For crypto traders, the idea of on-chain prop trading is a welcome topic with a lucrative market share and returns proposition. But the challenges are no less intimidating - reliance on opaque, centralized systems with unverifiable data and misaligned incentives that potentially undermine performance evaluation, risk management, and payout execution. A viable solution is at hand.
Oasis x Carrot case study
Carrot has positioned itself as a pioneer on-chain trader funding platform, focusing on decentralizing access to trading capital. Here, traders can prove their skills by completing on-chain challenges to gain access to funded accounts backed by real capital. But having to trust black-box systems runs contrary to fair capital allocation. Opting for cryptographic verification over third-party trust is the only way to go.
Carrot integrating the Oasis runtime off-chain logic (ROFL) framework for its risk engine, running in parallel with the existing infrastructure, as a verification layer, is very significant. Let's examine why.
Carrot has already been using trustless components for its platform - Rethink Finance vault infrastructure for capital safety, and gTrade for trade execution. However, the AWS-based engine that executes trading orders and evaluation logic for traders and capital in the vault was still running solo. Now, with ROFL integration, trust assumptions in on-chain prop trading infrastructure will be significantly reduced as every computation can and will be verified cryptographically.
How it works
Before exploring the value Oasis ROFL integration brings to the table, let me try to explain how Carrot functions, as mentioned in the previous section.
- Carrot’s trading and risk engine is open to traders who purchase access NFTs.
- In the next stage, gTrade powers a two-step transparent on-chain challenge that traders need to pass.
- Funding is now unlocked for the successful traders. They can now execute trades directly on-chain.
- Carrot’s verifiable risk management engine controls all risk decisions.
- Here, Carrot leverages Rethink's vault infrastructure for on-chain capital safety.
- Smart contracts govern the vaults and delegate limited execution permissions to the AWS-based risk engine, indicating that investor funds remain safe and immovable even with system compromise.
But the design trade-off is that investor capital safety comes at the cost of using AWS - opaque, centralized, and unverifiable.
This is now solved by migrating the risk engine from AWS to Oasis ROFL.
The ROFL Solution
In simple terms, ROFL's trusted execution environment (TEE) architecture ensures that every computational decision - from evaluation metrics to payout calculation - can be cryptographically verified on-chain, while decentralized confidential compute (DeCC) takes place off-chain.
Here, I want to make an important distinction - Oasis is not replacing Carrot's AWS layer, at least not right away. In the current iteration, ROFL will run in parallel with the existing AWS infrastructure.
As an independent verification layer, it ensures every AWS-executed computation is validated, producing a cryptographically provable record that traders and investors can access at will.
Why this matters
This is a key takeaway from this post - why the adoption of verifiable private compute is important for on-chain prop trading, not only for Carrot but for the whole crypto trading community.
Having Oasis ROFL's secure compute layer in place means traders don't need to assume and blindly trust, but can now review that evaluation criteria are applied fairly and consistently.
With every decision record available on-chain after being computed in a TEE's secure enclave, the data remains secure, tamper-proof, and verifiable cryptographically.
As a result, investors backing the capital pools, a truly trustless confidence develops, assuring that funds are managed according to predetermined, immutable rules.
In conclusion, Carrot's integration of Oasis ROFL underlines the beginning of a new era in the DeFi ecosystem. It demonstrates how complex, performance-critical financial applications can reduce trust assumptions through verifiable compute infrastructure. This also aligns with the longer-term roadmap, where DeFi can welcome full migration to ROFL-only operation.
Final words
For most crypto traders, a look behind the hood at the logistics and architectural design, and the solidity of ROFL as a solution for reduced trust assumptions might not be required, but, with verifiability at its heart, developers will need it.
For the former, this overview might be enough to establish validity and create appreciation; for the more tech-savvy latter community, I invite a deep dive into the BUIDL space.
What do you think of this case study, and which aspects of it resonated with you? Also, which other trading or financial protocols do you think could benefit from a similar integration of verifiable private compute, and why? Let's discuss.
Top comments (0)