Credential-based token, e.g. KYC

[IMPACT]

Our objective is to:

• Integrate more ID provider SDKs into ProofSpace (we already have Onfido)
• Enable PRISM VC issuing from ID providers for a range of checks: identity document verification, liveness check, KYC/AML, etc.
• Enable verifying organizations to set their tolerance on the age and reliability of the different identity attributes (i.e. values) using credential predicates
• Support publishing of KYC-verified token for use in smart contracts.

Our audience is:

• Organizations with regulatory requirements for KYC or customer identification
• Organizations for whom there is a business imperative (e.g. risk, marketing, customer service, etc.) for customer identification

The outputs will be:

• A standard “KYC-verified” credential schema that is used by all ID providers in ProofSpace.
• The ability to use the ProofSpace Dash to configure digital KYC steps into a service workflow in the ProofSpace App (e.g. passport photo and selfie).
• Automatic issuance of the KYC-verified credential to the end user upon completion of the digital KYC steps.
• If digital KYC steps have been completed elsewhere and the user already has their KYC-verified credential, let them use it to complete the step for which digital KYC was required.
• Publish a native or Datum token of the KYC-verified credential which can be used in a smart contract.

Possible use cases include:

• Confirming that a transaction has taken place in order to gain access to a site, service, etc.
• Confirming that a task has been fulfilled in order to execute a smart contract and receive payment

The impact will be:

• Users get a reusable KYC-verified credential that gives them access to more services and acts just like a physical ID (which is reusable for free).
• Businesses achieve cost reduction by verifying existing KYC-verified credentials rather than repeating digital KYC (at a cost of USD$1-4) for each new onboarding.
• Businesses reduce customer drop-off and churn in case a user doesn’t already have KYC-verified credential by offering the digital KYC workflow.
• Businesses and other institutions are able to exchange KYC-linked crypto tokens for improved transparency, accountability and reduction of illegal activities.
• All stakeholders gain the possibility to use KYC-verified token in smart contracts - the open way to encode “one person-one vote” principle in a smart contract.

The proposed solution addresses the challenge in the following ways:

The overall question to be addressed by the challenge is: “What solutions can we develop and implement with Atala PRISM to have the most positive impact and opportunities for rapid growth of Cardano”.

The KYC-verified PRISM credential should be one of the most frequently used and highly valued credentials in the PRISM/Cardano ecosystem. The reusability of the credential dramatically reduces the incremental cost of ID verification that otherwise occurs with one-time ID checks. One of the areas of focus of the challenge is: Self-governance of Emergent Communities. The KYC credential is high-value and enables use cases where customer identification is a requirement for business success; whether this relates to customer on-boarding, transaction verification, voter registration or user authentication.

The project is highly relevant to the key metrics for the challenge:

• The sum of realized production pilots or launches in 2022: we anticipate that this proposal will enable the use of the KYC-verified token in smart contracts in particular, and result in a wave of “one person-one vote” use cases.
• Discovery of repeatable patterns in use-cases: this is a repeatable pattern that can be used across a range of use cases: we hypothesize the KYC-verified token is the best open way to encode the “one person-one vote” rule into a smart contract.
• The number of issuers, holders, and verifiers: the pattern can be repeated across multiple use cases and this can be achieved easily with ProofSpace’s no-code solutions. The resulting increase in production deployments should increase the number of issuers, holders and verifiers, with new issuers in particular including ID providers and new verifiers including service providers who require the KYC credential to do business.
• The number of verifications performed on credentials in production: the high-value KYC-verified credential should be a driver of verifications.

Business relationships: Each KYC provider, such as Onfido, requires a business relationship and this can be a bottleneck affecting the number of available ID providers. We mitigate this risk in the following way:

• We have already integrated the Onfido SDK into ProofSpace under an existing business relationship
• We have already held in depth conversations with a number of other KYC providers who recognise this as a potentially competitive angle for their commercial teams
• We take comfort that users ultimately only need one KYC provider to fulfil the desired flow (the choice to have multiple providers is a longer-term risk mitigation strategy to avoid over-reliance on a single provider and provide options to end users).

Regulation: The utility of the KYC-verified token for mainstream financial services will be limited until regulation permits the use of reusable KYC credentials. Regulation already permits the use of reusable KYC in many jurisdictions depending on the value of the transaction, the nature of the transaction and the legal status of the transacting parties. Regulated entities wishing to adopt this technology in their business models will need to understand what is permissible given their particular context.

[FEASIBILITY]

Tasks, Milestones and Deliverables are provided below.

June

1. Research of general structure.
2. Create a trust registry of KYC operators. In the PoC stage — manual. Later it can be decentralized (see proposal “Trust Registry with Smart-Contract”, https://cardano.ideascale.com/c/idea/400313)
3. Draft open API Documentation for KYC provider interfaces, based on web hooks.
4. Draft PoC-Level of minting rules, which wait for KYC oracle before minting.

