Argos - Blockchain Analysis and Traceability

In this post, we will about how the idea of Argos came to be, the scientific and technical challenges behind it, and why we, a company specializing in blockchain development and blockchains in general, suddenly want to analyze and trace them.

A Bit of Backstory

Back in 2022, during the ACPR-AMF Fintech Forum in Paris, it was highlighted that blockchain technology has become fertile ground for illicit activities, such as ransomware attacks and the financing of terrorism.

Many people tend to believe that all blockchains are anonymous and that you and your activity are hidden from everyone. While true for some privacy-focused blockchains, it's not generally the case. Most blockchains like Bitcoin are pseudonymous—you might not know who is behind an address, but you can still observe the transactions. The challenge is associating an address with a real-world individual, which, admittedly, can be an arbitrarily difficult task. There are many ways to complicate the process of linking a real-world individual to a blockchain address, and it is important to understand that criminals who abuse blockchain technology are familiar with most, if not all, of them. This is, however, a topic for a separate blog post.

Circling back to the ACPR-AMF Fintech Forum, it became abundantly clear to us that tracing these activities was crucial, and that it was a complex challenge from both a technical and a scientific point of view. What the Forum did not mention, as it was beyond its scope, are the other serious types of crimes that blockchains are used for—such as human trafficking and child pornography. Sadly, blockchains are often used as payment platforms for those types of activities, making the ability to track blockchain transactions even more critical.

This was only confirmed to us when one of Functori's closest partners and collaborators, a professor from Université Paris-Saclay, had a student interning with the French police. This internship led our partner to the same conclusion as us: blockchain analysis is not just an interesting problem but a critical one that must be tackled head-on.

An Interesting Problem

It is important to acknowledge that blockchain traceability and analysis are not new challenges. Tools exist and are used all over the world, both by the private and public sectors.

There are a lot of sides to tracing and analyzing blockchain transactions. You want a tool to be able to identify users correctly, or at the very least, find paths that would allow users to be identified. You also want to detect when one entity is behind several addresses, since creating addresses is easy and can be done in the blink of an eye. At the same time, any tool has to have defense mechanisms against common obfuscation techniques like mixers and coinjoins. And what does one even do with privacy-focused coins like Monero? As we said, it's an interesting problem.

The problem gets even more complex when you start factoring in smart contracts and the DeFi landscape. Suddenly it's not just tracing blockchain transactions, but identifying different types of transactions within the DeFi ecosystem and analyzing smart contracts. All of these things add up to something incredibly exciting scientifically and technically.

There is also a practical aspect to this: sovereignty. It is evident that tools capable of tackling blockchains are of interest to law enforcement. But what happens when all the best tools aren't local? From the point of view of a user, it might not even matter—a great tool is a great tool. However, at higher levels of decision-making, concerns may arise about relying on foreign tools to address critical national security issues. And here in France, they've started ringing the alarm that something local was needed.

Argos

So why does a company that works on blockchain development care? Well, it’s precisely because we work on blockchain development that we care deeply about this issue. We believe that the blockchain is a fantastic piece of technology with a lot of potential, and it is extremely concerning that people use it for the worst crimes imaginable, like child pornography. The more the blockchain is used for crime, the more authorities will crack down on it. This will make it harder for everyone else to use it. We also believe in full transparency—a tool built to help identify crime shouldn't be opaque, and people should not have to worry about being mistakenly tagged as criminals.

This is where Argos comes in.

The goal of Argos isn’t to replace every tool out there. As we mentioned, blockchain traceability is not new, and existing tools that trace blockchains like Bitcoin do their job well. What we want to bring to the table with Argos is, first of all, sovereignty and transparency. Argos will be open-source and fully developed here in France.

Secondly, we want to leverage our specific expertise in DeFi. Argos will complement existing tools by focusing heavily on analyzing the DeFi landscape, offering specialized insights that are increasingly crucial in the evolving world of decentralized finance.

Argos is currently in development with help from Bpifrance and support from the French Interior Ministry. You can find more information about the Bpifrance financing here and check out Argos's dedicated website here.

We’re excited to dive into the world of blockchain traceability with Argos and see where it takes us.