zkDID: A user-friendly regulatory solution

zkDID: A user-friendly regulatory solution

Regulatory issues have attracted attention. Currently, the data silo and lack of cross-border KYC identity verification programs in centralized exchanges and OTC platforms, as well as the balance between identity verification and privacy, have made regulators cautious about cryptocurrencies. Slow licensing and legislative progress have also hindered industry development.

This article discusses the combination of decentralized on-chain identity DID with regulation to break the data silo and cross-regional KYC authentication issues. The DID scheme that combines ZKP with SBT and NFT can further balance identity verification and privacy.

The zkDID combined with regulation, represented by zkSBT, may become a feasible solution. The zkSBT launched by Manta NPO platform is a user-friendly regulatory solution.

Current bottlenecks faced by regulation

KYC and anti-money laundering are one of the most important regulatory directions. Gilbert, a partner and lawyer at Mulana, mentioned during the participation in the Manta Network Chinese SBlockingce that the current regulations of various countries on cryptocurrencies mainly target centralized exchanges and OTC platforms. The regulatory schemes for stablecoins, DeFi, and NFT are also being formulated, and early-stage will focus on KYC and anti-money laundering. It is very important to verify the identity and source of funds of the transferor for regulation and crime prevention.

Gilbert believes that SBT may be used as a KYC tool.

In addition, the current crackdown on crimes using cryptocurrencies, such as money laundering, is mainly carried out by calling relevant data through centralized trading platforms. This method faces problems such as data silos of centralized platforms and cross-regional joint supervision, which requires the mobilization of multiple resources to cooperate, has high costs, and has efficiency issues.

On the other hand, privacy and digital identity autonomy are equally important. In July 2022, the World Wide Web Consortium (W3C) announced that Decentralized Identifiers (DIDs) v1.0 has become a formal recommended standard. DIDs allow owners to verify DID ownership by encryption, enabling individuals, organizations, communities, governments, and IoT devices to conduct more reliable online transactions.

Especially for individuals, DIDs can regain control of their personal data and authorization, and can also achieve more respectful two-way trust relationships in preventing forgery, respecting privacy, and improving usability.

zkDID as a universal privacy identity verification program

DID is the abbreviation of Decentralized Identifier, and it also refers to a decentralized identity verification mechanism, which proves the state of an address on the chain, such as holding a certain amount of a certain asset, or performing a certain operation on the chain, such as adding LP in DEX, etc.

Users who meet certain requirements can mint specified NFTs or SBTs on-chain as credentials that cannot be tampered or forged. Unlike traditional centralized identification verification mechanisms, DID does not rely on any centralized identification verification agency. DID uses blockchain to decentralize identification verification power, allowing individuals or entities to control their own identity information.

In fact, we need a way that can protect the privacy and autonomy of DID owners and achieve verifiability. NFT/SBT can achieve verifiability. Combining ZKP with NFT/SBT can obtain zkNFT/zkSBT that achieves verifiability under privacy and autonomy. This is also what Manta Network is currently doing, based on DID with privacy and autonomy.

Zero-knowledge proof (ZKP) is a technology that verifies information under privacy conditions. It was proposed by cryptography experts S.Goldwasser, S.Micali, and C.Rackoff in the early 1980s. The prover generates a ZKP proof based on complex number theory and cryptographic principles. The verifier verifies that the ZKP proof is true based on the same principle.

Complex number theory and cryptographic principles make ZKP have:

1) Completeness: If the prover actually meets the conditions, he/she can definitely find a way to prove to the verifier that he/she meets the conditions, which means it is true and cannot be false.

2) Soundness: If the prover does not meet the conditions, he/she cannot prove himself/herself, which means it is false and cannot be true.

3) Zero-knowledge: The verifier knows nothing about the prover’s other information except for the ZKP proof itself.

The verifier can only verify the ZKP proof itself, and will not obtain any information about the prover. When users mint zkNFT/zkSBT issued by Manta NPO, they actually prove that they meet the conditions as the provers, and Manta’s on-chain nodes act as verifiers to verify.

zkSBT is equivalent to the privacy of Galxe OAT. zkSBT can only represent the holder who meets a certain condition, such as the holder of zkBAB, who is the BAB holder with the real KYC information of Binance.

For example, the holder of zkARB is the ARB airdrop recipient, and no one else can obtain any other information about the holder of zkSBT, including wallet address, transaction history, IP address, etc., even the issuer of zkSBT and Manta Network itself cannot obtain them. This is the greatness of ZK in terms of privacy.

