Re-Imagining Decentralized Identification for DAOs: Unika Use Case
Decentralized autonomous organizations (DAOs) are getting popular nowadays among technological investors and entrepreneurs of Web3. This form of management based on democracy is actively invading DeFi and other segments of blockchain. In the case of financial operations, it is capable of supplanting the traditional banking system and cutting out intermediaries between entities in economic communication. In addition to Investment, Venture, and Grant DAOs, there are also Social, Media, Service, Protocol, and other types of DAOs. Any project, community, or group of people on blockchain could pick up the DAO form of management when there is no central body (CEO or board) to issue decisions and each member of the community shares a common goal and tries to act in the best interest of the group. DAO could also represent a new trend in asset ownership and high-end collecting which allows people to work collaboratively and share ideas on how to acquire rare collectibles or artworks.
All decisions in a DAO are made through voting and the voting power is represented by tokens, which are cryptocurrencies connected to a certain project. All members of the community who have any number of tokens could vote.
How Decisions are Made in DAO?
The rules of governance in any DAO are written in smart contracts — software code running on a blockchain. Smart contracts provide the framework for DAO to operate, they are visible, publicly auditable, and verifiable. Anyone who is joining DAO agrees to these smart contracts. Anyway, through DAO voting they could be changed or some new rules can be added. Due to their self-executing nature, they offer accuracy, efficiency, speed, transparency, and security. Although sometimes the DAO voting itself could be subjected to some fraud regarding the decision-making procedure.
In some DAOs the voting power is represented by the DAO token and the participant with the biggest amount of tokens might have more chances to influence the voting process, some accept the reputation of participants and their importance for the DAO infrastructure. But recently, new types of DAO are seeking true democracy when one unique individual has only one vote. Similarly to how democracy was executed in Ancient Greece in the 6th ct BC when it was introduced by Cleisthenes, the Athenian leader.
DAOs Risks and Hazards
As any other service operating in Web3, DAOs could be subjected to malicious attacks from any anonymous participant. Sometimes DAO voting could be violated by individuals creating a network of fake accounts that vote against the majority and could lead the decision-making in the wrong direction. Sometimes fake participants through multiple blockchain addresses spam the network with proposals having the same malicious idea in mind, to manipulate the DAO governance framework. These are just some examples of classy Sybil attacks.
Also, some DAOs heavily rely on experienced external contributors. Pursuing top matching candidates to join a DAO, identity issues are sometimes put aside though this could be a big mistake because anonymous contributors could harm the DAO system much harder than a Sybil attack. They can put harmful parts in the initial code of DAO smart contracts and easily activate them.
Decentralized Identity Tools For DAOs
Proof of Humanity (PoH)
Proof of Humanity is an ERC-20 registry developed by Kleros where offline users’ identities are linked to their blockchain addresses. The requirements for the newcomers are as follows: to submit a video, send a deposit, and an invitation from someone who is already registered in the system. Moreover, there are monetary rewards for the participants who could spot fake accounts. Anyway, we could question the procedure of identification, because it is unclear how the participant-to-be should send their videos and also how this sensitive data will be stored.
Proof of Existence (PoE)
The first entity to issue non-transferable ERC20 tokens called ‘Proof-of-Existence’ was Governor DAO. The token is based on the technology of biometric authentication. The onboarding procedure is as follows: users log in with MetaMask covering their real face. Then hashing data-points are collected from visual and audio data provided and stored in their onboarding portal. Based on this, a unique encrypted hash is created which represents the individual. Then this hash is linked by the system with the input blockchain address. This ‘Proof-of-Existence’ token is attached to users’ cryptowallets indefinitely and represents a source of identity. If a user wants to register another account, then on the stage of sensory data provision, the same hash will be issued which supposedly precludes the generation of multiple fake accounts, which means that the process is not anonymous and users’ personal data could be easily reached out. Again, the issue of data storage and obtaining this sensory data from the user, which is private, needs clarification and Governor DAO hasn’t provided yet all the needed answers to make this technology compliant with the Web3 paradigm of confidentiality.
Unika
What is Unika?
Unika has been created by the Unika team for a plethora of purposes and all of them are aimed at users’ private data protection and at the same time fraud prevention. The technology is developed on blockchain and could be easily applied for Web2 as well as Web3. Unika tackled the problem of identity in DAO in a much grander fashion. It links users’ biometric data with their blockchain addresses.
How Does Unika Link Users’ Blockchain Addresses with Biometrics?
The process of users’ identification goes as follows: users send requests to the Unika smart contract and are redirected to the network of validators. Validators and users make sure that the Unika software runs in the Trusted Execution Environment (TEE) and the interactive stage of identification starts, which is not long, though. Then the sensory data received is sent to encrypted decentralized storages. Eventually, we have anonymously identified users because none of their personal data like name, surname, or an ID number is required and yet the blockchain addresses are linked with unique people.
How Does Unika Solve the Problem of Multi-accounts ?
The next stage after the participants identification is that the DAO service provides Unika with the list of voters. The request sent to Unika is the following: ‘Are there any participants who provided more than one blockchain address during the registration?’ Unika executes an immediate fact-checking procedure and replies to the DAO with a short answer: ‘Yes’ or ‘No’ regarding each participant. By doing so, the probability of a Sybil attack is drastically minimized because the final list of participants will include only one unique person (based on their biometric data) and only one blockchain address connected to this person.
Unika can either constitute a DAO identification system or act as partner software to prevent Sybil attacks with any DAO irrespective of the blockchain.
Also, in the near future, there is a high probability that Unika will be capable of not only providing anonymous personal identification for DAO structures but also getting track of users’ behavior online and scoring DAO participants based on their reputation, particular skills, experiences, etc.
Summing Up
The problem of decentralized identification tools deficiency for DAOs cannot be underestimated. They help to:
- protect DAO participants’ data;
- increase DAO security;
- improve DAO resilience;
- protect DAO from Sybil attacks;
- prevent fraudulent behavior of any DAO contributors.
Based on a quick comparison of decentralized identity tools mentioned in the article: Unika, PoH, and PoE it’s quite clear that some are more promising than others in terms of security, anonymity, and decentralization.
Stay connected to witness our project grow and deliver much value not only to DAOs but many other entities in Web3 as well as Web2. We’ll be happy to talk to you or learn your feedback — just drop us a line. Also, do keep an eye on our social networks!
