> For the complete documentation index, see [llms.txt](https://powerx.gitbook.io/powerx/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://powerx.gitbook.io/powerx/security-and-compliance.md).
# Security & Compliance
## Smart Contract Security
Smart contracts are the core infrastructure of the PowerX ecosystem. All key processes such as NFT asset tokenization, ST token revenue distribution, P2P transactions, DeFi lending, etc. are executed by smart contracts. In order to ensure the security of the PowerX ecosystem, all contracts will undergo rigorous security testing and third-party audits before deployment, and a variety of anti-attack mechanisms will be adopted to reduce security risks.
**Code open source & smart contract security audit**
All of PowerX's smart contracts are completely open source , and are fully audited by top blockchain security organizations (such as CertiK and Quantstamp) before formal deployment . The smart contract code uses formal verification to ensure that the core logic is free of vulnerabilities, and performs dynamic security testing (Fuzz Testing) and static code analysis to discover potential security risks in advance. In addition, in order to reduce the risk of being attacked by hackers, PowerX also uses contract permission management (Multisig & Timelock) to ensure that all key contract modifications are confirmed by multiple signatures.
**Oracle data tamper-proof mechanism**
PowerX relies on decentralized oracles (such as Chainlink and Band Protocol ) to obtain key data such as new energy asset power generation data, electricity price information, and carbon credit trading prices to ensure the transparency of revenue calculations. All external data will be verified by hash signature when stored on the chain to prevent data tampering. At the same time, PowerX adopts a multi-oracle consensus mechanism to ensure the reliability of the data source and avoid the risk of manipulation by a single data provider.
**Defending against economic attacks & preventing flash loan attacks**
PowerX adopts a flash loan attack protection mechanism to prevent short-term arbitrage attacks from affecting the valuation of new energy assets. At the same time, in DeFi lending and NFT pledge transactions, smart contracts will use slippage protection (Slippage Control) and transaction rate limiting (Rate Limiting) to ensure market price stability and avoid manipulation.
## Legal Compliance
#### Security Tokens (ST) follow the ERC-1400 / ERC-3643 standard
ERC-1400/ERC-3643, which complies with the global security token standard , as the ST token architecture, so that it meets the securities regulatory requirements of various countries and can be traded in compliant markets.
The ERC-1400 standard is a blockchain protocol designed specifically for security tokens. It allows tokens to be transferred under a compliance framework, supports embedding legal compliance modules (such as KYC/AML certification), and ensures that investor identity verification complies with financial regulations in various countries. PowerX uses ERC-1400 to enable ST tokens to be traded in multiple on-chain regulated markets, while providing a compliance lock mechanism to ensure that investors who do not comply with KYC rules cannot trade.
The ERC-3643 standard further enhances the regulatory support for security tokens, making them compliant with securities regulations such as the EU MiFID II (Markets in Financial Instruments Regulation), the US SEC Reg D (Securities Registration Exemption), and the Swiss FINMA regulatory framework. The standard requires that all ST tokens must undergo on-chain compliance verification and ensure that holders meet the identity requirements of local securities investors. This allows PowerX's ST tokens to circulate safely in different markets around the world, ensuring the legitimacy of transactions.
In addition, PowerX adopts a traceable compliance transaction mechanism . All ST token holders must pass KYC (Know Your Customer) / AML (Anti-Money Laundering) certification to ensure the authenticity of all investors and prevent illegal capital inflows. At the same time, the ST token transaction process will be traceable on the chain to ensure that investment records are transparent and traceable, and provide effective compliance reports for regulators.
#### Follow global financial regulatory policies to ensure compliance operations
PowerX plans to set up compliance entities in financial-friendly regions such as Singapore, Switzerland, and Dubai , and apply for relevant financial licenses in order to provide legal new energy asset tokenization services. At the same time, PowerX will also maintain close communication with regulators in various countries to ensure that NFT and ST token transactions comply with global financial regulatory policies and enable the ecosystem to achieve sustainable development on a global scale.
**Anti-Money Laundering (AML) & Know Your Customer (KYC)**
PowerX adopts a strict KYC/AML compliance policy to ensure the authenticity of all investors participating in the PowerX ecosystem and prevent illegal funds from entering the market. All users must complete KYC certification when conducting NFT asset transactions, ST token sales, DeFi lending and other operations involving large capital flows.
In addition, PowerX uses an on-chain transaction monitoring system that can track large transactions in real time and ensure compliance with the global FATF (Financial Action Task Force) anti-money laundering regulations. The flow of funds of all investors can be verified on the chain to ensure the transparency of transactions and prevent illegal transactions.
**Data Privacy & GDPR Compliance**
PowerX strictly complies with global data privacy regulations, especially Europe's GDPR (General Data Protection Regulation) , to ensure that user data will not be abused. In the PowerX ecosystem, all user identity information and transaction records are highly encrypted and protected, and no third party can access this data without the user's consent.
In order to ensure the verifiability of transactions while protecting user privacy, PowerX uses zero-knowledge proof (ZK-SNARKs) technology, allowing users to complete KYC authentication and transaction verification without exposing their complete identity information. This can achieve decentralized identity authentication and allow users' personal privacy to be protected to the greatest extent in the PowerX ecosystem.
**Transaction Compliance & Tax Compliance**
on-chain tax calculation tools in major compliance markets (such as the United States, the European Union, and Singapore ) to help investors automatically calculate crypto asset returns and simplify the tax declaration process. In this way, NFT assets and ST token transactions in the PowerX ecosystem can not only be legally circulated, but also comply with the tax regulatory requirements of various countries.
At the same time, PowerX cooperates with compliant financial institutions to realize legal asset transaction record storage , ensuring that all transaction information can be audited by the tax department and meets international tax transparency requirements. This makes PowerX more compliant and competitive in the global market and attracts more institutional investors to enter the new energy asset market.