Therefore, zkNFT/zkSBT launched by the Manta NPO platform is an attempt at a user-friendly regulatory solution. For long-term development, Manta prioritizes technology and hopes that these technologies will have better application scenarios and achieve regulatory friendliness while truly protecting user privacy.

In terms of verifiability, zkBAB and zkGalxe represent that the user has done KYC on Binance and Galxe, respectively, but only represent the user as KYC. No one can obtain any information related to Mint users through zkSBT, not even the issuer of NPO and Manta Network.

zkSBT: Connect Web2 and Web3 through ZK Proof

Secondly, zkSBT can achieve more combinatoriality. Manta Network zkSBT and other DID can be used as Manta ecological project credentials. The Proof Key attached to zkSBT can be filled in the supported DApp and App, and even in the Web2 application, to verify DID in other applications. For example, AsMatch APP as an identity credential.

AsMatch’s App is actually a Web2 mobile Internet App. When the user fills in the ZK Proof Key in AsMatch, the ZK Proof Key will enter the centralized server, but the centralized server can only obtain the ZK Proof Key, and cannot obtain the information corresponding to the ZK Proof Key, ensuring user privacy and realizing verification under privacy conditions. User identity.

Therefore, Web2 applications do not need to connect to Web3 wallets such as Metamask, and can directly use Proof Key as user login verification.

On the other hand, ZK Proof Key can also verify the user’s on-chain holdings of tokens, NFTs, etc. Users can display according to their own wishes, such as whether they hold ETH, whether they hold BAYC, etc. On AsMatch, holders of the same tokens and NFTs can “break the ice” and chat better.

ZK Proof Key or zkSBT actually brings the immutability and verifiability of the blockchain into the Web2 world. ZK proof has become a bridge connecting the Web2 and Web3 worlds. Trustlessness and low friction are powerful tools for blockchain to change the world. Blockchain can solve the problem of trustlessness in other fields, and ZK Proof Key brings the “authenticity” of blockchain to Web2.

In fact, ZK can “simplify” on-chain behavior or identity into zkNFT or zkSBT. zkNFT/zkSBT represents that a user on the chain does have a certain identity or has performed a certain operation, such as locking a certain asset into a certain contract, and then can Mint zkNFT.

When Minting zkNFT/zkSBT, ZK Proof Key is generated at the same time, filled into the DApp or App offline, and used to perform a certain operation or obtain a certain right.

Any application, including Web2’s App, as long as it accesses NPO SDK and provides an entry for filling in Proof Key, can apply the user’s chain DID identity to the Web2 App. Proof Key is equivalent to the wallet of the application.

Investment Value of DID

The DID platform is a user traffic entry point and a user data entry point, such as Galxe, CyberConnect, and TaskOn.

The Manta Network NPO is actually a DID aggregator and a DID middleware that connects users and project parties as data suppliers on one end and other project parties as demand parties on the other end. Ultiverse, TaskON, ReadON, Yuliverse, Web3Go, zkBlockings, and LetsMeme will become the first batch of applications integrated with zkBAB in the BNB chain ecosystem.

In fact, the development of DID may exceed the imagination of most people. The “Distributed Digital Identity and Its Application in Industrial Internet” released by the Industrial Internet and Internet of Things Research Institute of the China Academy of Information and Communications Technology stated that

“At the national level, the governments of the United States, Europe and other countries vigorously promote the development of DID.

As of 2021, the United States Department of Homeland Security (DHS) has provided more than 4 million US dollars in special funds in batches to support the technical research and achievement transformation of DID [2], and support American companies in the international standard organization W3C to initiate the establishment of the DID working group.

The European Blockchain Services Infrastructure (EBSI), which the European Commission is building, provides DID-based electronic identity authentication services for EU citizens as one of its core functions. At the standard and open source organization level, the technical framework of DID has basically formed.

In September 2019, W3C established the DID working group and officially released the core standard “DID-Core Architecture, Data Model and Representation (v1-0)” in September 2021.”

With the emergence of Account Abstraction (AA) and non-mnemonic wallets, as well as the development of IoT sensing devices, users in the future may be able to perform operations such as login, signature, and transfer only through identity authentication. At that time, DID will play a greater role, especially zkDID with added privacy functions and options.

zkDID is increasingly likely to become the entry point connecting Web2 and Web3 in the future. Represented by zkSBT, zkDID not only provides users with privacy options, but also realizes on-chain identity and behavior through Proof Key, and verifies it off-chain, with more imagination space.