A New Hope in the Data Wars: Our first-ever “non-fungible” DID on the cheqd network

Co-written by Ankur Banerjee (CTO/co-founder), Ross Power (Product Manager), and Alex Tweeddale (Governance Lead).

💫 About a month ago, in a Cosmos far, far away…

…we spoke about the top 10 highlights of Q1 at cheqd, where we touched upon the work we have been doing on adding and improving the identity functionality for app developers and users of our network.

Today, I’m excited to share the first-ever Decentralized Identifier (DID) on the cheqd network and what that means for real-world usage of our network for anchoring digital identities. This is an important milestone in our journey to help our partners and community reclaim their data.

Decentralised Identifiers (“DIDs”) are essential cornerstones of how decentralised identity works at a technical level. This first DID we created on the cheqd mainnet uses the cheqd DID method, and is permanently available on our immutable ledger.

Think of this as a web URL/address, much like how https://blog.cheqd.io does. In our case, the DID created by cheqd looks like this:

did:cheqd:mainnet: zF7rhDBfUt9d1gJPjx7s1JXfUY7oVWkY

The random letters and numbers above are a unique “address”, where the cheqd team published details that relate to cheqd, as a company.

These are the DID Documents you are looking for 👋

To access the contents that are stored on the ledger for a DID, which are called “DID Documents, you need a “browser” for DIDs. Think of this the same way Chrome is a common web browser for web URLs. The Decentralized Identity Foundation (DIF) Universal Resolver is the “browser” for DIDs that app developers use to interact with digital identity networks.

Over the last month, we have been working on adding support for the cheqd network driver to the Universal Resolver project. When you use this to access the DID Document for the DID we created, you will see:

DID Documents are a bit like droids. They are not always understood by humans, beeep-beeeep boooop-boooop, but they are incredibly useful for machines to understand useful information about digital identities. In DID Document above, the contents describe keys using which cheqd (the company) could use to issue secure digital credentials.

It also describes links to web/social media profiles controlled by cheqd, such as our websiteTwitter, and LinkedIn. And sometimes, just like droids, DID Documents can even carry secret messages. 🤫

Do (click). Or do not. There is no try. 🤓

Pay close attention to this part in the DID Document (“DIDDoc”) and you’ll see…

{ “id”: “did:cheqd:mainnet:zF7rhDBfUt9d1gJPjx7s1JXfUY7oVWkY#non-fungible-image”, “serviceEndpoint”: “https://gateway.ipfs.io/ipfs/bafybeihetj2ng3d74k7t754atv2s5dk76pcqtvxls6dntef3xa6rax25xe", “type”: “LinkedDomains” }

InterPlanetary File System — or IPFS, as it’s more popularly known — is a global, decentralised, file storage system. Think of it as a file storage service such as Dropbox, except, with no single controlling entity behind securely storing the files.

If you look up the IPFS link above through any valid IPFS gateway, you’ll find our Data Wars poster, showing every single person who has been working hard over the past year to bring new hope to a vision for decentralised identity which gives control back to the people.

The cheqd team in the Data Wars

I’m extremely proud — especially of our product & engineering team — of the part they have played to make the technical work happen. ❤️

The DID Document “non-fungible” Data Wars 🖼

Non-Fungible Tokens (NFTs) have been often-mentioned in the context of being used to create a decentralised, on-chain unique identifier. We brought up how popular this concept has become in our analysis piece on Web 3.0 trends on the intersection of NFTs and identity.

One of the basics of an NFT is that the image/media associated with is not itself encoded in the token, but referenced through a link/URL where the image/media is available (usually, decentralised storage such as IPFS).

That’s very similar to what we had in our DID: a unique on-chain identifier that contains a link to an image/media asset off-chain, stored on decentralised IPFS storage. What’s more, by transferring control of a DIDDoc, it’s also possible for owners of a DID to switch hands. While it doesn’t exactly have the same (non-)fungibility properties of a “real” NFT, we thought this would be a fun and interesting way of how flexible the Decentralized Identifiers (DID) format is. 😉

How to create a DID on cheqd’s mainnet?

We are excited that it is now time for our community of cheqd validators, many of which are leading SSI vendors, to begin experimenting with creating a DID on cheqd. You can do so using the cheqd CLI or through VDR Tools.

