Chainlink Functions <> Compliant On-Chain Finance

This use case showcases how Chainlink Functions can be used in conjunction with off-chain data such as Chainalysis Web3 analytics data to drive decisions for on-chain financial protocols, and showcase ‘compliant’ on-chain finance.

The client vault contract included in this repo demonstrates that. It can be used to deposit and withdraw funds from a user’s wallet. Before a deposit or withdraw can be executed, a request must be made to the Chainalysis API to check if the user’s wallet is compliant. The contract sends a request to Chainlink Functions to make the API call, and the result is used to determine if the deposit or withdraw should be executed.

The script shows how to use Chainlink Functions to make an API call to Chainalysis and process the data to the contract. The whole verification process is done by running a script off-chain, and the contract is only updated with the result of the verification.

Deposits utilize the Chainalysis Address Screening as part of the verification process to check if the user’s wallet has been involved in any illicit activity. Withdraws utilize Chainalysis KYT (Know Your Transaction) by checking the user wallet for alerts and direct exposures to any suspicious activity.

Requirements

Node.js version 18

Steps

Clone this repository to your local machine
Open this directory in your command line, then run npm install to install all dependencies.
Aquire a Github personal access token which allows reading and writing Gists.
1. Visit https://github.com/settings/tokens?type=beta and click "Generate new token"
2. Name the token and enable read & write access for Gists from the "Account permissions" drop-down menu. Do not enable any additional permissions.
3. Click "Generate token" and copy the resulting personal access token for step 4.
Set the required environment variables.
1. Set an encryption password for your environment variables to a secure password by running:
  npx env-enc set-pw
2. Use the command npx env-enc set to set the required environment variables (see Environment Variable Management):
  - GITHUB_API_TOKEN for your Github token obtained from step 3
  - PRIVATE_KEY for your development wallet
  - POLYGON_MUMBAI_RPC_URL, ETHEREUM_SEPOLIA_RPC_URL, AVALANCHE_FUJI_RPC_URL for the network that you intend to use
  - ETHEREUM_MAINNET_RPC_URL is required to run the integration tests on a forked mainnet
  - CHAINALYSIS_API_KEY for your Chainalysis API key
3. If desired, the <explorer>_API_KEY can be set in order to verify contracts, along with any values used in the secrets object in Functions-request-config.js such as COINMARKETCAP_API_KEY.
Test an end-to-end request and fulfillment locally by simulating it using:
npx hardhat functions-simulate
Note: To test deposit or withdraw functionality, change the args in Functions-request-config.js
Run the integration tests on a forked mainnet by running:
npm run test:integration
Create & fund a new Functions billing subscription from the Functions web interface at functions.chain.link.
Note: Ensure your wallet has a sufficient LINK balance before running this command. Testnet LINK can be obtained at faucets.chain.link.
Deploy and verify the client vault contract to an actual blockchain network by running:
npx hardhat deploy-vault --network network_name_here --subid your_sub_id --verify true
Note: Make sure <explorer>_API_KEY is set if using --verify true, depending on which network is used.
Make an on-chain request by running:
1. For deposit:
  npx hardhat vault-request --network network_name_here --contract 0xDeployed_client_contract_address_here --deposit true --amount eth_amount_here
2. For withdraw:
  npx hardhat vault-request --network network_name_here --contract 0xDeployed_client_contract_address_here --withdraw true --amount eth_amount_here
3. Alternatively you can use the Etherscan UI to make a request by calling the requestDeposit and requestWithdraw functions on the deployed client contract.

Content below is general knowkedge from function-hardhat-starter-kit.

Environment Variable Management
- Environment Variable Management Commands
Request Configuration
- JavaScript Code
  - Functions Library
- Off-chain Secrets
Automation Integration
Gas Spikes

Environment Variable Management

This repo uses the NPM package @chainlink/env-enc for keeping environment variables such as wallet private keys, RPC URLs, and other secrets encrypted at rest. This reduces the risk of credential exposure by ensuring credentials are not visible in plaintext.

By default, all encrypted environment variables will be stored in a file named .env.enc in the root directory of this repo.

First, set the encryption password by running the command npx env-enc set-pw. The password must be set at the beginning of each new session. If this password is lost, there will be no way to recover the encrypted environment variables.

Run the command npx env-enc set to set and save environment variables. These variables will be loaded into your environment when the config() method is called at the top of hardhat.config.js. Use npx env-enc view to view all currently saved environment variables. When pressing ENTER, the terminal will be cleared to prevent these values from remaining visible. Running npx env-enc remove VAR_NAME_HERE deletes the specified environment variable. The command npx env-enc remove-all deletes the entire saved environment variable file.

When running this command on a Windows machine, you may receive a security confirmation prompt. Enter r to proceed.

NOTE: When you finish each work session, close down your terminal to prevent your encryption password from becoming exposes if your machine is compromised.

Environment Variable Management Commands

The following commands accept an optional --path flag followed by a path to the desired encrypted environment variable file. If one does not exist, it will be created automatically by the npx env-enc set command.

