On-chain DID Deposits on KILT: Why They Exist
Upgrading your DID currently requires a deposit of 2 KILT. Let’s dive into why this deposit exists and how it works.
First it’s important to understand how DIDs (decentralized identifiers) form the core of your digital identity on KILT. After generating your DID in the Sporran wallet for free, you can start building your digital identity by adding credentials such as your social media handles.
Upgrading your free DID to an on-chain DID and anchoring it on the KILT blockchain enables applications “built on KILT” that make Web3 more accessible. For instance, you can add a unique, easily readable web3name to represent the DID’s string of numbers and letters. You can also link some of your credentials publicly, adding an extra layer of verification to your identity. You can also use your on-chain DID to sign any digital files — PDFs, audio, video, software — privately and securely using DIDsign.
In simple terms, a blockchain is a digital, decentralized database, or record of transactions. Each digital bookkeeper in the system (in this case, collators on the KILT blockchain), has a copy of all the transactions on the chain. Since this amounts to a lot of data that is continually being replicated and must be accessible, it’s important that unnecessary data be deleted.
As a Kusama parachain in the Polkadot ecosystem, KILT uses an energy-efficient system in which the fee required to write and store this data on the blockchain is calculated based on the size of the transaction.
A simple token transfer or writing a hash (a number to represent data) on the KILT blockchain doesn’t use much computing or storage power, allowing low fees for transactions and credentials — as little as a few cents. In contrast, an on-chain DID requires a lot more storage power, as a DID can hold many different keys and endpoints in order to facilitate its functions. All this data needs to be stored on the KILT blockchain for permanent accessibility. Using a formula based on these storage needs, the sum of 2 KILT was calculated to meet these costs.
Deposits vs. fees
Instead of charging a 2 KILT fee for an on-chain DID, deposits encourage users to delete DIDs they no longer need, and deters spamming.
The deposit stays on the balance of the account that paid, but is locked and can’t be used for transfers, staking or voting. If the DID owner later chooses to delete their on-chain DID, the collators (who run the KILT servers) will delete this DID from their database so that it is just recorded in the history but no longer occupies storage. The 2 KILT Coins are then unlocked and added to the payee’s free balance (minus a small transaction fee). This creates an incentive to delete unused DIDs rather than leaving them sitting on the blockchain and wasting storage space.
However, since the total supply of pre-minted KILT Coins was around 150 million KILT Coins at genesis, isn’t this limiting the potential of the KILT blockchain to hold more than 75 million DIDs? Especially considering other factors such as the need for KILT Coins to pay transaction fees, for staking, for Treasury funding, and for future projects on the roadmap?
This is where the flexibility of the KILT blockchain comes into play, allowing governance on KILT to change the deposit as circumstances change. As the number of on-chain DIDs increases and more KILT Coins are locked as deposits, KILT Coin holders can propose and vote in an on-chain referendum to lower the deposit for future DIDs. A vote may also be initiated by any KILT Coin holder if the price of the KILT Coin should change in a way that makes the deposit unreasonably expensive.
Transferring deposit fees
While a change in the cost of a deposit for an on-chain DID may not be a major issue for individuals, even a small change could be significant for companies who have paid the deposit for a large number of employees. In this case, rather than being locked into the original deposit, they have the option of unlocking the difference. In that case, if the deposit was initially 2 KILT and was then reduced to 0.5, for example, then the company could unlock 1.5 KILT Coins for each deposit paid, while still covering the 0.5 deposit on the individual employee’s account for their DID.
KILT’s mission is to return control over personal data to its owner, restoring privacy to the individual. On-chain DIDs and DIDsign are one step towards achieving this, using the KILT blockchain to create a decentralized digital identity and to sign digital documents privately and safely without unnecessary sharing of data.
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