If you want to get started with anchoring DIDs and DID Documents, head over to the tutorials available here.

Building real digital identity apps using cheqd 🛂

We demonstrated a demo web-based wallet at Internet Identity Workshop #34 in San Francisco last week (26–28 April 2022). Check out this tweetstorm we did during the conference, which explains how we used this to demonstrate DIDs anchored on cheqd to which secure digital credential issuance can be linked.

You can also read a summary here if you find Twitter threads hard to follow:

Summary of cheqd’s identity wallet demo at #IIW | Ankur Banerjee.

😎 Try out the @cheqd_io demo yourself, get a Verifiable Credential for #IIW 34, and read more about the background for…

typefully.com

We want more app developers, including the many partners of cheqd, to be able to build similar experiences as we did in a short timeframe for the conference. In a more technical tutorial in the future, we’ll explain how to do this yourself.

Demo wallet for IIW built by cheqd

Give wallet.cheqd.io a spin to get a demo credential. May the Fourth be with you as you join our rebel alliance in the Data Wars! 🫶

Q1 round-up from cheqd: We’ve upgraded our network’s identity features, bridged to Ethereum, plus much more…

Co-authored by Fraser Edwards (CEO/co-founder), Ankur Banerjee (CTO/co-founder), Alex Tweeddale (Governance & Compliance Lead), and Ross Power (Product Manager)

cheqd is moving fast as we build out the decentralised network for trusted data on Cosmos. Three months into 2022, and we’ve been blowing past our quarterly milestones: making headway in the identity features of the network, bridging to Ethereum, listing on more high-profile cryptoasset exchanges, improving the validator and token holder experience, and much more.

A recap of cheqd’s product roadmap priorities for Q1 2022

At the start of the year, we shared cheqd’s product vision for 2022 where we laid out our plans for the year ahead, beginning with some ‘quick wins’ across identity and Web 3.0. In this blog post, we’ll give a summary of what we achieved in Q1 — and what to look forward to beyond.

Top 10 Highlights from Q1 for cheqd

  1. Completed two successful upgrades of the network. This is a large step in the right direction to firm up the identity capabilities of the network as we prepare to move into Q2, which will bring with it some exciting ways to make it easier for anyone to interact with the identity functionalities.
  2. Created a CHEQ-ERC20 wrapped token using Gravity Bridge. This means you can now engage in Liquidity Pools on Ethereum based DEX’s such as UniSwap! The Cosmos-based CHEQ token was already available on Osmosis DEX and was also listed on Emeris DEX.
  3. Welcomed some of the major validators in Cosmos ecosystem onboard as trusted partners: Everstake, Informal systemsCitadel.OneForboleNotional, WhisperNodeSmartnodesEnigmaEZstakingBlockfend and Lavender.Five Nodes.
  4. Welcomed our second cohort of SSI vendors: Animo SolutionsGravityMavennetAyanWorksUmaziMonokeeGayaVerio (and 5 more to be announced shortly).
  5. Been showered with press love — from Bloomberg to The FinTech Times, and from Global Banking and Finance Review to Blockchain Tribune, Bitcoinist, and many more!
  6. Successfully completed our Cosmos Community Rewards, with cheqd growing the number of wallets from 6,000 to 71,000+. This also took our community engagement to new levels with 23,000+ Telegram group members47,000+ Twitter followers, and 10,000+ Discord users.
  7. Listed on BitMart, a premier global digital asset trading platform with more than nine million users worldwide and ranked among the top crypto exchanges on CoinGecko.
  8. Formed a strategic partnership with Indacoin — a leading fiat-to-crypto exchange company — to allow people to buy $CHEQ tokens more easily and drive mass adoption. Millions of credit and debit cardholders are now able to purchase $CHEQ in more than 180 countries to accelerate the adoption of SSI.
  9. Published our analysis of the Top 5 trends in Decentralised Self-Sovereign Identity and Privacy-preserving Technology in Web 3.0, based on a survey of general audiences and experts in the field of self-sovereign identity.
  10. Made it easier to engage in governance voting and discussions through the integration with Commonwealth

More ways to engage and interact with cheqd

In Q2 2022, we aim to bring more ways to interact with cheqd: both on the $CHEQ token, as well as identity functionality. Let’s dive in…

Update on product roadmap progress

✅ Our upgraded cheqd mainnet

The cheqd mainnet upgrade in March 2022 was a major step for us as we wrapped up much of the improvements to the identity aspects of the network we needed to do. This upgrade fixed technical debt issues and overall offered significant enhancements to the identity functionality and security of the network. You’ll find a more in-depth explanation of the March upgrade further in a separate blog post as well as our release notes for cheqd node v0.5.0.

