ZKML Options Liquidator

Permissionless Options Liquidation system, using ZKML to prove complex off-chain calcualations so anyone can make profit liquidating delinquent actors and keep the protocol safe for the good actors.

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Built at ETHDenver 2024

Build on Linea - Prize(s)

Created on 29th February 2024

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ZKML Options Liquidator

Permissionless Options Liquidation system, using ZKML to prove complex off-chain calcualations so anyone can make profit liquidating delinquent actors and keep the protocol safe for the good actors.

The problem ZKML Options Liquidator solves

Options trading on DeFi platforms requires intricate calculations for determining liquidation thresholds, a task complicated further by the need for reverse-engineering "Implied Volatility" from market trades. Traditional methods rely heavily on the Black-Scholes formula, posing trust and transparency issues when executed off-chain. Our approach overcomes these challenges by integrating AI/Machine Learning with Zero Knowledge Proofs (ZKP) to ensure accuracy and verifiability of liquidation operations.

Challenges we ran into

Proving System Limitations: Initial attempts at step-by-step AI inference emulation proved prohibitively expensive. Adoption of the EZKL system, optimized for matrix multiplication in ML, presented a viable alternative.
Data Input Validation: The absence of ZK-friendly oracles necessitated a novel approach to validating input data. We achieved this by verifying blockchain transaction signatures and generating ECDSA proofs with Brevis.
Proof System Incompatibility: Integrating disparate proving systems posed a significant challenge, addressed by employing a common Poseidon hash to ensure consistency across proofs.

Tracks Applied (9)