Fractal: build a DID registry in Harmony to enable decentralized verified identity as a built-in service for your builders

Funding Proposals Grants
1

Name of Project

Build a DID registry in Harmony to enable decentralized verified identity as a built-in service for your builders

Proposal overview

tl;dr

We propose to build, populate and maintain a DID registry in Harmony to enable new use cases for builders such as sybil-resistant governance, KYC/AML compliance, NFT authenticity and fair airdrops.

Fractal is the market leader in identity verification in the blockchain space. Our community has grown to 1M users, almost half with fully verified identities.

After working on several approaches to decentralized identity, we’re on a mission to make DIDs publicly available to as many people as possible, and we want to help Harmony make it a feature you offer to every builder on your platform. We’re launching and populating a DID registry in Kusama in the next few weeks, and partnering with Harmony next can help drive our product development to offer the best solution across multiple use-cases and create a unique feature that adds to the value you offer to builders on your platform.

We are aligned with Harmony’s focus on adoption and real world solutions, and are looking forward to working with this community to onboard the next billion users into crypto. There are many interesting DID solutions out there, but no one comes close to the size of our community of verified identities. Doing the hard work of actually verifying identities makes Fractal different.

Decentralized identity and verification

Decentralized identity is awesome because it allows users to remain self-sovereign over their own identity and data. Decentralization fundamentally prevents data leaks and makes the user independent of web services.

Many more have contributed to the decentralized identity space. The W3C designed standards for decentralized IDs and verifiable credentials. The inventor of the ERC-20 token standard published ERC-725 and ERC-735 as identity and claims standards for Ethereum. Hyperledger, Sovrin, Civic, uPort, KILT, Spruce and many others worked hard to create technical solutions for decentralized identity.

What makes Fractal different is that we combine elegant standards and cutting edge tech with the “boring” work of actually verifying identities. This is hard labor, involving legal risk and a lot of responsibility. It’s work Fractal is proud to do, because every user we can onboard to crypto counts.

Today, most of the identity verification we do is for KYC/AML compliance, helping users onboard to exchanges, token sales, launchpads, security tokens, and institutional DeFi. This is important because, like it or not, regulators are all over crypto, and companies must comply with regulation. Much of Fractal’s work is focused on making compliance better for companies and users alike.

Bringing the next billion users to crypto

Anonymity is already a feature in Harmony — we want identity to be a feature and another tool in the Harmony toolbox.

Identity is how we get adoption. Early adopters take many risks, but most people are looking for a middle ground between the safe walled garden of Coinbase, and the wild west of liquidity farming. Making identity simple and secure is how we bring the next billion people into crypto and how we persuade institutions to deploy trillions of dollars of liquidity.

And identity is about a lot more than just compliance, especially in web3. Identity enables true democracy with one-person-one vote, makes DAO governance sybil-resistant, makes airdrops fair, NFTs authentic, quadratic voting possible and is the key to unlock undercollateralized loans in DeFi.

We want the use cases above to be possible for all Harmony builders to implement. For example:

  • Securing Harmony: Harmony could require validators to prove their uniqueness as a guarantee of decentralization. Validators could choose to also prove their identity in order to gain the trust of delegators.
  • Attracting institutional liquidity: DeFi leaders like Sushi or ViperSwap could launch permissioned pools with verified participants.
  • Diversifying governance: any Harmony DAO would have 1-person-1-vote governance at their disposal.
  • Proving art authorship: daVinci could allow NFT artists to optionally attach their proven identity as a proof of authorship.
  • Account recovery: 1wallet could offer users the option of safekeeping a key backup, recoverable using an identity proof.

Project stage

Fractal has been verifying identities for crypto companies since 2017. Our clients include the Ocean Protocol, Polymath, Gnosis, Polkastarter, CardStarter, Solstarter, StarLaunch, Fantomstarter, Solrazr, and dozens more.

