Using cheqd for Verifiable Supply Chains

Co-authored by Sid Lamichhane, Alex Tweeddale, and Patrick Herbke

Note: This blog post is based on the research paper: “DIDChain: Advancing Supply Chain Data Management with Decentralized Identifiers and Blockchain” by Herbke et al., accepted to be published at the 18th IEEE International Conference on Service-Oriented System Engineering 2024. During the proceeding of the conference, Herbke et al. won the best paper award for their contribution with DIDChain. Please reference the paper instead of this blog post.

Introduction

There is an increasing societal demand for consumers to be able to properly trace and verify the components, ingredients, and processes used for their purchased products.

More than ever before, consumers have greater choice in the food, pharmaceutical supplies, clothes and products that they buy; and concurrently, consumers have become more conscious about their health, environmental footprint and working conditions in the supply chain industry. Consumers are now interested in verifying that all the ingredients of food they purchase are healthy, pesticide-free or in accordance with their diet and allergies. Equally, consumers want to ensure that they do not support unfair trade, child labor, or environmental damage with their purchase.

Yet, the solution for enabling consumers to trace and verify products is not simple. The supply chain industry has been built on legacy systems for managing product data, such as centralised data silos and manual data processing, which predate the more recent demands for more transparency, verifiability, and trust assurance.

As a result, this gap between a product’s verifiability and its underlying composition, combined with the increase in consumerism, has led to a growing distrust in various industries, specifically with food, fashion, and pharmaceutical products.

In principle, it should be possible to offer product owners the chance to trace back the supply chain steps their product and its components have undergone. However, in practice, this is challenging because it requires all companies involved in a product’s supply chain to collaborate to reveal information about a specific product to its owner. Therefore, it becomes a considerable endeavour, depending on the complexity of a product and its supply chain’s level of globalisation.

To address this problem, we introduce a framework based on the cheqd blockchain network. Our framework endeavours to solve the aforementioned problems by giving owners and consumers of products a way to verify the supply chain of their products in a trustworthy manner.

cheqd for Verifiable Supply Chains

cheqd is a distributed ledger technology (DLT) that allows the sequential and chronological ordering of data that is highly accessible, persistently stored, and intrinsically verifiable. Technically, cheqd supports Decentralised Identifiers (DIDs) that are written into its blockchain. did:cheqd is a DID method with diverse functionality, enabling us to create a tree-based data structure to store the entire supply chain of a product on-chain. As the cheqd Network is public and permissionless, all on-chain data is public, permanent, and immutable. This not only leads to the supply chain’s verifiability but also makes it tansparent and trustworthy.

Figure 1 shows the tree-based data structure for modeling supply chains. Every node in the tree is a DID of type “cheqd” representing either a real-life product (P) or material (M). Products are defined to have components that can be either constituent products or materials. Materials such as oil, water, and copper are the tree leaves because they are produced, which does not require components like in the manufacturing of products. To store the relationships of the tree, the framework saves for each product the DID ID of all its components in the service section of its initial DID document.

Figure 1: Modeling supply chains as trees with products (P) as inner nodes and materials (M) as leaves.

However, having awareness of how other constituent products and materials assemble a product is not enough information for consumers to verify their lifecycle. Consumers also want to know what has happened to all the materials and constituent products used for their product. For this, our framework uses cheqd’s built-in on-chain DID document versioning management. Figure 2 shows how each DID document version corresponds to an event in the supply chain of the material or constituent product represented by the respective DID. It also shows how the built-in versioning management tracks the events in each DID document version’s metadata. This ultimately links all events together and gives them a timestamp, enabling a clear and holistic insight into a product’s supply chain.

Figure 2: Representing supply chain events of products and materials with DID document versions while cheqd’s built-in on-chain versioning management ensures traceability.

Our framework defines four atomic supply chain events: producing, shipping, receiving, and manufacturing. In the event of producing, a material is newly produced and registered as a DID. Shipping and receiving events both trigger an update to the DID document of the respective constituent product or material, automatically creating a new DID document version with a timestamp and a link to the previous version. When constituent products and materials are eventually sold, the shipping event takes place. It corresponds with a DID controller change in the new DID document version to reflect the change in ownership in real life. During manufacturing, a product is registered as a DID and its first document version contains a list of all DID IDs referencing the materials and constituent products used for its manufacturing.

Besides these event-specific happenings, each event is further detailed in a file stored in IPFS, the path of which is written in the corresponding DID document version. This minimises on-chain data storage and allows for infinite data scalability without comprising the framework’s data properties: public, permanent, and immutable. Alternatively, we can use cheqd’s DID-Linked Resources to keep all data on the cheqd Network. This alternative comes with the significant advantage of enabling the linked files to be secured with the same cryptographic integrity as the DID itself, as well as being flexible regarding the privacy level of the data.

Conclusion

As a result, our framework enables supply chain entities such as producers, manufacturers, and suppliers to make their actions transparent and traceable. Due to its rich functionalities, cheqd’s DID method simplifies the implementation of our framework. With its built-in on-chain versioning management, cheqd provides the crucial trust layer for our verifiable supply chain data management system framework, which is not possible with centralised or traditional infrastructure. Through this model, cheqd and other compatible DLT infrastructure can be a transformative use of technology for the supply chain industry, unlocking transparency, accountability, and trust.

Breaking and Forging the Value Chain Anew with SSI

Co-authored by Fraser Edwards and Teresa Chan

Throughout this blog, we will make frequent reference to an excellent piece by Antti Kettunen: The adoption challenges of wallets & decentralized ecosystems.

