The Importance of Attestations in Web3 Identity Verification
While identity verification is a common practice in the Web2 world, it has not yet become a reality in Web3. However, with virtual asset legislation being passed by regulators around the world, on-chain “know your customer” (KYC) processes are becoming an inevitable requirement for compliance. KYC aims to verify the validity of an individual’s identity in order to prevent fraud and money laundering. In the world of blockchain, where bots can wreak havoc by siphoning off large sums of money, trust in human identity is crucial.
However, for decentralized finance (DeFi) to thrive, more than just proof of being human is needed. The unregulated nature of DeFi poses risks, as it allows for exploitation and lacks enforceable regulations. Therefore, Web3 requires not only identity verification but also proof of trust.
Traditional KYC processes are not sufficient for this purpose, as they cannot determine an individual’s trustworthiness unless they are explicitly listed on a sanction list. To tackle this issue, Ethereum founding member Steve Dakh is building the Ethereum Attestation Service (EAS), which allows entities to make attestations on the blockchain about anything. These attestations can then be used to build a user’s reputation and establish trust.
Attestations are claims made by one identity about another identity, which can be independently verified. They work by referencing identifiers such as legal names, addresses, or social security numbers. For example, a U.S. passport attests to an individual’s citizenship by using their legal name and can be verified by border agents comparing it to a database.
On the blockchain, attestations are tied to on-chain identifiers, such as decentralized identifiers (DIDs), wallets, or multi-signature addresses. Identity and reputation are represented as an aggregate of attestations tied to these identifiers. The value of these attestations is relative to the trust the receiver has in the entities that make them.
Attestations, combined with zero-knowledge proofs, enable entities to prove certain aspects of their identity without revealing the entire contents of their personal information. This is useful for KYC processes, as individuals can independently verify different aspects of their identity as required for compliance.
On-chain attestations have the flexibility to be made for practically anything, allowing for meaningful interactions on a large scale. They can be based on traditional attestations, such as birthday or accredited investor status, as well as other types of information, such as music taste, Twitter profiles, or proof of authorship. This flexibility allows participants to choose which entities they trust and how they want to measure trust quantitatively or qualitatively.
Furthermore, attestations enable modularity, as multiple attestations can be combined to determine an identity’s trustworthiness. This means that certain attestations can be considered trustworthy even if others are not. Protocols like the Ethereum Attestation Service enable these interactions between identities and reputations to be represented on-chain and interoperable between platforms.
While the technical infrastructure for on-chain attestations is still in its infancy, the potential for flexible and modular identity models is immense. As this technology progresses, decentralized finance will be able to thrive securely and responsibly. Web3 is set to revolutionize identity verification and trust-building processes, paving the way for a new era of secure and transparent transactions.
