On-Chain Transaction Monitoring - Detecting and preventing interactions with illicit or sanctioned funds.

  2. Immutable Smart Contracts - Ensuring Zipper remains secure, non-custodial, and resistant to external interference.

These mechanisms work together to mitigate risk, maintain regulatory integrity, and build trust among users and developers alike.

1. On-Chain Transaction Monitoring

Zipper employs a third-party chain monitoring service to scan all transactions for compliance violations, including:

āœ… Sanctioned Wallets - Blocking addresses flagged under OFAC (Office of Foreign Assets Control) or similar regulatory frameworks. āœ… Illicit Activity - Identifying wallets linked to hacked, stolen, or blacklisted funds. āœ… Anti-Money Laundering (AML) Measures - Monitoring suspicious transaction patterns and blocking high-risk transfers.

How It Works

  • Chain monitoring services run real-time checks on deposit and withdrawal transactions.

  • If a transaction involves a flagged address, the transfer is automatically rejected and flagged for further review or returned the originator.

  • This system protects Zipper from becoming a vehicle for illicit financial activity while allowing legitimate users to transact.

Why This Matters

šŸ”¹ Ensures Zipper remains compliant with global financial regulations. šŸ”¹ Prevents stolen assets from being laundered through the protocol. šŸ”¹ Increases user confidence by maintaining a secure and trusted environment.

Important: Zipper does not collect user data or interfere with transactions beyond these compliance checks. The system operates at the protocol level, ensuring neutrality while enforcing security measures.

2. Immutable Smart Contracts

Zipper's smart contracts are immutable, meaning they cannot be modified, upgraded, or altered after deployment. This immutability is a key compliance mechanism because it ensures that:

āœ… The contract logic remains trustless - No entity (including developers) can change how Zipper operates post-deployment. āœ… Users are fully protected from governance takeovers - No centralized group can introduce new permissions, backdoors, or exploits. āœ… Regulatory transparency is enforced - The protocol operates under fixed, predictable conditions, eliminating concerns about external manipulation.

How It Works

  • Once Zipper contracts are deployed and verified, they cannot be altered or upgraded.

  • Any changes to how Zipper functions would require deploying an entirely new version, ensuring that existing contracts remain untouched.

  • This model protects users from unexpected risks, ensuring the same rules apply to all participants at all times.

Why This Matters

šŸ”¹ Prevents centralized control over user funds. šŸ”¹ Eliminates the risk of malicious contract updates. šŸ”¹ Ensures Zipper remains decentralized, predictable, and censorship-resistant.