Identity and data is currently experiencing a paradigm shift, especially with respect to control and ownership. From eIDAS 2.0 using verifiable credentials & SSI to regulator challenges to Meta’s pay or consent approach, consumers are demanding and being empowered to control and own more of their own data. Market forces such as the ease with which fraudsters can generate fraudulent images and media with AI, mean data must have veracity and verifiable lineage to be trustworthy. 

However, SSI fundamentally breaks most of the commercial models mentioned in the previous blog / chapter. Like any other technology though, it requires a successful and sustainable commercial model to achieve and drive adoption. In this blog, we will talk through the fundamental shift in monetising data in this new paradigm, the market forces this creates and the new business opportunities previously not possible.

The Value of Data

“Data is the new oil” ~Clive Humby

Data has long been spoken of as the new oil, or the new money. Ultimately the monetary value of a given piece of data is ascertained by the market based on the business value (or otherwise) that can be derived from it. An easy example are weather forecasts, allowing a variety of services and business value to be built such as optimising travelling routes for commuters, e.g. delay departing for 20 minutes to avoid rain. Although the sum remains undisclosed, Apple bought mobile application Dark Sky which targeted exactly this use-case.

 The monetary value of data is typically a function of:

  • What insight can be derived from said data (either standalone or in conjunction with other data)
  • How much effort has been expended to derive the data?
  • Is it accurate?
  • Is it precise?
  • Is it current?
  • Is it in a usable format?
  • Is it from a trustworthy source?
  • Is the data reusable?

Naturally, this value varies wildly. A single data point for the temperature in a given location in the past, may have little value, whereas a full passport from a respected sovereign government is extremely valuable in terms of the countries it provides access to but also all the services it allows the holder and subject to access. Furthermore, there is substantial embodied cost in a passport due to the time, materials and energy invested in creating a secure document issued to the correct individual. UK passports, for instance, are charged from £57.5 to £112, depending on the age and application method.

These examples highlight the stark contrast between high-cost, high-value credentials and low-cost, low-value data or credentials.

 

Charging for Data

Currently, the value of data in credential systems is tied to API costs, which are incurred each time data is accessed. These costs reflect a “once-only” model, where retrieval by a company comes with an associated fee.

This model, however, does not work for credentials where credentials are issued to individuals, may be reused ad infinitum, and the value is still mainly received by the ultimate recipient. As Antti lays out:

“Producers (e.g. credential issuers) do not by design have any access or knowledge of who will use the data later on. Moreover, all possibilities to correlate and connect that information by sharing information on the background is difficult and even forbidden on regulatory level in EU.”

API costs will likely shift to focus solely on the issuance of credentials. This means that while issuing credentials will be high volume  and hence need to remain low-cost, the credential itself may carry an inherent, one-time cost that reflects its long-term value.

By separating API costs from the value of the credential, the system can prioritise efficient and cost-effective issuance while still recognizing the embodied value of the credential itself. This shift will lead to a more sustainable and scalable approach to managing and verifying credentials.

Paying to Access -> Paying to Verify

Historically, the acquisition of data operated on a simple premise: paying at the point of access / paying to access. Whether it was purchasing an API which provides data access like the CoinMarketCap or CoinGecko price feeds, or obtaining a dataset for marketing purposes, transactions revolved around paying for access to data.

API-based information exchange has also been one of the best methods to guarantee that exchanged data is trustworthy. By integrating directly with what is perceived / agreed to be an authentic data source, you can assume the data itself is authentic. The challenge is that as soon as you take the data outside of the original context, it loses its verifiability. “Predominant identity stacks, like OpenIDConnect, are based on the notion of ephemeral secure context, which is why they always require authentication at the time of login & data exchange.” commented Antti Kettunen, Author of Identifinity.net, Task Force Lead at Trust Over IP Foundation, Lead Consultant in SSI & Digital Trust at Tietoevry.

This model thrived because both parties found value in the exchange: the accessor gained insights from the data, while the provider received monetary compensation. 

However, as mentioned above, the emergence of the Verifiable Credential data exchange model /  self-sovereign identity (SSI) disrupts this approach. In SSI, the verifier or receiver seeks value from trusted data, while the holder asserts their right to control and ownership (whilst also seeking their own value be that monetary, rewards or simply improved user experience).

Ref: The adoption challenges of wallets & decentralised ecosystems


This discrepancy has led to a predominance of public or government-led data initiatives, where the cost of issuance is absorbed as part of providing a public service. However, this model does not seamlessly translate to corporate entities driven by profit motives.

While SaaS and APIs continue to facilitate data issuance, the party benefiting from the data no longer bears the cost. This begs the question: how do we align the value chain between verifier/receiver and issuer to incentivise issuer participation as otherwise the issuer has no incentive unless forced by regulation to adopt this?

Ref: The adoption challenges of wallets & decentralised ecosystems


Considering the healthcare industry, the proliferation of health data, including information from professional health systems and wearable devices, has created vast potential for optimising treatments through precision medicine. However, realising this potential requires collaboration among hospitals, academia, and industry resulting in the “valley of death” where there is a break between biomedical researchers and patients who need their discoveries. Yet, sharing data among these stakeholders is often hindered by reluctance, despite patients being the rightful owners of their health data. This example illustrates that aligning the value chain between all parties is imperative.

Antti makes the same case using receipts as the example use-case:

“Employees as the buyers in this use case, would receive positive benefits, and the employer likely a lot of benefits through automation and cost benefits. Conversely, the merchant does not really receive new benefits from participating in the ecosystem, as they would not benefit from issuance of the vReceipt to another wallet. Instead the merchant would need to include a new step to the checkout process to accommodate the identity wallet and credential exchange. This leads to only costs, and no benefits, leaving the merchant to negative impact, while other parties have a positive net impact.”

