dForce Partners up with zCloak to Bring Decentralized Identity to DeFi!
Decentralised Finance (DeFi), which is open to all, enables the development of new financial products as well as the streamlining of trading for greater scale and liquidity. With smart contracts collecting tens of billions of dollars in digital assets, this new frontier has become more appealing for retailers to explore.
However, standing in the way of an involvement of traditional financial institutions and of an adoption of personalized services is the pseudonymity granted by the blockchain, in contrast with the know-your-customer (KYC) requirements typically adopted in the Traditional Finance.
A new paradigm of web3 digital identity solutions based on the concept of verifiable credentials, on the other hand, is providing a way forward and building on one of the most popular narratives in 2023.
What if tools could be developed that allow DeFi players to confirm identity without sacrificing privacy, ensuring compliance while preserving the anonymity that is associated with the crypto world? It may appear paradoxical, but that is what the new generation of identity solutions, such as zCloak, enable, opening up new possibilities for DeFi.
So what exactly are verifiable credentials?
In a nutshell, verifiable credentials are a digital identity verification standard developed by the World Wide Web Consortium (W3C) and a number of other organisations.
Verifiable credentials allow anyone to use cryptographic proofs to prove who they are without having to overshare personal information, allowing the creation of a decentralised digital identity system. They are made possible by decentralised identifiers, which are pieces of code that ensure a user’s identity when they share a verifiable credential.
DID and DeFi: a future yet to unveil
The transformative power of a DeFi powered by verifiable credentials cannot be overstated, as such integration would open up new avenues of personalised investment opportunities, credit-based lending, portfolio diversification, and product innovation.
Today, DeFi users interact with services pseudonymously by using their wallet addresses. As a result, because the lender does not know who might borrow their assets, greater security is required to compensate for credit risk, and borrowing has required over-collateralisation.
However, greater adoption of DID platforms may open up several new opportunities for money markets: For example, dForce could develop on-chain solutions already available in Traditional Finance, such as a required collateral and an interest rate based on a user’s personal credit reputation.
In this context, dForce is pleased to announce that it has closed a partnership with zCloak’s Valid ID!
About zCloak Network
zCloak Network is a privacy-first DID and verifiable computation infrastructure. It aims to deliver the Web3 dream of Self-Sovereignty by moving both the storage and the computation of user data into user device from centralized servers. The integrity of user computation is proven by a STARK-based ZK-VM in a browser extension. zCloak’s W3C compatible DID system can mirror real-world legal status and reputation in DeSoc. With zCloak Network, people can use their real-world data for e.g. DeFi, Identity, Biometric applications without disclosing their privacy. zCloak Network is chain-agnostic — its identity and ZKP service can be served for most public blockchains.
Learn more about zCloak:
About Valid ID
The Valid ID platform is the zCloak’s flagship product. It aims to rebuild the Web of Trust based on verifiable credentials and attestations. It can connect the real-world information of an entity such as its website, Twitter handle, email etc to its W3C DID and public keys.
About dForce
dForce is a decentralized stablecoin protocol powered by an integrated DeFi matrix (assets, lending, trading, and bridge). dForce is currently available on seven different blockchains (Ethereum, Arbitrum, Optimism, BSC, Polygon, Avalanche, KAVA, and now also Conflux) and boasts $200 million in Total Assets.
dForce protocols have undergone extensive smart contract reviews by a number of best-in-class audit firms, including Trail of Bits, ConsenSys Diligence, Certora, Quantstamp, PeckShield, Slowmist, SECBIT, with a bug bounty launched through Immunefi.
Learn more about dForce:
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