We’re making our work natively available for everyone in web3 in 2022, by building a DID registry. It’s a simple smart contract that maps wallet addresses to levels of identity verification (all the way from “unique human” to “fully KYC/AML compliant”). No personal data needs to be stored on chain.

This registry is populated with the users who choose to do identity verification. This enables any other smart contract on the blockchain to make decisions based on identity with 1-2 extra lines of code. For example, “you already voted once, but with another address”. Or “you already got this airdrop, so don’t try to claim more with another address”. Or “we can’t sell this token because our company has KYC/AML compliance obligations”.

Fractal maintains this registry and keeps it up to date and growing over time with every new onboarding.

Our first DID registry will launch this month on Karura to support the launch of Citizend — a partnership between Fractal, Acala, RMRK and Outlier Ventures. It’s built on fairness — it uses identity proofs to ensure that everyone’s vote counts the same and that every DAO member gets the same rights.

Our registry is open source, so anyone else wanting to verify identities can take our code and deploy, populate and maintain their registry. We welcome diversity in identity verification, and can’t wait to see what we learn from other approaches.

  • We’re now ready to get started on building and maintaining this registry for the Harmony community.

Help needed

  • Input and feedback
    • There are several approaches to decentralized identity, each with different trade-offs. We would like to know what aspects and use cases of identity are more valuable for the Harmony community, to inform future developments.
  • Joint marketing
    • The more folks onboard to the identity registry in Harmony, the more powerful it becomes. We want to work with Harmony, and projects building on Harmony for whom identity is important, to promote and incentivize onboarding to the Fractal community and beyond.

Milestones

  • Milestone 1: Building (Q2 2022)
    • conducting product discovery effort with the Harmony community to identity
    • tweaking our registry based on this discovery effort
    • auditing and deploying the DID registry
    • publishing developer documentation and tooling for interacting with the registry, both in web3 and web2
    • publishing attester documentation for deploying alternative DID registries
  • Milestone 2: Growth (Q3 2022)
    • running incentive program to onboard at least 5,000 real identities to Harmony

Proposal ask

  • $150k for milestone 1: covers discovery, development, audit, deployment and documentation efforts
  • $150k for milestone 2: covers user acquisition costs

Metrics for success

  • Milestone 1: DID registry ready and documented
  • Milestone 2: 5,000 verified identities in DID registry

External links

4 Likes
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Thanks for your proposal, it has been assigned and the team will review and respond shortly :blue_heart:

1 Like
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As a community member I would like to see Harmony closely review this proposal. Like the OP indicates, building infrastructure that makes identity a feature and lends itself to future and credible regulation is important.

While I lean on the expertise of the Harmony core team, I fully support this proposal as I currently understand it.

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Thanks for getting back to me so quickly — looking forward to your response. I’m on your Discord (juliosantos#8398), if you need a direct channel.

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Thank you for your kind words. What we propose doesn’t stop at infrastructure — it’s about breathing life into that infrastructure as well. Bridging humans to Harmony, if you will :slight_smile:

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From what I read this will keep your privacy but verify you as real human i.e better than KYC (which I think it is technically an illegal invasion of privacy).

If so this is huge and a step closet to ZPK.
Good lack with the grant, I support !!

I would also want to collaborate by the end of the year to implement DID to Harmony Pay

I am also pencilling you in for this - Harmony London International event -for a talk od a presentation lets see how this event will form

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@juliosantos Welcome to Harmony.

I’d urge you to do the discovery ahead of time to justify the need for a DID solution. What’s the best use case today to have a DID on Harmony?

Also, how does Fractal compare with Evernym, Uport, Everest, and Identity.com (Civic)?

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With regards to the ask:

  • how is the first $150k going to be used for discovery/development? Harmony is an EVM compatible chain, can you break down the cost estimate further?
  • why $150k for user acquisition cost? for 5K identities, that would be $30/identity, that’s a pretty high customer acquisition cost (CAC) rate

With regards to the metrics:

  • what does “DID registry ready” mean here?
  • is there a playbook on gaining 5K verified identities? via what channel/project?
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Appreciate your engagement @Jacksteroo, these are great questions. I’ll do my best to address them.

