ADI Whitelist: A Universal Identity Layer

Written by TJ

On May 31, 2022

Accumulate is announcing a whitelist for 10,000 Web3 enthusiasts to join in order to gain early access to claim a unique Accumulate Digital Identifier or ADI, which you will be able to use once the Accumulate Mainnet launches. 

What are ADIs?  

ADIs refer to a system for assigning unique digital identities to assets, individuals, or entities on the blockchain. Traditional blockchains are organized based on randomly generated public and private key pairs which are used to store funds and record transactions on a distributed ledger.  

Current blockchain key management systems lack simplicity for the average user. The common approach of using the first and last characters of an address can leave users exposed to what is called the ‘man-in-the-middle attack’, which is a form of cyber attack where a bad actor could intercept or manipulate a transaction by injecting wrong information or changing the recipient’s address to their own. This is made easier due to the complex nature of randomly generated addresses.

Additionally, due to these addresses being randomly generated, public & private key management systems make it difficult to store ordered data sets or assign different levels of permissions to specific keys.  

Accumulate Digital Identifiers (ADIs) are human-readable addresses similar to website URLs that are chosen by individuals or assigned by organizations to represent their presence on the blockchain. 

ADIs enable more flexibility and deployment of complex operations by issuing a hierarchy of keys with different permissions or levels of security. 

This allows entities operating on the blockchain to more easily build standardized yet scalable protocols for other entities to interact with and exchange sensitive information with them based on access permissions granted for specific data sets.   

Using ADIs, Accumulate can serve as the de-facto communication and audit layer between blockchains, enabling the seamless transfer of tokens or other kinds of digital assets between ADIs across different chains regardless of their consensus mechanism. 

Soul Bound NFTs

While ADIs have the potential to become the primary form of digital identity on-chain, the reality is that digital identifiers are an exploding facet of the crypto space, with several prominent blockchains and Dapps offering some form of digital identity solution for users who wish to create a domain name, build a reputation, and conduct verifications on-chain.

The most popular examples include the Ethereum Name Service (ENS), Civic, Self-key, and Social KYC. 

In the past week, the public interest in digital identifiers ascended to new heights when Ethereum co-founder Vitalik Buterin published a paper titled Decentralized Society: Finding Web3’s Soul. In this 37-page paper, he proposes the idea of creating ‘Soul-bound tokens’ or SBTs, which are a type of NFT that is non-transferrable and also revocable by the owner of the SBT. 

Typically when we talk about a person’s on-chain digital identity, we are usually referring to an NFT that is unique, non-divisible, and cannot be exchanged one-for-one with another NFT. 

The problem with using NFTs in their current state as a form of identity is that their ownership is transferable, which makes their ability to provide a reliable authentication of certain information limited.  

For example, if a University decides to issue degrees in the form of NFTs to graduating students, there is no guarantee that each issued NFT will remain tied to the owner of the wallet that receives it. The owner of the wallet may receive a generous offer from someone to sell their NFT, or they might transfer it to a different wallet or lose access entirely if they are hacked. 

In any of those cases, even if the NFT contains a unique identifier code and metadata, there is no way of verifying that the current owner of the NFT is also the one who minted or originally received it. 

Soul Bound Tokens or SBTs solve this problem by permanently tying a token to the wallet address that receives it, meaning that it cannot be transferred to another address once minted. In the same way that a person and their physical identity (or their ‘soul’) are intrinsically tied together, so is the case with an SBT and the original owner’s wallet. 

This permanent connection between the SBT and wallet address enhances one’s ability to exist as a real and identifiable person on-chain. SBTs can be used to represent real-world credentials, help online communities create better reputation systems, cut down on fraud due to the permanent association of one’s actions to their SBT, and more. 

