Data Leakage Controls

In decentralized finance (DeFi), data is currency: private keys, wallet addresses, user credentials, and on-chain positions can be as valuable as the assets themselves. Any unintentional exposure of this information—whether through an AI chatbot response or a behind-the-scenes data pipeline—can compromise both user privacy and the integrity of financial transactions. Damasco’s Data Leakage Controls provide real-time safeguards against unauthorized disclosures, keeping sensitive data private and preventing costly errors.

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Why Data Leakage Prevention Is Critical

Unlike traditional systems, LLM-based DeFi applications accept free-form text from users, partners, or integrated references (e.g., documentation, chat logs, or transaction histories). This openness invites the risk of:

• Exposing Private Keys or Seed Phrases

• Revealing Customer PII (Personally Identifiable Information)

• Disclosing Confidential Trading Strategies

• Breaching Regulatory Requirements (e.g., data protection laws)

A single leaked piece of sensitive data can have irreversible consequences—compromised wallets, stolen assets, and legal liabilities. Damasco’s Data Leakage Controls operate continuously to shield your AI-driven workflows from such risks.

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Core Features of Data Leakage Controls

1. Real-Time PII Detection

   • Damasco automatically scans all inbound and outbound AI text for indicators of personally identifiable information, such as emails, phone numbers, or physical addresses.

   • If a match is found, the system can immediately mask, redact, or block the content.

2. Financial Data Scrubbing

   • Private keys, secret passphrases, or detailed transaction logs are sanitized before they ever exit the system.

   • Administrators can define custom patterns to detect domain-specific data (e.g., specialized ID formats or security tokens).

3. Threshold-Based Alerting

   • Each potential leak is assigned a confidence score. When the system’s detection reaches or surpasses a configured threshold, Damasco automatically flags the content for review or blocks it entirely.

   • By adjusting confidence levels, you can reduce false positives (e.g., routine references to “keys” that aren’t actually private keys) while still capturing real threats.

4. Policy-Driven Customization

   • Set up different policies for various contexts: user-facing chat, back-office analytics, or automated smart contract calls.

   • Tailor the system to either block or partially redact text, ensuring minimal disruption to essential workflows.

5. On-Chain and Off-Chain Coverage

   • Damasco extends data leakage prevention across both on-chain and off-chain data sources, helping you enforce end-to-end protection for the entire DeFi lifecycle.

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Example Leakage Scenarios

1. Private Key Exposure

   “Sure, the private key for this wallet is 0xABC123...—use it to access the funds.”

   • Without controls, an AI might inadvertently share a private key in a user-facing conversation.

2. User PII Output

   “Here is the user’s personal information: John Smith, 555-0123, 123 Apple Street.”

   • In a DeFi loan or KYC process, the AI might reveal a user’s PII from internal records.

3. Trading Algorithm Leak

   “The current strategy is to move all liquidity at 4:59 PM, using these 3 contract calls: ...”

   • Someone could prompt the AI to summarize or reveal a confidential on-chain strategy.

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What Data Leakage Controls Do Not Cover

Damasco’s Data Leakage Controls focus on identifying and preventing unauthorized disclosure of sensitive data—particularly private keys, PII, or proprietary financial details. Some scenarios lie outside its scope:

• Permitted, Publicly Available Data

  • Public wallet addresses or general protocol details are not considered “sensitive,” unless your policy explicitly flags them.

• Strategic Organizational Decisions

  • E.g., “Should we pivot to Layer-2 solutions?” While it may be confidential business info, it may not qualify under strict definitions of “sensitive data” unless configured as such.

• Developer or User Errors Outside the AI Channel

  • Data leakage can still occur if a developer includes sensitive data in publicly visible source code or if a user manually posts private information on an open forum.

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Best Practices

1. Combine System Prompt Guidelines

   • Reinforce that the AI should never disclose sensitive data under any circumstances.

   • Clear system-level instructions reduce accidental leaks at the source.

2. Regularly Review & Adjust Thresholds

   • Balance false positives (blocking legitimate requests) against the risk of real leaks.

   • Consider maintaining stricter thresholds for private keys or seed phrases than for user emails.

3. Enable Custom Detectors

   • DeFi organizations often have unique data formats—use custom patterns to detect additional info beyond standard PII.

   • For instance, if you track internal staff IDs or specialized on-chain transaction codes, ensure they’re added to Damasco’s watchlist.

4. Periodic Auditing

   • Evaluate logs for how often data is flagged, and determine if adjustments are needed.

   • Continually refine your detection rules to capture newly discovered vulnerabilities or data types.

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Integration with Other Damasco Defenses

• Prompt Injection Prevention: Ensure malicious prompts don’t coerce your AI into leaking data it would otherwise protect.

• Harmful Content Moderation: Filter out hateful or objectionable content that can overshadow or distract from critical data security procedures.

• Smart Contract Integrity Checks: Validate on-chain operations to protect against contract-level exploits that might bypass data safeguards.