The --path flag has no effect on the npx env-enc set-pw command as the password is stored as an ephemeral environment variable for the current terminal session.

Command	Description	Parameters
`npx env-enc set-pw`	Sets the password to encrypt and decrypt the environment variable file NOTE: On Windows, this command may show a security confirmation prompt
`npx env-enc set`	Sets and saves variables to the encrypted environment variable file
`npx env-enc view`	Shows all currently saved variables in the encrypted environment variable file
`npx env-enc remove <name>`	Removes a variable from the encrypted environment variable file	`name`: Variable name
`npx env-enc remove-all`	Deletes the encrypted environment variable file

Request Configuration

Chainlink Functions requests can be configured by modifying values in the requestConfig object found in the Functions-request-config.js file located in the root of this repository.

Setting Name	Description
`codeLocation`	This specifies where the JavaScript code for a request is located. Currently, only the `Location.Inline` option is supported (represented by the value `0`). This means the JavaScript string is provided directly in the on-chain request instead of being referenced via a URL.
`codeLanguage`	This specifies the language of the source code which is executed in a request. Currently, only `JavaScript` is supported (represented by the value `0`).
`source`	This is a string containing the source code which is executed in a request. This must be valid JavaScript code that returns a Buffer. See the JavaScript Code section for more details.
`secrets`	This is an object which contains secret values that are injected into the JavaScript source code and can be accessed using the name `secrets`. This object can only contain string values. This object will be automatically encrypted by the tooling using the DON public key before making request. Any DON member can use these secrets when processing a request.
`perNodeSecrets`	This is an array of `secrets` objects that enables the optional ability to assign a separate set of secrets for each node in the DON. DON members can only use the set of secrets which they have been assigned.
`walletPrivateKey`	This is the EVM private key. It is used to generate a signature for the encrypted secrets such that the secrets cannot be reused by an unauthorized 3rd party.
`args`	This is an array of strings which contains values that are injected into the JavaScript source code and can be accessed using the name `args`. This provides a convenient way to set modifiable parameters within a request.
`expectedReturnType`	This specifies the expected return type of a request. It has no on-chain impact, but is used by the CLI to decode the response bytes into the specified type. The options are `uint256`, `int256`, `string`, or `Buffer`.
`secretsURLs`	This is an array of URLs where encrypted secrets can be fetched when a request is executed. This array is converted into a space-separated string, encrypted using the DON public key, and used as the `secrets` parameter on-chain. If any URLs are provided, automatic Gist uploading will be disabled in favor of the provided URLs.

JavaScript Code

The JavaScript source code for a Functions request can use vanilla Node.js features, but cannot use any require statements or imported modules other than the built-in modules buffer, crypto, querystring, string_decoder, url, and util.

It must return a JavaScript Buffer which represents the response bytes that are sent back to the requesting contract. Encoding functions are provided in the Functions library. Additionally, the script must return in less than 10 seconds or it will be terminated and send back an error to the requesting contract.

In order to make HTTP requests, the source code must use the Functions.makeHttpRequest function from the exposed Functions library. Asynchronous code with top-level await statements is supported, as shown in the file API-request-example.js.

Functions Library

The Functions library is injected into the JavaScript source code and can be accessed using the name Functions.

In order to make HTTP requests, only the Functions.makeHttpRequest function can be used. All other methods of accessing the Internet are restricted. The function takes an object with the following parameters.

{
  url: String with the URL to which the request is sent,
  method (optional): String specifying the HTTP method to use which can be either 'GET', 'POST', 'PUT', 'DELETE', 'PATCH', 'HEAD', or 'OPTIONS' (defaults to 'GET'),
  headers (optional): Object with headers to use in the request,
  params (optional): Object with URL query parameters,
  data (optional): Object which represents the body sent with the request,
  timeout (optional): Number with the maximum request duration in ms (defaults to 5000 ms),
  responseType (optional): String specifying the expected response type which can be either 'json', 'arraybuffer', 'document', 'text' or 'stream' (defaults to 'json'),
}

The function returns a promise that resolves to either a success response object or an error response object.

A success response object will have the following parameters.

{
  error: false,
  data: Response data sent by the server,
  status: Number representing the response status,
  statusText: String representing the response status,
  headers: Object with response headers sent by the server,
}

An error response object will have the following parameters.

{
  error: true,
  message (may be undefined): String containing error message,
  code (may be undefined): String containing an error code,
  response (may be undefined): Object containing response sent from the server,
}

This library also exposes functions for encoding JavaScript values into Buffers which represent the bytes that a returned on-chain.

Functions.encodeUint256 takes a positive JavaScript integer number and returns a Buffer of 32 bytes representing a uint256 type in Solidity.
Functions.encodeInt256 takes a JavaScript integer number and returns a Buffer of 32 bytes representing a int256 type in Solidity.
Functions.encodeString takes a JavaScript string and returns a Buffer representing a string type in Solidity.