The biggest benefit of all is the ability for real-world entities to represent themselves on-chain through wallet addresses that hold several SBTs, each serving a specific purpose (proof of credentials, proof of partnerships, proof of attendance to certain events, etc.). This also makes it possible for individuals and entities to begin to establish a new credit system on-chain, which would allow people to receive under-collateralized loans that are tied to their SBT.  

SBTs can also help DAOs and other types of online communities be more precise in who they choose to issue memberships to based on the verifiable track record of SBT holders. 

When it comes to verifying the number of members or the level of decentralization of a particular crypto community, SBTs can make it possible to distinguish between unique wallets in a way that has not been possible before. 

The obvious risk with SBTs is what happens if your wallet gets hacked. In this case, the methods for recovery include social recovery, community recovery, and revocability. 

With social recovery, the owner of an SBT can assign ‘guardians’ who will have the authority to change the private keys of their wallet. So in the event that they are ever hacked, the guardians (who would most likely be close friends or family) could change the keys to prevent the attacker from accessing the SBT or spending any other tokens in the wallet. 

SBT recovery can also be handled through the voting consensus of a community. With this approach, you would need a majority consensus from members of your Soul community who know the person that was hacked to authorize the changing of their private keys.     

SBTs also have another valuable feature for solving this problem, which is revocability. The issuer of an SBT has the ability to burn a token and then re-issue it to a new wallet. This comes in handy in the event of a hack because the SBT can simply be removed from the hacked wallet and recreated in the original owner’s new wallet. 

ADIs or Soul Bound NFTs: Consolidating Your On-Chain Digital Identity 

There are a lot of parallels that can be drawn between ADIs and SBTs. For one, ADIs allow users to create ‘Authorization Schemes’ that make it possible for holders of an ADI to approve and revoke access to certain information. This is similar to the revocability feature that SBTs offer, and can also be a useful solution to the problem of transferring ID’s. 

In the event that a user with an assigned ADI transfers it to another wallet, there could be an authorization scheme put in place to revoke any permissions or access granted to the sending and receiving wallet, thereby making the ADI no longer useful. You could also place frequent verification checks in place to ensure that the current holder of an ADI is still the original person or entity who received it. If the holder fails a verification check, then their ADI could be automatically revoked pending further review from other members of the network. 

Creating a Universal Identity Layer 

A key advantage of ADIs is the emphasis on multi-chain interoperability with other digital identifier solutions. 

One of the biggest challenges that the Web3 space faces today is the lack of connectivity between the dozens of other blockchain-based identity solutions, each of which is vying for the same goal of achieving a universal identity layer. 

A decentralized identity solution is only as valuable as the number of individuals or entities it represents. The smaller the number of adopters of a digital identity format, the less useful each ID will be when it comes to accurately representing the online or offline behavior and reputation of its holder.  

The ultimate purpose of a digital identity is to serve as a single source of truth and a standardized form of accounting for all on-chain and off-chain activities that the identity holder has participated in and for all digitally native and digitized (or tokenized) assets that they hold. 

Under this description, it is essential that a digital ID be integrated into every Dapp or blockchain that a user has adopted in order to represent that user in the most accurate and complete way possible. 

To this end, the Accumulate is not just focused on creating its own digital identity layer for users to adopt, it is also focused on partnering with existing digital identity providers in order to consolidate these services under one universal identity layer that can most accurately represent the Web3 space in its entirety. 

On Accumulate, we aim to enable users who hold an SBT, an ENS domain, or any other form of digital identity to convert them into our ADI format, similar to how BTC can become WBTC by being embedded into a smart contract that converts the token to an ERC-20 token, thereby giving it functionality within the Ethereum ecosystem.  

Each uniquely formed identity on a different chain or Dapp could be given an ADI wrapper that would enable it to function as a unique ADI within the Accumulate Network.

Ultimately, enabling interoperability between on-chain digital IDs to create a cross-chain universal identity layer will be one of the defining traits of Accumulate. 

Join the Accumulate ADI whitelist today to take part in the next phase of decentralized digital identities. 

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