📚 Improved documentation for validators and community

Last week we launched our new learning site on learn.cheqd.io. We believe it is vital that we play our part in improving knowledge of what the possibilities are with the cheqd network and generally about self-sovereign identity. This new site will act as a central location for all things decentralised identity, SSI and Web 3.0, as we draw on our existing knowledge and new discoveries to help educate our community members and partners alike.

We’ve updated the documentation for cheqd node software. Many of our SSI partners and other validators noted in our product roadmap survey that more clarity is needed in our documentation, and improvements made to the overall onboarding experience.

We have made improvements in the node installation and upgrade process through Debian packages as well as Docker images. We also created snapshots.cheqd.net to serve up daily ledger snapshots to speed up the setup/restore process for node operators.

We hope these improvements will reduce the time it takes to set up a node, reduce the need to seek support, and free up more of our engineering team’s time for building functionality on the network.

CHEQ-ERC20 wrapped token using Gravity Bridge

As we build payment rails for trusted data, we want to offer issuers, verifiers (the receivers of trusted data), and holders a choice on the means of settlement. We expect a preference for stablecoins to eliminate the volatility in either pricing or settling payments for trusted data. More on this in our tokenomics for payment models. Building a link to Ethereum was one of the most heavily requested Web 3.0 features/functionality that the cheqd community wanted in our product survey.

A blockchain bridge or ‘cross-chain bridge’ enables users to transfer assets or any form of data seamlessly from one entirely separate protocol or ecosystem to another (i.e. Solana to Ethereum, or in our case Cosmos to Ethereum and vice versa).

CHEQ-ERC20:USDT pool on Uniswap

Therefore, we partnered with Gravity Bridge to create an ERC20 representation of the Cosmos-based CHEQ token. You can transfer CHEQ between its Cosmos and ERC20 versions now using the SpaceStation InterChain Bridge web app and participate in liquidity pools on Uniswap. This brings the CHEQ token to even more DEXs, besides Osmosis DEX.

You can add the CHEQ-ERC20 token to MetaMask by clicking on More under the profile summary, and then Add Token to MetaMask (Web 3).

📖 Tutorials for identity functionality on cheqd network

Making cheqd’s functionality easily digestible and accessible has been a core goal for the team in this quarter. This one is the top-ranked feedback point from our network partners.

In the background, we have been working on multiple tutorials for creating Decentralised Identifiers (DIDs) and DID Documents using the cheqd node command-line interface (CLI) as well as Evernym Verifiable Data Registry (VDR) Tools. Stay tuned for more on this soon 🤓

🛠 Migrating cheqd’s testnet from AWS, with more DevOps automation

We initially ran most of cheqd’s own mainnet and testnet nodes on Amazon Web Services (AWS), but over the series of months we’ve been running the network, we identified a number of fundamental issues that make AWS not commercially competitive for running nodes at the scale we need to do our infrastructure. (Perhaps worth its own blog post.)

Our mainnet currently runs on a blend of HetznerDigitalOcean, and Cloudflare — and we’ve now completed this transition for our testnet as well. We’ve also worked on completely refactoring our repositories for DevOps and cloud automation tooling, which we plan on open-sourcing.

💳 Simpler ways to buy $CHEQ, through Indacoin

Easy access to $CHEQ has been a major priority for the team here, and we are happy to announce that buying $CHEQ is now a simple process, with just a debit or credit card.

This is made possible through our integration with Indacoin, which currently allows highly efficient on-ramps into cheqd and other large crypto projects. Indacoin is also currently working on developing similarly efficient off-ramps which will genuinely revolutionise how cryptocurrency is accessed, bought and sold. No complex, onerous and time-consuming commercial agreements to negotiate. 