This is why the challenge of “verifier pays issuer” emerged as a significant barrier to commercialising SSI. Some ecosystems or consortia have looked to solve this by building holistic ecosystems from inception, i.e. where a company incurs a cost to issue credentials, they are compensated by value they derive from credentials they themselves receive from other companies. This approach borrows from the concepts of bartering and obligation clearing. In Antti’s example, he proposed that the merchant could benefit through:

  • “Payment type agnostic buyer identification
  • Customer identification (e.g. loyalty)
  • Product delivery address (online delivery)
  • Age verification
  • Receipt delivery information
  • Payment request”

However, there is a significant risk that this approach compounds the cold start problem inherent in systems which rely on network effects as an entire closed loop in terms of value must be recruited, at a minimum, before the ecosystem can begin; what Antti calls the “ecosystem value chain”. Furthermore, even where a group which resembles a closed loop is found, if one company still bears the brunt of the investment without sufficient recompense, they may be unwilling to participate.

verifier pays issuer


In the context of this challenge, it’s crucial to understand some of the fundamental functions  of money. Money addresses the inequivalence and lack of liquidity between bartered goods, e.g. the coincidence of wants. This underscores the need for a more streamlined and efficient method of value exchange within the SSI ecosystem. Without a clear mechanism for compensating issuers, the system risks stagnation and limited commercial adoption beyond that mandated by state bodies.

Instead, through a “verifier-pays-issuer” model, the issuer of trusted data or credentials can be rewarded directly for the value of said data, all whilst making use of ideas such as collaborative finance to reduce payment graphs and make the overall system more capital efficient.

Instead, value is embedded directly into the data itself. The value is intricately linked to various factors mentioned above such as data accuracy, precision, timeliness, usability, source trustworthiness, and reusability. Through a “verifier pays issuer” model, prices can be set based on these attributes, ensuring fairness and encouraging issuer participation all whilst reusability is guaranteed.

By allowing issuers to establish prices reflecting the value of data attributes and overall utility, the system promotes participation while maintaining fairness. Furthermore, where there are multiple providers of equivalent credentials, market forces should help reduce costs for verifiers / receivers over time.

Incentives are Crucial in Cold-Start Problems

Verifiers and holders have always had strong incentives to participate in SSI ecosystems:

ActorBenefitsExample
Verifier / receiverReduced cost of verified dataReusable KYC records versus using an external provider to check document pictures and selfies
Improved quality and veracity of data and hence reduced fraud riskAddresses can be entered from credentials issued by trusted sources rather than entered (and typoed)
Compliance with regulationPer eIDAS 2.0, large online service providers will be required to accept verifiable credentials presented by their users or those signing up.
HolderImproved ownership and control over their dataA user can manage and share their personal information with multiple service providers without relying on third-party intermediaries, ensuring their data is only accessed with their explicit consent.
Improved user experienceA frequent traveller quickly and seamlessly checks into hotels and board flights without having to repeatedly manually enter personal information.
Enhanced privacyLegal firms supporting clients with visa applications may no longer need to hold dossiers of data on their clients for those applications, instead being able to rely on easy, secure and reliable access to either the client’s data store or the individual repositories. This reduces their need to replicate and store the data themselves.
Rewards through loyalty, discounts or outright paymentsA customer earns loyalty points and discounts from a retailer by sharing verified purchase history.
Re-establishing the value chain between the ultimate data recipients and the issuers creates strong financial incentives for issuers to release data, establishing the much needed supply side of the credentials / SSI / trusted data markets.
ActorRequires value chain join?BenefitsExample
IssuerNoImproved relationship with the customer due to releasing data to the subject / holderBanks allow their customer to use their transaction data, e.g. Open Banking / PSDII in the UK, for other services to improve their financial outcomes.
NoEnhanced reputationCredit bureaus improve their data quality on individuals through trusted data such that their services to clients are more reliable, e.g. no more inaccurate addresses for individuals.
YesRevenue as credentials are paid forThe passport office earns revenue whenever a passport is requested.
YesRecurring revenue whenever credentials are re-usedUniversity registry offices earn revenue whenever one of their degrees is checked by a company as part of onboarding them.
YesCost savingsConstruction site managers can reduce time spent checking contractor documents each day / week / month and hence those contractors can spend more time working, improving their ability to deliver projects on time / to cost.

This also reduces the time per day / week / month required per day by the employee to check said documents.

Crucially, when all parties have an incentive to expand the ecosystem, we can achieve strong network effects:

A Virtuous Flywheel Envisioned

Incentives for all parties should result in a virtuous flywheel for self-sovereign identity growth. 

Issuing organisations are now motivated to provide trusted data back to identity subjects to generate new revenue. With the increased circulation of credentials, organisations will find it easier, more efficient, and more natural to accept them for acquiring trusted data, all with the consent of the identity subject

The lower cost structures for creating trusted data will result in more affordable prices for consuming verified identity data compared to current, sometimes prohibitively expensive methods. Lower prices for accessing trusted data will create a richer ecosystem of organisations and services that embrace credentials and SSI. This results in a better user experience, offering individuals and companies a more private and secure interaction compared to current data usage practices.

Incentives for all parties involved, that scale according to network effects will cause all said parties to recruit more members to the network, e.g. issuers will recruit more receiving organisations, receivers will recruit more issuing organisations, both profiles will recruit more consumers.

Example: Know Your Customer

Many online platforms and businesses find it financially burdensome to cover the expenses associated with customer verification, resulting in inadequate identity assurance. As a direct result digital spaces are susceptible to exploitation by bots, scammers, and malicious actors, with minimal consequences. To illustrate, present approximate costs of identity checks are as follows:

  • Basic Know Your Customer (KYC) check: $2 – $5
  • Criminal record check: ~$50 – $100
  • Company background (GLEIF-accredited LEI): >$50/year

The value proposition of utilising a robust infrastructure for verifiable credentials lies in its ability to significantly reduce identity verification time and costs, potentially lowering them from approximately $2-5 per verification to around $0.10. This enhanced efficiency and cost reduction make customer identity checks feasible in sectors where they were previously deemed too expensive.