I’d urge you to do the discovery ahead of time to justify the need for a DID solution. What’s the best use case today to have a DID on Harmony?

The best use case today to offer a DID registry on Harmony is to create an attractor for projects requiring identity, starting with launchpads and all the projects they help fund. Here’s why that’s important.

We have done plenty of discovery about DIDs and their relevance for the crypto space. Our first experiments with decentralized identity date back to 2018. In 2020, we helped Polymath build a DID registry for their regulated blockchain. Last year, we built a data wallet with selective disclosure capabilities, just shy of 100k downloads. And this year we’ve built the DID registry that powers citizend’s 1-person-1-vote and token sales, launching in May.

Perhaps more importantly, we’ve seen our web3 partners struggle with integrating web2 solutions. For example, we work closely with a number of launchpads. Most token sales require KYC; we’ve helped dozens of them, and witnessed first hand how unwieldy the user experience can be, and how burdensome some of the workarounds are.

In short: many web3 organizations and projects require identity as a feature, at the very least for their token sale. Transparent and decentralized fundraising is superior in every way to backroom VC deals, and the less friction exists for meeting their KYC requirements the more popular they will become. All token launchpads are looking for web3-compatible solutions to their KYC problem, and we offer both the technical layer and the verification work. The best use case today to have a DID on Harmony is to create an attractor for projects requiring identity, starting with launchpads and all the projects they help fund.And that’s just the start. Identity is the key to bring trillions of institutional liquidity into the space, by enabling authorized trades with verified participants. And it unlocks democracy: we want all DAOs to have 1-person-1-vote governance at their disposal.

how does Fractal compare with Evernym, Uport, Everest, and Identity.com (Civic)?

In short, we’re more than technology — we have been an identity validator/verifier for over 4 years, and got quite good at it at scale (1M users, almost half verified).

These are all interesting initiatives, but their focus is more capabilities (infrastructure and marketplaces), automations (which only go so far), and standards (which we’re grateful for). What makes Fractal different is that we first mastered the hard and “boring” work of identity verification before moving to improve the technical layer.

We’re experts in identity verification at any level (from human uniqueness to full KYC/AML) and at any scale (on busy days, our team performs way over 10,000 verifications). We gained enormous experience through working with dozens of clients (Ocean Protocol, eToro, Polymath, Gnosis, Fantomstarter, STEX, CardStarter…). We’ve built a community of almost 1M users, almost half with fully verified identities. And we offer them the best support you’ll find in the space, because crypto has a global userbase and for a lot of people this is their first time doing identity verification.

Evernym and uPort are OGs in the self-sovereign identity space who built some impressive infrastructure for identity on and off-chain, and they’re primarily a technology play. More recently, Identity.com together with Civic also help with identity verification, but I haven’t seen them much in the wild yet. They have a strong brand and we respect their work, but we rarely see them implemented, or hear about them from our partners.

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Thanks for the questions @Jacksteroo — responses below, let me know what you think!

how is the first $150k going to be used for discovery/development? Harmony is an EVM compatible chain, can you break down the cost estimate further?

If we looked at this from a “time and materials” perspective, as a software agency would, we’d probably be looking at a lower number like $85k given what we expect:

  • $30k: 1 month of product work for Harmony-specific discovery (engaging with your core team, builders and community to gather the most useful tweaks to our registry design)
  • $30k: 1 month of engineering work to implement the results of discovery into the code, tests, and documentation
  • $15k: external audit
  • $5k: a week of engineering work to implement review fixes
  • $5k: a week of engineering work to deploy the registry and test it in production

Because we’re not a software agency, we arrived at $150k very differently: we see it as a measure of the opportunity cost we incur on refocusing some of our organization on Harmony, especially given the 3-months exclusivity you request.

why $150k for user acquisition cost? for 5K identities, that would be $30/identity, that’s a pretty high customer acquisition cost (CAC) rate

This is not a service charge: the entirety of these funds will be spent in user incentivization. We plan on spending the same amount out of pocket to inform users about Harmony and nudge them to join your community, for example by purchasing ONE to distribute to their newly created Harmony wallets so they can get started with your dApps. So, since grants are paid after milestones are hit, we see these $150k as a refund, not a payment.