🪂 Airdrops for the Cosmos community

We ran a series of community rewards (“airdrops”) for the Cosmos community. Airdrops are a common method used to reward community members who engage in various activities such as staking CHEQ tokens, or other networks selected, providing Liquidity on pools and generally for being loyal and engaged supporters. Check out if your wallet is eligible on rewards.cheqd.io, which will allow you to claim $CHEQ token rewards.

Out of the Cosmos ecosystem wallets we calculated eligibility for, approximately 180,000 wallets are entirely new to cheqd: as in, they weren’t staking or LPing $CHEQ before our campaigns began. The cheqd airdrop helped us achieve a number of milestones in our overall presence, and significantly increased the amount of cheqd wallets, now at 71,000+ unique cheqd wallets. We welcome these Cosmonauts from the Cosmos ecosystem onboard!

However, the airdrop was not without its difficulties and has offered us an interesting insight into more of the challenges that exist within Web 3.0 which largely come down to issues relating to identity. Across the airdrop, we were able to identify a significant amount of fraudulent behaviour based on sockpuppeting. At the same time, we made omissions that initially resulted in far lower wallets being calculated as eligible than they should have been.

We sincerely apologise to the Cosmos and cheqd community for this error and hope to make future airdrop campaigns go smoother based on the lessons learned from this one.

We do have a final airdrop mission coming soon, so watch this space… oh, and Happy Easter 😉🥚🐇

🔮 Looking forward: Q2 and beyond…

Over the coming months, we’re continuing to work on key identity aspects of the network, largely improving the overall developer/user experience and making the identity functionality come to life.

Q2 and beyond product roadmap for cheq

🔍 Universal DID Resolver

We are in the final stages of wrapping up the design and architecture for a Universal Resolver driver for the did:cheqd method. While there are REST APIs on the node/ledger software to produce the underlying data for DID and its associated DIDDoc, the JSON produced by the default REST API cannot be fully conformant to the DID Core spec because of limitations in the conversion from on-ledger to JSON format.

This DID Resolver that we’re building will enhance data fetched from ledger to provide DID Core specification conformant JSON DIDDoc production. The objective is to provide two distinct modes of running DID resolution, to meet the needs of different developer audiences.

  1. “Full” DID Resolver that directly talks to a ledger node. This will likely be required by app developers or SSI vendors looking at processing high volumes of requests, and/or if they want the highest levels of assurance that the data was pulled untampered from the ledger.
  2. “Light” DID Resolver, designed as a serverless application that relays requests to a remote/external “full” DID Resolver API. This will allow app developers who don’t want to run a full node + full DID Resolver to be able to run their own, extremely scalable, and lightweight infrastructure for servicing DID read requests.

🧑‍💻 Client-application SDKs

Software Development Kits (SDKs) are important for providing third parties functionality to use cheqd. Within an SDK for a network such as cheqd’s, it is important to provide easy functionality to (among other things):

  • Creating, updating, retrieving DIDs and associated DID Documents
  • Issuing, holding, verifying, and revoking Verifiable Credentials
  • Creating, updating, and reading schemas for Verifiable Credentials

Our aim is to make a single, modular SDK that supports the cheqd DID method while offering compatibility with Hyperledger Aries-based SDKs such as Aries Framework JavaScript.

🗃 A web-based wallet for $CHEQ tokens… and credentials

A common question we get from our SSI vendor/partners as well as from our community is a simple way to visualise and understand the token + identity functionality that our network offers. We want to bring together the work we are doing on DID Resolvers and client-app SDKs into a web-based app that allows people to engage with CHEQ tokens, as well as to hold digital credentials.

We see this as a way to demonstrate how the various parts of the tech stack fit together, and to provide a reference implementation that can be used by our SSI vendor-partners. To be clear, we do not want to directly compete with the existing rich ecosystem of wallets and credential-handling applications — but create simple user experiences, focused on Web 3.0 use cases, that were ranked highly in our SSI trends research.

🧾 Scalable revocation registries and payment rails

cheqd’s USP is that it provides a way for Verifiable Credentials to be monetised using its native token, $CHEQ. There are various commercial models that may be created by using the cheqd network.
An example payment flow for digital credential exchanges

A verifier could pay the issuer for Verifiable Credentials it receives from the holder. This gives the issuer a recurring revenue stream each time the Credentials it issues need to be live-checked by the issuer.