Such a solution addresses a significant challenge faced by various industries in verifying customers on their platforms. It offers a cost-effective, reusable, and future-proof approach that aligns with forthcoming regulations, making it an attractive option for businesses seeking to streamline their identity verification processes.

Furthermore, as KYC has become commoditised, price points have reduced. This has been great for verifiers who have been able to reduce their costs over time. However, for issuing organisations, they are staring directly at reduced revenues based if volumes hold steady, with their cost bases not reducing. Allowing for the re-use of KYC records with the ability to charge upon their re-use allows for issuers to increase their revenue whilst maintaining the same cost per individual, with re-usable KYC credentials able to be used by industries where costs and user-friction were previously too high. As an example, a merchant or online retailer could accept a reusable KYC credential to automatically complete address and customer information with verified information to prevent fraudulent use of stolen credit card details and hence suffering chargebacks.

Maintaining Privacy whilst Enabling Payments

One of the major benefits in theory of credentials and SSI is improved privacy for individuals. Through techniques such as selective disclosure and zero-knowledge proofs, companies can ask for and receive only the data they absolutely require, honouring one of the tenets of GDPR: data minimisation. Furthermore, pairwise connections between individuals and companies, rather than relying on federated systems such as Google or Facebook based Single Sign on (SSO), can minimise the leakage of an individual’s activity data where it is analysed and monetised opaquely.

 

It is for this same reason that SoulBound Tokens (SBTs) and Non-fungible Tokens (NFTs) should not be used for identity data. Writing personal data to a public ledger inherently makes this information both public, permanent, and hence permanently public. This means that individuals can no longer exercise control such as selective disclosure as they have already revealed the information publicly. As an example, a university degree stored on a ledger could reveal: race, gender and likely class status depending on where the degree has been issued from, allowing anyone to surveil and categorise that individual without their awareness. Another example are ledger Name Services, e.g. ENS. If a user binds their real name or even a pseudonym that has leaked information such as country or address, anyone can assess that user’s tax liability from their on-ledger behaviour.

 

Therefore, if we assume that users can maximise their privacy through the use of credentials and SSI, payments for credentials should not leak information and hence degrade that privacy. For example, one of the guiding principles of credentials and SSI is that organisations who issue credentials to individuals should not know where those credentials are being used. For a tangible example, a government who has issued a passport should not know where, how or why that passport has been used. 

 

If verifier-pays-issuer flows are not implemented correctly and safely it would be possible for issuers to track individual’s behaviour, breaking this guiding principle. For example, if an issuer of data or credential set unique prices per credential or attribute per user, whenever they were paid this amount from a given recipient company they would know that specific individual had interacted with that company, providing them with information they should not know. At a bare minimum, individuals should benefit from herd privacy with respect to payments, where they are indistinguishable from any other. 

 

Whilst this blog and section will not go into further detail, the principle remains that the addition of payments for credentials into ecosystems should not degrade the privacy of the members within said ecosystems.

Beyond Transactional Payments

At the simplest level, we can imagine a singular Trust triangle:

  • One issuing organisation
  • One individual / holder / subject
  • One receiving organisation

For the sake of simplicity in this example, we will ignore the concerns raised in the previous section.

An organisation issues a credential to the individual who then shares that credential with another organisation, who then pays the first organisation. This represents a single transactional payment for a credential. 

Naturally, we can significantly extend this model to move beyond transactional payments to models such as: tiered models based on volumes, subscription models or models where costs are mutualised based on proportional usage.

  1. Tiered Models based on Volumes:
    • Description: Organisations pay fees based on the volume of credentials issued or verified.
    • Benefits: Cost efficiency for high-volume users and scalable pricing.
  2. Subscription Models:
    • Description: Organisations pay a recurring fee for a set number of credentials or verification services.
    • Benefits: Predictable revenue streams and easier budgeting for organisations.
  3. Mutualised Cost Models:
    • Description: Costs are shared among participants based on their proportional usage of the system.
    • Benefits: Fair distribution of costs and incentivizes efficient use.

Enabling more complex and flexible models allows ecosystems to tailor their models to the needs of their industries, use cases or preferences, similar to those that exist in existing identity or data ecosystems using traditional technology.

This logic can be implemented either manually or programmatically, possibly via smart contracts based upon ledgers / blockchains. Smart contracts can automate the execution of payments and compliance checks, ensuring transparency and reducing the administrative burden. However, the implementation of such systems requires careful planning to ensure security, scalability, and interoperability with existing systems.

Conclusion

As explored throughout this blog, SSI disrupts traditional commercial models by prioritising individual control or ownership of data. The shift from a dominant “pay to access” approach to include “pay to verify” underpins this new paradigm, enabling a more sustainable approach to data management and verification. In this model, consumers are paying for access to verified data directly from individuals, rather than simply paying for access itself.

The challenge lies in creating viable commercial models that incentivise issuers to participate while maintaining fairness and privacy. The “verifier pays issuer” model addresses this by rejoining the value chain originally broken by SSI. This avoids compounding the cold-start problem inherent in building ecosystems as well as requiring a coincidence of wants between the participants.

Instead, this allows issuers to set prices based on the perceived or estimated value of data attributes, which the open market is then free to provide feedback upon. This model not only encourages the release of trusted data but also facilitates its reuse, reducing costs and enhancing user experience.

