Identity Verification and Trust in Web3
Identity verification is a common practice in the Web2 world but has yet to be fully realized in Web3. With the rise of virtual asset legislation by regulators around the world, on-chain know your customer (KYC) processes have become necessary for compliance.
KYC verifies that an individual is a valid human and confirms their identity. This is crucial for blockchain platforms that are often targeted by bots, which can cause significant financial losses. However, KYC alone is not enough for decentralized finance (DeFi) platforms.
In addition to verifying identities, DeFi needs proof of trust. Web3 requires a way to verify users’ identities and establish their reputation, as trust is closely linked to perceived trustworthiness. KYC cannot provide this level of assurance unless an identity is explicitly on a sanction list.
This limitation hinders the adoption of blockchain’s most valuable use cases, such as decentralized voting. Ethereum founding member Steve Dakh highlights this issue as one of the reasons why blockchain has primarily seen NFTs and asset tokens.
The Role of Attestations
To address these challenges, Dakh is developing the Ethereum Attestation Service (EAS), which allows entities to make attestations on the blockchain about various aspects. These attestations can then be used to determine trustworthiness. Dakh believes that this protocol lays the foundation for achieving Ethereum’s original vision.
An attestation is a claim made by one identity about another identity that can be independently verified. It serves as evidence of trust and can be tied to specific identifiers on the blockchain, such as decentralized identifiers (DIDs) or wallets.
Attestations provide relative reputation based on the trustworthiness of the entities making them. Smart contracts can be programmed to interact only with entities that possess specific attestations, allowing for customizable trust criteria. Different use cases may require trust in different authorities or types of attestations.
Combined with zero-knowledge proofs, attestations also enable the verification of specific identity information without revealing the entire contents. This is particularly useful for KYC compliance, as individuals can selectively share aspects of their identity as required.
Flexible Identity Models
On-chain attestations offer flexibility in determining trust and enable more meaningful interactions at scale. They can be used to verify traditional attributes like birthday or accredited investor status, as well as other unique characteristics such as music taste or employment history.
This flexibility allows participants to choose which entities they trust and how they quantify or qualify that trust. It also enables modularity, where certain combinations of attestations can establish trustworthiness even if other attributes are not favorable.
Protocols like EAS make it possible to represent these interactions and reputation on-chain, making them interoperable between platforms. This opens up possibilities for innovative identity models and metadata production beyond deterministic claims.
Hot Take: The Future of Web3 Identity
The development of on-chain attestations and protocols like EAS signals a promising future for identity verification in Web3. By combining trustworthiness with verifiable identity information, blockchain platforms can unlock the potential for decentralized finance applications and other valuable use cases.
About the Author
Graeme Moore is the Head of Tokenization at the Polymesh Association, a not-for-profit dedicated to the growth of the Polymesh blockchain ecosystem. He is also the author of “B is for Bitcoin,” the first ever ABC book about Bitcoin. The views expressed here are his own and do not necessarily represent those of Decrypt.
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