The mechanism for this payment is through a privacy-preserving revocation registry that the issuer establishes.

The verifier will make a payment only if it wants to check whether the holder’s credentials have been revoked or not.

Over the next quarter, we will begin to fully define the Revocation Registry architecture and the building blocks for payment rails.

Conclusion

It’s been a very busy start to the year for the team and we’ve achieved a lot of our objectives and key results in the first quarter of 2022. This provides a fantastic foundation for the rest of the year, and to continue building our vision of becoming the payment layer for self-sovereign identity ecosystems.

Alongside our partners, we want to showcase what cheqd can really do to affect the way we interact online and offline — adding a trust layer — and incentive mechanisms.

We’d finally like to give a big shout out to our community of node operators, and the ever-growing community of supporters who motivate us to keep achieving new heights as we build on our vision.

Keep it up cheqmates — and we will continue to work with your best interests at heart! ❤️

We would love to know your thoughts as always either as comments on the article or via any of our other channels below.

Make sure to join our rapidly growing Telegram community to stay updated with our most recent news and insights.

P.S. We’re also on TwitterLinkedIn, and Discord make sure to cheq in!

Top 5 trends in Decentralised Self-Sovereign Identity and Privacy-preserving Technology in Web 3.0 (2022)

5 trends survey blog

Co-authored by Alex Tweeddale (Governance & Compliance Lead), Ross Power (Product Manager), and Ankur Banerjee (CTO/co-founder)

In the early months of 2022, the cheqd team conducted two surveys diving into self-sovereign identity (SSI) and digital identity in Web 3.0. We analysed responses from a general audience, as well as from an expert audience, to tease out key trends in how identity plays a role in decentralised systems and Web 3.0.

The first article focuses on trends and key takeaways that we derived from combining a general survey and a deep-dive survey, where the respondents were a blend of experts from our list of 45+ partners as well as general audience members through outreach we did on our social media channels on TwitterTelegram, and LinkedIn.

In a future article, we will deep-dive into the technical and industry-standard topics in self-sovereign identity (SSI), from an extended survey that was shown to an expert audience on the two topics.

Overall, we had 114 completed respondents to the general survey (with a completion rate of 65.8% with a confidence level of 95% for the trends and conclusions drawn from this survey. We describe the methodology and statistical analysis of survey respondents in more detail at the end of this article. We’ve also included links to the anonymised, aggregated responses for those interested in diving deeper into the data.

Key Trends in Digital Identity from cheqd’s survey

  1. Trend #1: Maintaining privacy and control of their own data is of paramount importance to web users
  2. Trend #2: Users — and the companies/organisations where they want to use self-sovereign identity — have vastly different motivations
  3. Trend #3: Privacy-preserving commercial models for digital identity exchange could radically accelerate the adoption of self-sovereign identity
  4. Trend #4: Identity is a foundational building block for DeFi and Web 3.0
  5. Trend #5: Healthcare, Social Media, and Government use cases lead the pack among “traditional” sectors where SSI can be applied

Trend #1: Maintaining privacy and control of their own data is of paramount importance to web users

PEOPLE DO NOT FEEL IN CONTROL OF THEIR DATA

An overwhelming majority — 68% — felt that they had limited/no control over their personal data, and what happens once it’s shared with companies. Perhaps not unsurprisingly, given the composition of our survey respondents, a lot of them believed that self-sovereign identity (SSI) — a new paradigm in portable and interoperable digital identity — would be the default method of handling digital identity in a 5+ years time horizon.

Obviously, in a lot of scenarios people have to give their data to a company. For example, when buying a product from a Shopify store, a customer needs to give Shopify / the store their name and address (so that they can send the items bought).

An SSI solution doesn’t automatically solve the problem of whether a company decides to take someone’s personal/business data, and repurposes it. What it does offer a possibility of is to make asking for fewer correlatable data points or cloaked data points and make that the norm. This is a principle called data minimisation.

What do does ‘data minimisation’ mean?