We further highlighted that the need for privacy-preserving mechanisms in payment flows is paramount. Ensuring that the addition of payments for credentials does not degrade privacy is crucial for maintaining trust and adherence to principles like data minimization. Techniques such as selective disclosure and zero-knowledge proofs can help achieve this balance.

Finally, we explored shifting beyond transaction models to more complex models such as Tiered or Subscription-based models which better match the commercial requirements of ecosystems.

As we continue to create a rich ecosystem of services and applications, the principles and models discussed here will be instrumental in shaping a future where data is managed more securely, efficiently, and equitably.

Glossary

  1. Bartering: an act of trading goods or services between two or more parties without the use of money or a monetary medium
  2. Selective disclosure: a crucial element of Self-Sovereign Identity (SSI) because it allows individuals to share only the essential personal information required for a transaction or interaction
  3. Valley of death: Describes a disconnect between biomedical researchers and the patients who need their discoveries.
  4. Zero-knowledge proofs: one party proves to another party that some given statement is true, while avoiding conveying to the verifier any information beyond the mere fact of that statement’s truth
  5. Herd privacy: The ability of an individual or thing to maintain a degree of privacy due to being one of many, i.e. one individual or thing in a large, indistinguishable group.
  6. Data minimisation: limit the collection of personal information to what is directly relevant and necessary to accomplish a specified purpose

References

  1. Antti Kettunen (2024) The adoption challenges of wallets & decentralized ecosystems https://identifinity.net/the-adoption-challenges-of-wallets-decentralized-ecosystems-58b81924dec6
  2. TechCrunch (2024) Meta’s ‘consent or pay’ data grab in Europe faces new complaints https://techcrunch.com/2024/02/28/meta-consent-or-pay-consumer-gdpr-complaints/
  3. David Birch (2014) Identity is the new money https://dgwbirch.com/identity-is-the-new-money/
  4. EU Commission (2024) eIDAS Regulation https://digital-strategy.ec.europa.eu/en/policies/eidas-regulation
  5. BBC (2020) Apple buys weather app Dark Sky https://www.bbc.co.uk/news/technology-52115095
  6. Tim Hulsen (2020) Sharing Is Caring-Data Sharing Initiatives in Healthcare https://pubmed.ncbi.nlm.nih.gov/32349396/

cheqd Mid-Year Update: Key Achievements and What’s Ahead

As 2024 speeds by, we’re advancing our products to drive the industry forward. Our commitment remains steadfast: to foster a more equitable, decentralised, and trusted world for businesses and individuals.

At cheqd, we pride ourselves on keeping our community and supporters well-informed about our progress, insights, and future directions. In this update, we’ll highlight our key achievements from Q2 and the first part of Q3. If you’re interested in how our journey began this year, be sure to check out our Q1 round-up.

This year has been nothing short of transformative for cheqd, marked by several groundbreaking advancements that have propelled us forward.

Here’s a snapshot of what we’ve accomplished:

Highlights & Key Achievements

1. Analytics and Insights in the Creds Creator Studio

Creds Creators Studio Overview Page with Insights

We’re thrilled to announce the introduction of Analytics and Insights to the Creds Creator Studio. This new feature empowers community managers with valuable, trusted data about their community members, known as collectors. It helps them identify and reward top contributors and uncover deeply engaged superfans. Additionally, informed decisions can be made regarding changes in campaign strategies to optimise community engagement and grow trust or loyalty.

The feedback has been overwhelmingly positive, with creators noting that these insights are helping them better understand their communities and craft more personalised experiences.

To see this in action, check out our demo video available here

Want to have a play with Creds for yourself? Have a community that could benefit from being recognised better?

Get started with Creds now; pick a plan.

2. Sell a Credential Launched within the Creator Studio

Credential payments are a crucial element of our mission at cheqd. As a reminder, we believe that for decentralised identity to go mainstream, a robust commercial model is essential that encourages data issuers to release data to the individual.

Our ‘Sell a Credential’ feature exemplifies this model, offering a unique way to monetise directly through verifiable credentials. Within the Creator Studio, creators can set a price and limit of credentials, creating rarity and increasing desire, in a few clicks — check it out 👇

Creator Setting a Price & Limit for a cred while building a new cred
 

This first-of-its-kind opportunity allows for direct revenue generation while building trust within the community.

Visit the link be to see this innovative feature in action, explore how it facilitates trust-building and community engagement, and see our demo video.

3. Creds Studio Light Mode

As Creds has evolved, we’ve seen new interest from varying industries. As such, we’ve realised the need for a more traditional look and feel for the studio, which we’ve implemented as a light mode. This is now available for creators using the studio, and we’ll be mirroring this on the app in the future.

4. cheqd Studio Launch

We have refined our SaaS product offering, formerly known as Credential Service, to focus more on the specific differentiators of the cheqd Network and its underlying functionality. Specifically, the product focuses on trust infrastructure, including DIDs, Trust Registries and Status Lists; and payment infrastructure, including verifier-pays-issuer with USDC, and EURO stablecoin support. These concepts are at the heart of cheqd’s core Network functionality, enabling us to fully productise “cheqd” and its unique benefits compared to other verifiable data registries..

Through creating API keys, developers will be able to authenticate with our suite of APIs, allowing them to consume cheqd’s identity functionality into any existing or new application. This, therefore opens cheqd up to the market of developers looking to establish credential-based ecosystems with robust and enterprise-ready trust and payment models.

This evolution refocuses and double-downs on cheqd’s specialist elements, allowing for other partners or parties to build credential ecosystems on top of the network with simple API integrations. We also provide a comprehensive suite of documentation to get started with all elements of cheqd Studio, including Credential Payments and Trust Registries.