Deliverable — documentation + PoC-Level code.  

July

1. Create set of rules for tokens, which guarantees that the person who mints it always has access to one. (Poc-Level).
2. Enable revocation of KYC-check as burning transaction.
3. Deploy to ProofSpace Mobile Application: review of KYC flow,
4. Review and bug-fixing of minting rules with open and closed data. (ADD TO BUDGET)

Deliverable — repository with smart-contract for review, demo     

If we have capacity in this proposal we may make progress on the following tasks, which otherwise will be finalized through an F9/10 proposal.

F9/10: Part 1

1. Enable minting / burning of derived tokens with hidden personal data. (Poc-Level)
2. Generalization of Mobile App to support more than 1 KYC-provider 
3. Create standardized mobile API and proxy for using KYC-provider-specific interface

  Deliverable —- availability of KYC-provider token in test net.

F9/10: Part 2

1. Full implementation of small KYC-provider workplace
2. Pilot with selected KYC-provider.

Deliverable —- general availability of KYC-provider token with selected KYC provider.

The total budget for this proposal is $34,668. Our budget structure is provided as follows:

Deliverable

• $Cost

BUDGET

KYC-operator registry

• $9,040

General Structure

• $2,169.6

Webhook-based API

• $2,169.6

Smart-Contract (Poc)

• $4,339.2

Smart-Contract( Prod-1)

• $9,040

Review and bug fixing

• $2,825

Pilot

• $2,260

Cost of ID Provider package

• $2,825

TOTAL

• $34,668

Viktor Radchenko - CTO and mobile dev for ProofSpace. 20-year R&D track record. Skilled in project and product management, solution architecture, science consulting, blockchain, mobile, web, game, and embedded development. 6 publications in peer-reviewed journals.

Ruslan Shevchenko, PhD - Solution Architect and BE for ProofSpace. Skilled architect and scientific researcher with 30-years’ experience across blockchain, telecom, advertising and financial services. Researcher in the Institute of Software Systems and Founder of several successful ventures including NBI (an Internet Provider), GradSoft (a software development firm) and UA Scala user group. 10 publications in peer-reviewed journals, co-authored book entitled “Methods of Algebraic Programming” and is an active columnist for the Ukrainian developers' community portal.

Alexey Hodkov - FE/BE for ProofSpace. Talented web backend and frontend solution architect and developer with 17-years’ experience. Team leader, tech mentor and CTO in complex projects for various companies like Yandex LLC and Megogo.

Viacheslav Zhelobkov - Senior Mobile Dev for ProofSpace. Enthusiast software developer with 20 years experience in wide variety of IT areas including embedded, mobile, web, backend, etc. in roles from solo founder to Solution Architect and CTO.

Ilya Che - UI/UX for ProofSpace. Talented and multi-displinary UI/UX designer with 10+yrs experience and a skill for making complex things simple for end users. Past experience with Leantegra, ScanForce, SingleCare and others.

Nick Mason - CEO for ProofSpace. Experienced social entrepreneur and venture analyst with a proven track record of social venture funding and of starting and growing ventures in Europe and Africa. Background as Consultant venture analyst at Toniic, Head of Portfolio and Operations at BeyondMe, UK Director for Sierra Leone based education charity and Trustee for Street Child. Co-Founded ProofSpace (formerly ZAKA in 2019).

[AUDITABILITY]

Our progress in this project will be measured by the deliverables that we report in a timely manner through the Catalyst monthly reports and end of project reports.

May

Deliverable — documentation + PoC-Level code.  

June

Deliverable — repository with smart-contract for review, video demo     

We will measure the project’s success according to the following criteria being met during and after the project’s completion:

1. Project in progress: A KYC-verified credential schema is published.
2. Project almost complete: Video demo of no-code set-up, deployment and working use digital KYC workflow and usage of KYC-verified credential
3. Project Success: Named pilot implementation partners.
4. Project sustained success: deployment and working use of KYC-verified token in smart contract in a production use case, and a growing number of other potential use cases.
5. Related: we hope to also see an increase in (i) collaborative Catalyst proposals that specifically utilize this capability in use cases that we may or may not be currently aware of, (ii) independent or collaborative Catalyst proposals where our own, or joint, R&D results in ways to deepen the related capabilities of the proposed solution.

This proposal builds on an F7 proposal entitled “No-Code SSI SaaS for Mass Adoption” (see https://cardano.ideascale.com/c/idea/385204). The implementation of Atala PRISM credentials in ProofSpace SSI no-code platform will support the use of PRISM credentials in the SC workflows that result from this proposal.

SDG Rating

SDG Goals

• Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
• Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

SDG Subgoals

• 8.10 Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all
• 8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors
• 8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services