Something important is that these $30 are more than a CAC: they’re also about keeping the registry up to date. Documents expire and need to be reverified. AML lists change all the time. People will want us to verify and add other addresses they control to the registry. And, for all of these things, there’s support efforts involved.

Even ignoring all that, our experience shows us $30 is quite a low CAC. One of the reasons our partners work with us is because we have a large and engaged verified community, who we can promote their products with, helping them grow. We’ve helped several of our partners with user aquisition, and can say from experience that CACs have ranged between $25 and $150 (not including identity verification). And market benchmarks (e.g. here and here and here) show even higher numbers: any use case related to finance consistently sees CACs above $150.

what does “DID registry ready” mean here?

It means that all the items in milestone 1 are completed: product discovery with Harmony, implementing discovery results, auditing and deploying the DID registry, publishing developer documentation and tooling for interacting with the registry, and publishing attester documentation for deploying alternative DID registries.

Additionally, it means a commitment to utility: Fractal will keep the registry up to date for all identities we onboard.

is there a playbook on gaining 5K verified identities? via what channel/project?

We have almost 1M users in our community, and almost half went through identity verification. There’s a high level of trust and engagement, so they take our outreach seriously. We have done this multiple times, both for new internal products (the data wallet mentioned above) and new partner products (as described re CACs above).

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@juliosantos thanks for the detailed replies. If you can specify other lighter-touch integration options, we’re happy to see this laid out as well.

I’d really love to see which ecosystem builder at Harmony will be interested with integrating with Fractal. If there are any DeFi builders at Harmony who wish to discuss a possible integration with them, we’ll be happy to make an introduction. This will bolster the utility and kicks off the fly wheel.

Otherwise we will have to pause the discussion due to the timing and priorities in Harmony’s ecosystem. We’ll keep this thread alive to see further engagements here or elsewhere on this forum.

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Appreciate the feedback @jacksteroo!

I’d really love to see which ecosystem builder at Harmony will be interested with integrating with Fractal […] we’ll be happy to make an introduction

And we’ll be happy to receive those introductions! As your dApps grow in number and maturity, their need for identity solutions will be inevitable. We’ve been around since 2017, and will be around to serve you when the time comes.

If you can specify other lighter-touch integration options, we’re happy to see this laid out as well

Our idea was to build and populate an on-chain registry for it to be “open for business” as soon as the first dApps need it. I still think this would make sense, but naturally I can understand you need to prioritize, and going with “if you build it, they will come” can sometimes be defocusing.

That said, it’s important to mention that this grant application was much more about “working with the Harmony ecosystem” than anything else. So, while the registry approach might not take priority right now, I want to mention that any Harmony dApp can integrate with us even without the registry.

Fractal’s verifiable credentials are ready to integrate today

We’re recently published documentation for our credential proof verification solution. It’s an alternative method for smart contract authorization that doesn’t require a registry to be deployed and populated first. It allows dApps to get a KYC credential for a user instantly, if the user’s address belongs to any of our 1M users.

166981914-ed1d1888-9858-4989-8054-014a1937daae
166981914-ed1d1888-9858-4989-8054-014a1937daae2002Ă—412 92.5 KB

Have a look at the docs on github. If any builder is interested in privacy-preserving transaction authorization — from uniqueness for sybil-resistance to KYC for compliance — please reach out to me directly and I’ll help you get set up!

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Made an intro to C14, a fiat ramp startup building on Harmony. I’m guessing you guys are already starting to be sync’ing up by now.

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Hey Team, can someone from Team Fractal reach out to Rocket Monsters, I have a question for you in regards to your services. Thank you!