Web3 Security DAO (W3SD) WhitePaper

1. Introduction

The Growth and Challenges of Web3

The Web3 ecosystem is advancing rapidly, driving innovations in decentralized finance (DeFi), NFTs, the metaverse, and more. However, alongside these breakthroughs, the sector faces escalating security challenges. Fraud, phishing, and money laundering are increasingly pervasive, endangering user assets and ecosystem stability.

In 2024 alone, the cryptocurrency industry reported losses in the billions due to hacking and fraud. These security issues not only undermine user trust but also pose major barriers to mainstream cryptocurrency adoption. High-profile cryptocurrency thefts have further eroded investor confidence.

Tether reported in 2024, freezing more than 1,000 high-risk addresses, involving funds exceeding $1 billion. Similarly, Ethereum and Tron have collaborated with regulators, leveraging smart contracts to block hundreds of addresses associated with money laundering and scams.

Data source: 2024 Mid-year Blockchain Security and AML Report

Despite these efforts, they barely scratch the surface. Thousands of high-risk addresses remain unidentified. hidden within the blockchain’s vast expanse. These unidentified addresses—potentially linked to phishing websites, fraudulent investment platforms, and even transnational criminal activities—represent severe threats to the trust and stability of Web3 ecosystem.

2. The Origin of USDT BlackList

The USDT BlackList project, launched in April 2023, offers a free service for checking the risk levels of cryptocurrency addresses. The platform enable Web3 users identify and avoid on-chain risks. By integrating multi-dimensional data sources, it has developed an intelligent risk analysis system that brings transparency to potential on-chain threats and delivers precise risk warnings. To date, the platform has successfully helped users avoid tens of thousands of high-risk addresses.

The main data sources for USDT BlackList include

• Partner Data-Risk data provided by blockchain security alliances and third-party service providers.
• Intelligent Analysis System-Automatic analysis of on-chain transactions and associated activities to identify malicious addresses involved in fraud, phishing, or sanctioned activities.
• Public News and Reports-Aggregation and analysis of publicly available reports on Web3 security incidents via a web crawler system.
• User Feedback-Collection of user-submitted risk clues, which are validated through community collaboration.

3. Advancing Decentralization

Protecting Web3 and Crypto Security Together.

After over a year of centralized operations, we realized that relying exclusively on our team is insufficient to comprehensively address the governance of on-chain risks. To involve more individuals in safeguarding Web3 security and to achieve transparent and equitable risk management, we decided to transition to a decentralized governance model via a Decentralized Autonomous Organization (DAO).

Through the Web3 Security DAO (W3SD), our goal is to establish a global Web3 security community where individuals, companies, and organizations can become part of the governance structure. Together, we will develop and maintain the world's most reliable Web3 risk data source, empowering every user to contribute to the security of the Web3 ecosystem.

3.1 Governance

Benefits of DAO Governance

• Democratized Decision-Making-All DAO members can propose and vote, enabling collective wisdom to drive decisions.
• Transparency and Credibility-Governance records are stored on-chain, making processes traceable and tamper-proof.
• Efficiency and Automation-Smart contracts automatically execute voting outcomes, reducing manual intervention and delays.
• Inclusivity-Anyone meeting minimum requirements can join as a DAO member and participate in governance.
• Incentive Mechanism-Token-based rewards encourage greater participation, boosting community activity and data quality.

Principles of DAO Governance

• On-Chain Proposals-DAO members can submit proposals, such as marking an address as high-risk.
• Voting Mechanism-Once a proposal is submitted, eligible DAO members vote to support or oppose it.
• Smart Contract Execution-After voting concludes, smart contracts execute the decision, updating risk records and distributing rewards accordingly.

By embracing DAO governance, the community shifts from passive recipients of centralized services to active creators and managers of risk data.

3.2 Web3 Voting

Advantages of Web3 Voting

• Enhanced Security-Cryptographic techniques and consensus mechanisms protect the integrity of voting results.
• Transparency-All proposals, votes, and results are publicly accessible, eliminating opaque operations.
• High Efficiency-Smart contracts automate execution, reducing costs and time.
• Real-Time Updates-Proposals and voting outcomes can be updated in realtime, accelerating decision-making.
• Fairness-Token holdings and participation balance voting power, ensuring democratic governance.
• Global Accessibility-On-chain voting removes geographic barriers, fostering worldwide participation and collaboration.

