Innovate DeFi with Digital Identity
DeFi holds the promise of transforming the financial landscape by providing inclusive, transparent, and efficient financial services. However, to unlock its full potential, it must overcome the barriers of complexity, usability, user segments and compliance.
By embracing innovation with Privado id, #DeFi can attract targeted users, enhance user experience, and ultimately, drive greater adoption. Implementing an economic model that incentivizes issuers to provide credentials can lower the cost for verifiers to authenticate user information.
Identity encompasses more than just KYC. Below are some of the early ideas around user reputation based voting, personalized engagement and unified experience.
We welcome all the inputs to refine our ideas and use cases.
Ideas to innovate in DeFi with identity
- Differential voting systems: A simple governance system typically uses “one token, one vote”, but we’ve seen some systems, such as Lido governance use a “dual-token” voting system, where LDO holders may vote to propose changes to the protocol while stETH holders may vote to veto the changes. However in many protocols there are actually many different stakeholders, such as a dex may have token holders, liquidity providers (market makers), and traders (takers), each with their own exposures and interests that are not well represented by “one token, one vote”. @0xPolygonID would enable a much more expressive way for protocols to describe how they wish to give voting rights to the various actors in their ecosystem
Going one step further, apps may choose not to have a gov token, rather just a dynamic reputation system based on each user’s “value contribution” to the app, powered by zk proof for privacy
2. Blockchain infrastructure performance tracker: Efforts are underway to bring objective performance metrics about blockchain infrastructure on-chain, such as Jito’s StakeNet for SOL validators or Rated Network for ETH validators, to enable automated and more informed stake delegations for users. We could go a step further and track the performance of each operator from each blockchain module, and use that to distribute the chain’s rewards among the infra operators. This can be a reusable verifiable credential (VC) leveraging Privado id tech stack. Potential use cases here could be:
a) Stake reward smoothing or MEV smoothing when applied to validators/sequencers, or
b) Distributing network rewards to all infra operators of a chain, including infra that were previously non incentivized such as the local DA committee, the RPCs, indexers, light nodes, archival nodes, full nodes
c) Extending into the app layer as well as infra layer, we arrive at something like Berachain’s proof of liquidity
3. Personalized user engagement: There are several existing protocols like reputex.io who are establishing reputation primitives in Web3 for end users by analyzing activities across chains. This can enable apps to segment users and provide them offerings, rewards or discounts based on their score from on-chain activity.
a) Going a step further, additional parameters can be combined from web2 or complementing products to create a 360 degree comprehensive view of the user reputation e.g. number of Twitter followers, quest platform activities and others. This can empower apps to offer personalized engagements
b) Such reputation score from on-chain activity + other user credentials converted into a Privado id based VC can leverage zk-proof and enable privacy based user engagements
These are individual ideas compiled by @0xcarnation, @Crypto_Texan and @ravikantagrawal