For more details, check out our updated website and the latest blog that delves into the features and benefits of cheqd Studio.

Choose a plan now

5. Trust Registries with DID-Linked Resources Gaining Respect and Interest!

In April, Alex, one of our Product Managers, and Tasos, our Head of Engineering, presented our innovative approach to trust registries at the Internet Identity Workshop (IIW) in Mountain View, California.

Our focus was on simplifying the creation and management of trust registries through DID-Linked Resources as a common mechanism for storing, retrieving and resolving trust registry entries. This presentation garnered significant attention and respect, positioning our DID Linked Resources as a key differentiator for the cheqd network. It has led to significant partnership developments, which we’re itching to share more about as they evolve.

In June 2024, we partnered with Soverio, Netis and Danube Tech to take our trust registry approach to the European Blockchain Sandbox. and now we are working on a harmonised approach to a “universal” trust registry resolver mechanism, compliant with:

  1. The Trust over IP Trust Registry Protocol Specification
  2. EBSI’s approach to Trust Chains
  3. Traditional X.509 certificate chains and DNS records
  4. OpenID Federation 

More to come on this soon 👀

Additionally, we’re proud to share that cheqd’s DID Linked Resources have been accepted as a W3C draft specification. 

This milestone underscores their impact and potential to become a widely adopted standard for cheqd and beyond. 

Find the DID-Linked Resources spec here.

6. Improving Our Response to Feedback & the General UX of Our Products

Since our founding in 2021, we’ve embraced a dynamic startup mentality characterised by rapid development and iteration. The principle of “move fast and break things” has guided us as we’ve tested our products in the market.

As we transition from proof-of-concept and MVP stages to scalable, monetisable products, we’re addressing emerging issues strategically.

This includes welcoming Senior QA Engineer Radek, who brings a wealth of experience to enhance our testing strategies and product quality.

We’ve also introduced Featurebase, a new feedback-reporting tool that allows our community to suggest features, report bugs and provide feedback easily.

Head to the new dashboard now at feedback.creds.xyz, and share your thoughts.

You can also report them directly from the creds studio or creds app, shown below:

We’re also implementing Baselime, a tool designed to capture and analyse user logs, metrics, and traces to resolve issues proactively before they impact users.

As we reflect on these achievements, we’re excited about the future and committed to continuing our progress in the year ahead.

Q3 and Beyond - What's Next?

As we continue to advance through 2024, we’re excited to share a glimpse into what lies ahead for cheqd in Q3 and beyond. Building on our recent successes, we’re gearing up for a series of new initiatives and innovations that will further enhance our offerings and drive the industry forward.

Stay tuned as we unveil upcoming features, strategic developments, and new partnerships to help us achieve our vision of a more decentralised and trusted world.

Here’s a sneak peek at what’s on the horizon:

1. Exposing APIs in Creds

To enhance Creds’ utility and integration, we are focusing on making it the premier platform for community reputation management through a robust set of APIs. This quarter, we’re developing tools that will allow external developers to interact with Creds programmatically. We aim to offer a seamless experience for creators and collectors alike by enabling them to issue, build, and manage credentials through these APIs.

The API initiative is structured into three main areas. First, we will introduce the capability to issue credentials via API. This feature will enable creators to issue credentials using pre-built templates from within the studio and connect external sources to these templates, significantly reducing manual effort and boosting the number of credentials issued. Currently, creators can issue via CSVs or manually enter usernames, reducing their work’s scalability and efficiency. With automated issuance, they can set up integrations and leave them to run, issuing programmatically based on rules set in their existing platforms and tools.

Next, we will implement the ability to verify credentials via API. This will allow credentials to be verified within other applications, websites, or platforms, potentially as part of a broader verification portal. This feature will facilitate using credentials to access various digital and physical spaces, from applications to events.

Finally, we will roll out functionality to build and store credential templates (reusable credential format/styles/attributes) via API. This will enable users to submit and manage credential templates through an API, including creating custom templates in JSON format based on provided specifications.

Check out a preview below, demonstrating how creators will generate API keys:

2. Implementations of Advanced Tokenomics

In the second half of the year, we are putting significant focus on enhancing the network’s tokenomics on a few fronts, introducing:

1. An EIP-1559 style burn, inspired by Ethereum’s approach:

This will mean any transaction on the network will burn $CHEQ tokens, e.g. transfers, proof-of-stake delegations, not just identity ledger writes, such as DIDs, schema, revocations, writes. Crucially, this will affect payments across the network, including part of “credential payments”, making sure there is protocol revenue in the form of burnt $CHEQ tokens for every payment executed.

With this network enhancement, as demand increases, the community can decide whether $CHEQ tokens consumed continue to be burnt, maintaining a deflationary effect or whether they should instead be distributed to speakers as a replacement for staking rewards from inflation. This will also include preparatory work so that all identity and general transaction fees can be priced in stable dollar terms.

2. Fee abstraction

This will allow anyone holding a Cosmos token to pay for transactions on the cheqd network, with said Cosmos token converted to $CHEQ tokens as required to pay for fees. As a specific example, it will enable the adoption of USDC and EUROe or EURC for credentials payments and beyond, which is covered in more detail below.

3. A general burn transaction

This will simply allow anyone to burn $CHEQ tokens as desired.

Additionally, we are exploring strategies related to maximal extractable value (MEV). MEV involves optimising block production for profitability by selectively including, omitting, or reordering transactions. Integrating such mechanisms will further enhance our network’s efficiency and economic model.

3. Investigations and Implementation of USDC and EUROe Support

We are working on incorporating support for stablecoins like USDC and EURO-based currencies to facilitate smoother transactions for companies verifying credentials. By allowing payments in these currencies, we can offer MiCA-regulated payments on top of the cheqd Network, allowing companies to adopt our credential payments and trust utilities within regulatory-compliant ecosystems.

