Security and transparency are the two core pillars of Klara. Everything we build is based on the idea that users must stay in control of their assets at all times, and that every part of the system should be verifiable without depending on hidden logic or a centralized authority.

If the user cannot verify what is going on behind the scenes, then it is not real self custody.

Klara is designed to avoid trust based systems. Instead, the platform gives users tools that are cryptographically secure, mathematically verifiable, and protected through industry standard primitives.

Below is the complete breakdown of how Klara approaches security and transparency across the ecosystem.

8.1 Self Custody Foundation

Klara does not hold user funds.
Klara does not freeze user funds.
Klara cannot access user funds.
Klara does not operate like a custodial exchange or a centralized wallet.

The vault is built on self custodial smart contracts. These contracts are deployed on supported networks, and your assets remain in your control at all times. Only you have the authority to deposit, withdraw, or unlock collateral.

Self custody guarantees:

• no third party control
• no freezes
• no backend asset movement
• no hidden transfers
• no access by Klara staff or systems

This is the most secure foundation possible for a financial protocol.

8.2 Passkey Authentication

Instead of relying on passwords or outdated recovery systems, Klara uses passkeys and modern cryptographic identity tools. Passkeys are safer, easier to use, and almost impossible to brute force.

Passkey security ensures:

• biometric login options
• phishing resistance
• no shared secrets
• protection against password database breaches
• secure multi device support

In the future, passkey backed multi factor and social recovery features will enhance user safety even further.

8.3 Smart Contract Architecture

The Klara Vault and core infrastructure rely on audited smart contracts that are deployed transparently onchain. These contracts handle:

• asset locking
• collateral tracking
• withdrawal permissions
• credit engine inputs
• liquidation safety rules
• multi chain interactions
• settlement sync

The contract system is modular.
Each contract handles one function instead of merging responsibilities.
This reduces risk and makes code audits easier.

Smart contract architecture is the backbone of Klara’s trustless design.

8.4 Price Feed and Oracle Integrity

Accurate pricing is essential for safe credit.
Klara integrates with reliable, decentralized price feeds that aggregate multiple sources to prevent manipulation.

Oracle sources include:

• major price feed providers
• decentralized oracle networks
• fallback feeds for emergency conditions
• anti manipulation logic

If an oracle feed becomes unstable or unavailable, Klara uses alternative feeds or locks changes temporarily to protect user collateral.

No unchecked pricing.
No blind trust.

8.5 Onchain Proof of Collateral

One of Klara’s biggest commitments is to verifiable transparency. Your vault state, credit engine inputs, and collateral health can be verified through explorers. This ensures:

• user trust
• protocol integrity
• audit friendliness
• no hidden liabilities
• zero reliance on centralized logs

You are free to inspect:

• your vault balance
• contract state
• pending transactions
• historical collateral movements
• contract interactions

Verification is public and available at any time.

8.6 Audits and Bug Bounties

Security is an ongoing process.
Not a one time event.

Klara undergoes independent third party audits that evaluate:

• contract logic
• permission boundaries
• oracle usage
• credit engine input safety
• liquidation rules
• settlement flow

In addition, a bug bounty program will reward developers who identify vulnerabilities.

This ensures that white hat security researchers help maintain the ecosystem and keep users safe.

8.7 Fraud Detection and Card Security

Even though the backend is onchain, real world transactions come with risks. Klara incorporates advanced fraud detection tools to protect users from card misuse.

Fraud protection includes:

• behavior tracking
• region mismatches
• duplicate transactions
• unusual spending patterns
• suspicious merchant categories
• automated card freezing

You get notified instantly when something looks off.

8.8 Data Privacy and User Protection

Klara does not sell user data.
Klara does not leak user data to third parties.
Klara only collects what is required for compliance and system integrity.

Data policies include:

• encryption of sensitive info
• isolated storage for compliance data
• minimal user tracking
• no unnecessary behavioral analytics
• transparent privacy disclosures

Everything is built to protect the user.

8.9 Why Transparency Matters

The goal is simple.
Users should always be able to:

• verify their collateral
• check contract logic
• confirm their credit backing
• audit their own financial history
• see exactly how the system works