CHLOM License Exchange (LEX) — Full Architecture & Systems Specification (Phase 3→4)

Owner: CrownThrive, LLC Date: 2025-08-08 Classification: Internal — Decentralized Licensing Marketplace Specification

1. Purpose & Vision

The CHLOM License Exchange (LEX) will serve as a global, decentralized licensing infrastructure capable of supporting issuance, trading, sublicensing, revocation, dispute resolution, and compliance enforcement across multiple industries. LEX is engineered for interoperability, security, and zero-trust environments, with a compliance-first design embedded into every layer.

Strategic goals include:

• License Lifecycle Management — seamless primary issuance, transfers, sublicensing, and retirement.
• ZKP-Enhanced Compliance — privacy-preserving verification across jurisdictions.
• Global Interoperability — cross-chain and cross-industry adaptability.
• DAO Governance — community-driven rule-setting, fee structures, and dispute resolution.
• AI/ML Fraud Prevention — advanced detection and prevention mechanisms baked into every transaction.

2. System Architecture Overview (C4 Context + Container)

2.1 High-Level Context

• Actors: Issuers, Holders, Buyers/Sellers, Regulators, DAO.
• External Systems: Identity providers (KYC/AML), Regulatory APIs, Payment gateways, Off-chain data oracles.

2.2 Containers

• Blockchain Layer (On-Chain) — Substrate-based runtime with pallets for licensing, ZKP verification, escrow, and DAO governance.
• Off-Chain Layer — API Gateway (REST + gRPC), AI/ML fraud detection services, metadata storage (IPFS/Arweave).
• Integration Layer — SDKs for third-party marketplaces and enterprise systems.
• Security Layer — mTLS endpoints, OAuth2 with scoped access, hardware key integration.

3. Component Descriptions

• License Registry Pallet — Immutable record of licenses with compliance hooks.
• ZKP Verification Engine — Supports proofs for license validity, sanctions checks, and jurisdictional requirements.
• AI Fraud Detection Module — Implements Isolation Forest, PageRank-Fraud, and GBA propagation models for anomaly detection.
• Escrow Smart Contracts — Atomic transactions with conditional releases based on verification results.
• Dispute Resolution Module — DAO-driven process with binding smart contract outcomes.
• Off-Chain Indexer — ElasticSearch-based index for querying licenses.
• Developer SDK — Multi-language libraries (Rust, Python, JavaScript) with gRPC bindings.

4. Data Flow (Example: Compliance-Driven Trade)

1. Buyer initiates purchase via API or on-chain call.
2. ZKP proof request sent to off-chain verifier.
3. Verification results logged on-chain.
4. Escrow contract releases license NFT to buyer.
5. DAO audit log updates via event listener.

5. Trust Boundaries & Security Zones

• Public Zone: API Gateway, SDKs.
• Protected Zone: Off-chain compliance services, AI/ML fraud detection.
• Critical Zone: Blockchain runtime, DAO treasury, license registry.

6. Performance Targets

• TPS Goal: 500+ transactions per second.
• ZKP Verification Latency: < 500ms.
• Escrow Settlement Time: < 5 seconds.
• Fraud Detection Processing: Near real-time (< 2 seconds per transaction).

7. Sample Rust Contract Stub (License Minting)

#[pallet::call]
impl<T: Config> Pallet<T> {
    #[pallet::weight(10_000)]
    pub fn mint_license(
        origin: OriginFor<T>,
        metadata: LicenseMetadata,
    ) -> DispatchResult {
        let issuer = ensure_signed(origin)?;
        ensure!(Self::is_compliant(&metadata), Error::<T>::NonCompliantLicense);
        let license_id = Self::generate_license_id();
        LicenseRegistry::<T>::insert(license_id, metadata.clone());
        Self::deposit_event(Event::LicenseMinted(issuer, license_id));
        Ok(())
    }
}

8. Developer Build Notes

• Backend: Rust (Substrate), Node.js microservices for off-chain APIs.
• Storage: IPFS for metadata, Arweave for permanent audit logs.
• AI/ML Models: Deployed as gRPC microservices, updated via CI/CD pipeline.
• Security: Enforce mTLS + OAuth2, rotate keys quarterly, apply fuzz testing for all smart contracts.

This expanded architecture document provides the technical blueprint developers need to start building the LEX platform with precision and security, ensuring Phase 3 to Phase 4 execution aligns with the CHLOM DAO’s governance and compliance mandates.