Victor Ugochukwu · Dec 14, 2020 . 5min read
Ontology to Provide Digital Identity Solutions for DeFi
Ontology, a NEO-based platform for decentralized identity and data announces a new feature that helps developers to build better DeFi platforms with the help of Trust Score, Reusable KYC and the centralized DocuSign functionality.
By Victor Ugochukwu · Jul 27, 2020 . 7min read
In a recent tweet, Ontology, a NEO-based platform for decentralized identity and data announces a new digital identity for DeFi platforms. With this, DeFi project developers can tap into it implementing the feature’s Trust Score, Reusable KYC and the centralized DocuSign functionality.
This update comes amidst the massive interest that DeFi keeps receiving over the months. Specifically, this is another step in blockchain interoperability as it helps users who may be on Compound protocol, an Ethereum-based DeFi but would want to make use of Ontology’s rich tools in digital identity. Ontology’s unique multi-chain design lets businesses build robust blockchains tailored to their particular needs. Thus, it allows for a greater variety of use cases to exist. As at now, many industries tackle distinct issues of authentication and reconciliation.
The concept of Self-sovereign identity is new but critically applicable in DeFi.
Blockchain technology ushered in a new paradigm known as self-sovereign identity. Undoubtedly, one of the problems that the internet ushered in is the problem of digital identity. This is especially rife in areas like identity theft and the centralization of user data. The latter brings about data privacy abuse as well as inadvertent risks that arise upon data breach by hackers.
But Self-sovereign identity systems through blockchains provides leeway to most of these problems. It does this by using decentralized identifiers to look and verify data without involving a central directory.
We can provide the missing link of what we already know about cryptography through blockchain technology. This allows people to prove things about themselves using decentralized, verifiable credentials just as they do offline.
The concept of Reusable KYC was first made famous by Civic, another blockchain-based identity platform.
Trust Score provided by Ontology’s Digital Identity for DeFi could help unlock under collateralized as well as entirely unsecured loans.
As most DeFi platforms continue to evolve, we may see the rise of under collateralized debt position or even unsecured loans becoming available and accessible on the platforms. This type of lending will have to rely on some form of an identity system. This will allow borrowers to build up credit and increase their borrowing power like with the credit scores of today. However, instead of a centralized component managing this data, all of is recorded on the public blockchain. The crucial objective in this regard is that a decentralized identity will have to be both universal and privacy-preserving. And this is what this Ontology update should help usher and possibly maintain its growth.
It’s worth noting that Aave already implemented Credit Delegation on its platform which allows users to deposit into the protocol’s smart contract and then delegate their credit lines. Since this would rely on the value judgment of the person commissioning his credit line, perhaps Ontology’s digital identity for DeFi which assigns trust scores to “third-party” borrowers could help reduce possible risks.