This will also simplify the process for companies to on-ramp and off-ramp without needing to interact directly with CHEQ, creating much more user-friendly journeys for businesses looking to use cheqd’s identity functionality but for whom $CHEQ falls outside of their risk appetite, widening the range of companies who can comfortably adopt cheqd.

Additionally, we plan to enable consortia to implement payment schemes on top of cheqd, allowing them to align payment models with the flow of verifiable credentials.

4. Making cheqd the Easiest and Best Place to Build and Manage Trust Registries

This goal is to simplify the creation and management of Trust Registries for SSI vendors integrating with cheqd Studio. This will help organisations accredit others for specific purposes, offering an alternative or additional element to traditional X.509 and centralised Trusted List infrastructures.

We aim to position cheqd as a leading “trust infrastructure” solution, aligning our trust registry implementation with the European Blockchain Services Infrastructure (EBSI), while also maintaining compatibility for other styles or formats. This alignment would offer EU market customers a viable option for setting up trust registries without necessarily requiring a “qualified” trust service provider.

Additionally, we are exploring the concept of payment-gated trust registries to leverage cheqd’s payment rails and further boost the adoption of the network. This would allow governance authorities and companies to charge verifiers to check whether an issuer is “accredited” to issue certain types of credentials for specific purposes within a set of jurisdictions.

5. Gamified Collector Experience with Collector Quests and Metrics

To enhance user engagement and make Creds more engaging, we are introducing gamification elements such as Quests and credential metrics.

Quests are common amongst the Web 3 community-builder space to incentivise user engagement, and we foresee this type of community activation being popular in broader industries, such as education, gaming, corporate community building, and e-sports.

To help create a more fun and competitive Collector experience, we’ll provide Collectors with metrics on their credential views, shares, and verification, helping them understand their progress and reputation-building efforts.

This initiative aims to make the platform more enjoyable and sticky, helping creators identify and retain their best members and superfans.

6. Open Source Contributions Ramping Up

Our Interchain KYC project with NymLab continues to advance, with the recent cheqd network upgrade (v2) enabling this module’s functionality across other IBC-enabled chains. This upgrade allows cheqd’s native identity features to be utilised throughout the Cosmos ecosystem, providing a reusable KYC solution for various projects.

We’re also working on a ZK-proof KYC credential issued by a cheqd DID, which can be consumed by other AppChains. This differentiates our approach by offering both full KYC credentials with detailed personal information and basic ZK-KYC proofs that can be used across Cosmos chains and dApps on a selective basis.

Also, excitingly, we expect to see more Open-source contributions from our partners and community that leverage cheqd via our community pool to make cheqd’s DID-Linked Resources and Trust Registry capabilities as interoperable and widely available as possible. Through these contributions, we should be able to have cheqd’s unique functionality supported in a much wider array of SSI offerings and applications, generating significantly more network volume.

Conclusion

As we progress through 2024, we’re excited about the future and the incredible developments on the horizon. 

Our commitment to innovation and enhancing our platform is unwavering, and we can’t wait to share more about how these advancements will benefit our community and reshape the landscape of decentralised identity.

Stay tuned for more updates as we roll out these new features and improvements. In the meantime, we encourage you to connect with us, explore our latest offerings, and be part of the journey towards a more trusted and decentralised world. Your support and engagement are what drive us forward. 

As always, you can find the cheqd Product Team on Telegram, Discord, or contact us directly via email at [email protected].

Let’s continue to build something amazing together!

Introducing cheqd Studio

cheqd studio is an API service to easily build trust and payments for digital credential ecosystems.

We are excited to announce that our API product, Credential Service, is transforming into a more refined product: cheqd Studio. This shift recentres the focus of the product around providing two core concepts: trust infrastructure, including DIDs, Trust Registries and Status Lists; and payment infrastructure, including verifier-pays-issuer with USDC and EUROe support. These concepts are at the heart of cheqd’s core Network functionality, enabling us to fully productise and double-down on our original hypotheses for cheqd.

Why did we choose to evolve to Studio

Over the previous three months we ran a series of product interviews with leading digital credential companies and experts to determine the problems that they and their clients are facing.

This product-led research helped us re-establish what our partners and clients want from cheqd. In this research phase, we established two clear problems in the market:

92% identified either (1) Trust Registries; or (2) Commercial models for credential ecosystems as being a blocker in their projects or clients reaching production environments.

This was a significant validation for our functionality we have built on the cheqd Network, and reinforced our previous hypotheses about building at the network layer, given that providers high up the tech stack have not been able to solve these challenges on their own. We therefore have decided to rename the product from “Credential Service”, which suggested that the unique selling point of the product is centred around “credentials”, to cheqd Studio, which reinforces that the selling point for the product is around “cheqd”, and the innovative offerings it can provide. With the renaming of the product, the available APIs will also focus more prevalently on solving two crucial problems for the industry: establishing trust infrastructure to empower relying parties to fully trust the credentials they receive; and, facilitating payment infrastructure to allow companies and consortia to establish commercial models for credential flows, with stablecoin support and fiat on-ramping and off-ramping.

Trust Infrastructure

Historically there has been  a challenge for most ecosystems that utilise Decentralised Identifiers (DIDs), whereby a Relying Party could establish that a DID is legitimate, but they couldn’t establish that a DID actually belongs to the entity attesting to control the DID. 

