Identity aggregator what blockchains really need for future projects, Litentry opens some doors.
When I’m out hunting small-cap altcoin gems. There are several things that I look for factors that when brought together substantially increase the chance that the pig will be bang on the money. These include factors such as, solving a pressing problem, being one of the first to do it, while being built in a less saturated ecosystem that has a well-supported token and one of the most promising projects that I’ve recently found that meets these criteria is Litentry (LIT).
The ID Problem
To understand Litentry, you have to appreciate the problem that is trying to solve. Quite simply it all comes down to decentralized identity management.
Essentially, how do you attach unique identities to certain users on a decentralized blockchain? How do you know that a particular wallet address with which we are dealing is controlled by a unique individual? How can you tell who that individual is now?
There are certain limits to the potential that DeFi can achieve without being able to attach identities to addresses.
For example, how can we deal with things like lending and credit delegation? Sure, you can borrow funds and DeFi right now. But, all of these loans are heavily over collateralized.
To this day, I do not know of any DeFi protocol that offers lending functionality for loans below the minimum of 140% collateralization. Now, this is mainly for a very simple point. You don’t know who you’re lending to you.
Have no recourse if they don’t pay back the loan you can’t verify their DeFi credit record. So, it’s only logical that you’re going to ask for more collateral than they’re asking for the loan.
On the credit, to delegation point, I am not going to stand a surety for anyone else on the blockchain unless I know who the hell we are. That would be daft. But that’s just one of the issues that come without identity attribution.
Another one comes to decentralized governance. Currently, most Proof of State (PoS) blockchains have a governance model where token holdings determine the weight of someone’s voice.
You may think that the governance mechanism is decentralized because there are several different wallets. However, you’ve no way of knowing whether those wallets are controlled by a small group of individuals. Read More…