Through decentralized governance and incentive models, W3SD unites Web3 users globally to build a secure, transparent, and trustworthy on-chain ecosystem.

Incentive Rules

• If a proposal passes, both the proposer and supportive voters receive rewards.
• If a proposal fails, only supportive voters are rewarded, discouraging frivolous proposals.

3.3 Token

Roles of Governance Tokens

• Voting Weight-Each token represents one vote. Members holding more tokens have greater influence, aligning rights with responsibilities.
• Incentive Mechanism-Tokens serve as rewards to encourage active participation in proposals, voting, and data submission.
• Economic Sustainability-Token distribution and consumption (e.g., governance fees) ensure the long-term viability of the community.
• Access Control-Holding tokens is a prerequisite for governance participation, fostering a community of engaged and contributing members.

Advantages of Governance Tokens

• Fairness-Token holdings determine voting weight, preventing governance monopolization.
• Value Creation-Token circulation and appreciation are directly tied to community growth.
• Resource Allocation-Token-based rewards attract developers, data contributors, and security researchers.

4. Built on Polkadot

As blockchain technology continues to evolve, both Layer 1 and Layer 0 networks are rapidly expanding, each serving distinct purposes within the ecosystem. From the vast cosmos of blockchain ecosystems, Polkadot stands out with a clear vision:

Expanding on the above, Polkadot’s founder aims to establish the multi-chain web of the future.

5. Roadmap

Completed and Future plans

• 2023 Q2
  • USDT BlackList project beta version been launched.
• 2023 Q3
  • Joined the Crypto Defenders Alliance (CDA) and shared data bidirectionally with CDA.
• 2023 Q4
  • USDT BlackList released a Chrome browser extension.
  • USDT BlackList got Featured badge from Google Chrome store.
• 2024 Q1
  • USDT BlackList project released the official version.
  • Opened risk data API.
• 2024 Q2
  • Telegram Bot been launched, providing a faster query entry.
• 2024 Q3
  • Established strategic cooperation with OnChainAML.
  • Completed data ETL (Extract, Transform, Load) for improving data quality.
• 2024 Q4
  • Launch a Decentralized Autonomous Organization architecture Program.
  • Seek other external cooperation opportunities.
• 2025 Q1
  • Release the Web3 Security DAO members’ dashboard.
  • Publish DAO’s Token reward mechanism.
  • Release DAO governance smart contracts.
• 2025 Q2
  • Build to be most active Web3 Security community and activate member passion.
  • Support popular cryptocurrency address (BTC, DOT, SOL, etc.).
  • Reach out 500,000+ records at least.
• 2025 Q3
  • Support risk domain blacklist query.
  • > 10,000,000 risk address records.
• 2025 Q4
  • Build the global most reliable data source and Web3 security community.
  • Deeply cooperate with Exchanges/Crypto Wallets to create AML ecosystem.

6. Mission and Vision

6.1 Mission

To build the global most reliable risk data source and Web3 security community through decentralized autonomous organizations and community collaboration, ensuring on-chain security for every user and promoting the sustainable growth of Web3.

6.2 Vision

• Become the Global Standard for Web3 Security-Establish a trusted framework for risk governance in the Web3 ecosystem through transparency.
• Build a Global Security Community-Engage individuals, enterprises, and organizations to collectively protect the on-chain ecosystem.
• Foster On-Chain Transparency-Use DAO governance and decentralized technologies to eliminate information asymmetry, enhancing safety and reliability in on-chain activities.
• Incentivize Innovation and Collaboration-Encourage developers and researchers in Web3 security to innovate, driving technological progress and ecosystem prosperity.

We firmly believe that with the collective effort of users worldwide, Web3 Security DAO (W3SD) will become cornerstones of Web3 security, making the Web3 world safer and more trustworthy!

7. Contact

• Website https://w3sd.org
• Github https://github.com/Web3-Security-DAO
• X https://x.com/W3SD_Official
• Telegram https://t.me/W3SD_Official
• Email hello@w3sd.org