This is because DIDs are “decentralised” and therefore are not intrinsically backed by any centralised authority. For this reason, DIDs need to operate within a “trust infrastructure”, where a Relying Party can verify the legitimacy of a DID, by ascertaining that a DID was accredited or authorised by another entity; and, that the “Root of Trust” entity is who they claim to be. This trust can be achieved in multiple ways:

  1. Decentralised: Resolving back to an identifier which is verifiably more reputable than others, through mechanisms such as proof of work, stake or authority.
  2. Federated: Resolving back to an entity which is trusted within a known and trusted federation or scheme.  
  3. Centralised: Resolving back to a central authority root of trust such as a DNS domain or an X.509 certificate backed by a Certificate Authority;

cheqd provides a flexible trust infrastructure solution that can be extended to any Root of Trust model, including traditional X.509 certificates (centralised), OpenID Federation (federated), Fraunhofer Institute’s TRAIN (federated) or full decentralised reputation (decentralised). cheqd’s trust infrastructure uses DIDs as the entity identifiers, and allows any signed data format (e.g. JWTs or Verifiable Credentials) written as a DID-Linked Resource to be used for accreditations between parties.

This creates a flexible infrastructure for governing authorities to create hierarchical trust chains, offering support for the EBSI Trust Chain model or OpenID Federation. Owing to these capabilities, cheqd’s trust infrastructure is also directly compatible with the Trust over IP Trust Registry Protocol Specification, enabling relying parties to easily query whether an entity is accredited for a particular purpose, under a governance framework.

The benefit of using this trust infrastructure on cheqd, as opposed to using did:web, did:tdw or traditional web domains is the ability to persistently store chronological versions of trust registry entries which can be retrieved with full historical provenance and immutability. This provides far more “trust” in the integrity of the data and greatly minimises risk of tampering or server outages. Moreover, cheqd can be combined with other infrastructure for providing “Roots of Trust”, such as X.509 Certificate Trust Chains, DNS, KERI or more decentralised reputation systems to create full end-to-end trust registries across multiple ecosystems. To further scale this approach, we are also working with the European Blockchain Sandbox to establish a standardised approach for the European market to trust registries, with a common “universal” approach, like the Universal Resolver and Registrar.

Payment Infrastructure

Towards the end of 2023, cheqd launched its first-of-its-kind Credential Payments model, offering encrypted DID-Linked Resources with payment conditions to unlock, to facilitate Verifier-pays-Issuer commercial models for credentials.

Now, within cheqd Studio, we are looking to supercharge Credential Payments, for use within regulated industries and existing data sharing consortia. In order to get to production environments across this sector, we have decided to provide the following functionality:

  1. Stablecoin support: via USDC and likely EUROe, EURC and other desired currencies for making credential payments and using cheqd functionality
  2. Commercial models for consortia or schemes: creating guides on establishing commercial models for consortium or scheme operators and participants to exchange payments for verifiable credentials within the scope of Markets in Crypto Assets Regulation (MiCA) Regulation, with clear liability and governance structures.

Doubling down on Credential Payments has been a decision that we are proud of as a team, reinforcing the core cheqd hypotheses from the company’s inception. And these next developments will take the product into a state of maturity to provide the backbone for establishing large trusted data markets, supporting the continual demand for commercial models for verifiable credentials.

It is also important to explain that stablecoin support on cheqd will complement the CHEQ token and provide it greater utility. For example, USDC is supported on Cosmos through Noble, and as such, we will be able to leverage Cosmos’ concept of “fee abstraction” to settle transactions and fees in USDC on the cheqd Network, where under the hood, USDC and CHEQ are being exchanged on-the-fly to utilise the network’s core identity functionality. In addition we’re currently implementing an EIP1559-style burn mechanism to burn $CHEQ tokens when any currency is used on the network, whether USDC or other. 

This provides adopters the security and comfort of making transactions in a stable currency, while also offering benefits of blockchain technology that would not be possible with traditional payment rails or more centralised technology choices. For example, cheqd’s credential payments enables: non-repudiation and transaction finality; decentralised payment-gating with no risk of surveillance; privacy preserving flows for credential holders with no “phone home” correlation risk; and, smart contract-style logic for ensuring payments are made and settled. 

Powerful Partnerships

With cheqd Studio, we will be working even more closely with our SSI partners, focusing on our niche in the market around trust and payment infrastructure, which can be then utilised within other SSI software packages or products.

We want to create full production ecosystems for our clients, and the best way to achieve this is through collaboration. Over the last year, companies such as Animo Solutions have made excellent strides in refactoring and expanding the Credo SDK and launching their enterprise product, Paradym, to support the EU Architecture and Reference Framework (EU ARF) standards and protocols for credential issuance and exchange. Similarly, Walt.id have created an array of Open Source libraries for building alongside the EU ARF, namely the Community Stack, as well as working their new Enterprise Stack. With eIDAS 2.0 and the EU ARF now getting significant traction in Europe, it is imperative for us to build support into these ecosystems, and we are also working closely with EBSI and within the European Blockchain Sandbox to ensure that our trust and payment infrastructure is primed for adoption in Europe. 

We therefore want to position cheqd Studio as a set of APIs that complements the work at the credential issuance and wallet layers, and is not perceived as competing with them. Already this mentality is reaping its rewards, with our partners Danube Tech, Talao, Mailchain, Walt.id and Animo now supporting did:cheqd, with more exciting announcements coming in the following months. 

Conclusion

Our refinement of Credential Service to cheqd Studio is a reaffirmation of cheqd’s unique selling points, helping to productise our brand and provide a consistent product narrative for our community, partners and customers to buy into. It enables us to focus deeply on our specialist functionality: trust and payment infrastructure for digital credential ecosystems.

You can get started with cheqd Studio now: sign up and create your first API key to start integrating our APIs into your existing products, or let us help you build an end-to-end trusted ecosystem from the ground up. 


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