Remember, it is not required to use these encoding functions. The JavaScript code must only return a Buffer which represents the bytes array that is returned on-chain.

Off-chain Secrets

Instead of using encrypted secrets written directly on the blockchain, encrypted secrets are hosted off-chain and be fetched by DON nodes via HTTP when a request is initiated. This allows encrypted secrets to be deleted when they are no longer in use. By default, the tooling automatically uploads secrets to private Github Gists and deletes them once a request is fulfilled unless the secrets are being used for an AutomatedFunctionsConsumer.sol contract. If integrating with Chainlink Automation, it is recommended to delete the secrets Gist manually once it is not longer in use. Note that if there are URL(s) provided for the secretsURLs parameter in Functions_request_config.js, automatic Gist uploading will be disabled in favor of using the provided URL(s).

Additionally, per-node secrets allow a separate set of secrets to be assigned to each node in the DON. Each node will not be able to decrypt the set of secrets belonging to another node. Optionally, a set of default secrets encrypted with the DON public key can be used as a fallback by any DON member who does not have a set of secrets assigned to them. This handles the case where a new member is added to the DON, but the assigned secrets have not yet been updated.

To use per-node assigned secrets, enter a list of secrets objects into perNodeSecrets in Functions-request-config.js. The number of objects in the array must correspond to the number of nodes in the DON. Default secrets can be entered into the secrets parameter of Functions-request-config.js. Each secrets object must have the same set of entries, but the values for each entry can be different (ie: [ { apiKey: '123' }, { apiKey: '456' }, ... ]). If the per-node secrets feature is not desired, perNodeSecrets can be left empty and a single set of secrets can be entered for secrets.

If you prefer to host secrets elsewhere instead of having them automatically uploaded to a Github Gist, generate the encrypted secrets JSON file by running the command npx hardhat functions-build-offchain-secrets --network network_name_here. This will output the file offchain-secrets.json which can be uploaded to any other hosting service that allows the JSON file to be fetched via URL. Once the JSON file is uploaded, enter the URL(s) where the JSON file is hosted into secretsURLs. Multiple URLs can be entered as a fallback in case any of the URLs are offline. Each URL should host the exact same JSON file. The tooling will automatically pack the secrets URL(s) into a space-separated string and encrypt the string using the DON public key so no 3rd party can view the URLs. Finally, this encrypted string of URLs is used in the secrets parameter when making an on-chain request.

URLs which host secrets must be available every time a request is executed by DON nodes. For optimal security, it is recommended to expire the URLs when the off-chain secrets are no longer in use.

Automation Integration

Chainlink Functions can be used with Chainlink Automation in order to automatically trigger a Functions request.

Create & fund a new Functions billing subscription by running:
npx hardhat functions-sub-create --network network_name_here --amount LINK_funding_amount_here
Note: Ensure your wallet has a sufficient LINK balance before running this command.
Deploy the AutomationFunctionsConsumer client contract by running:
npx hardhat functions-deploy-auto-client --network network_name_here --subid subscription_id_number_here --interval time_between_requests_here --verify true
Note: Make sure <explorer>_API_KEY environment variable is set. API keys for these services are freely available to anyone who creates an EtherScan, PolygonScan or SnowTrace account.
Register the contract for upkeep via the Chainlink Automation web app here: https://automation.chain.link/
- Be sure to set the Gas limit for the performUpkeep function to a high enough value. The recommended value is 1,000,000.
- Find further documentation for working with Chainlink Automation here: https://docs.chain.link/chainlink-automation/introduction

Once the contract is registered for upkeep, check the latest response or error with the commands npx hardhat functions-read --network network_name_here --contract contract_address_here.

For debugging, use the command npx hardhat functions-check-upkeep --network network_name_here --contract contract_address_here to see if Automation needs to call performUpkeep. To manually trigger a request, use the command npx hardhat functions-perform-upkeep --network network_name_here --contract contract_address_here.

Gas Spikes

When on-chain traffic is high, transaction gas prices can spike unexpectedly. This may decrease the accuracy of the estimated requests costs or cause transactions to fail. In order to mitigate these problems, ensure your billing subscription balance has a sufficient buffer of two or more times the expected request cost in LINK. Additionally, you can manually set a hardcoded transaction gas price in the HardHat tooling by modifying the gasPrice parameter in the networks.js config file for a particular network.

Disclaimer

This tutorial offers educational examples of how to use a Chainlink system, product, or service and is provided to demonstrate how to interact with Chainlink’s systems, products, and services to integrate them into your own. This template is provided “AS IS” and “AS AVAILABLE” without warranties of any kind, it has not been audited, and it may be missing key checks or error handling to make the usage of the system, product, or service more clear. Do not use the code in this example in a production environment without completing your own audits and application of best practices. Neither Chainlink Labs, the Chainlink Foundation, nor Chainlink node operators are responsible for unintended outputs that are generated due to errors in code

hackbg / functions-chainalysis