Data minimisation means collecting the minimum amount of personal data that you need to deliver an individual element of your service. It means you cannot collect more data than you need to provide the elements of a service…

- Derived from UK Information Commissioner’s Office (ICO) guidance

duck duck go cheqd

Two good examples of data minimisation in active usage are Apple’s Hide My Email and DuckDuckGo Email Protection: both offer the ability to hide the real email addresses as well as remove trackers that could leak personal data. Albeit these offerings are not built using SSI, it demonstrates a path forward that people will adopt privacy-preserving solutions when it is offered to them.

Companies hide trackers in your emails that can capture personal information. Source: DuckDuckGo “Spread Privacy” blog.

Self-sovereign digital identity expands this concept beyond just email addresses and enables data portability across different companies, industries, and even geographies — for far more types of personal/business data. Techniques such as selective disclosure allow people to control what they share and minimise it in a fashion that moves data ecosystems towards giving people more control over their data.

“For far too long, blanket terms of service agreements have forced consumers to either ‘agree’ to all of a company’s conditions or lose access to a website or app entirely…No negotiation, no alternative, and no real choice.”

— Rep. Lori Trahan (D-MA)

EXISTING DATA PROTECTION REGULATION IS NOT GOOD ENOUGH

66% of our respondents said they don’t feel existing data privacy regulations are sufficient to give people control of their data. This is no surprise when we consider that regulations such as GDPR have resulted in more compliance on part of companies…but with limited effect, on the control a person can exercise.

Screenshot of ToS;DR home page

It’s extremely common even under the scope of GDPR that people are prompted to accept long-winded terms of service, where they blindly grant access to companies to their personal data that they understand little about. 

This situation has gotten ridiculous enough, to the extent that it has spawned projects such as ToS;DR (“Terms of Service; Didn’t Read”), where community volunteers annotate ToS policies into a more digestible format; and the Terms-of-service Labeling, Design and Readability Act (TLDR Act, a nod to the term “too long, didn’t read”) to legally compel companies to provide more tangible controls to people.

Trend #2: Users — and the companies/organisations where they want to use self-sovereign identity — have vastly different motivations

MOTIVATIONS OF USERS ARE LARGELY CENTRED AROUND CONTROLLING THE PRIVACY AND ACCESS TO THEIR DATA

We asked our survey respondents why did they, personally, care about self-sovereign identity. The choices presented here were based on commonly-quoted reasons the team at cheqd had heard during working during the past five years in the space of self-sovereign identity.

Some of the choices presented were directly beneficial to them, such as the privacy of personal/company data, which was ranked as the top reason for their interest in SSI by 62.3% of all respondents.

While the overall ranking disproportionately skewed towards privacy and control of their data, personal control (ranked 2nd overall) and efficiency gains (ranked 3rd overall) were the next closest motivations. Control and efficiency are things that both users — and the companies/organisations they interact with — care about.

Portabilitybetter inclusivity, and technological innovation brought the middle of the pack with relatively similar spreads. Given the demographics of our respondents, there was a slight uptick at 1st/2nd ranks for concepts such as tech innovation and decentralisation than others.

Scope for commercial gains/profits had low ranks at position 1 or 2 (still higher than both innovation and inclusivity), with a big bump around 5th rank — a bit more on this later.

WHY WOULD COMPANIES/ORGANISATIONS BOTHER WITH PRIVACY-PRESERVING DIGITAL IDENTITY?

Stating that people in our survey wanted SSI is a tad obvious…and hopefully we’ve also shown through examples outside of the sphere why people care about and adopt privacy-preserving digital identity. But why would the companies that these users interact with care?

To dig into that question, we asked our expert audience of executives and industry experts from digital identity companies why their own existing/prospective clients cared about SSI.

Reducing compliance risk was chosen by far by more than 2/3rds of the respondents who answered this question (70% of respondents), which is undoubtedly aided by clearer regulatory frameworks that promote privacy-preserving digital identity (55% of respondents). (We cover the evolution of the use cases and regulatory frameworks later in Trend 5.) Tied in the second spot was a desire to stay ahead of the curve by adopting new technology (also at 55%), which contrasts with the relatively-low ranking of “technological innovation” as a factor from a user perspective. Reduction in costscost of existing identity verification providers, or generating new revenue was selected by fewer respondents, which could be due to an existing lack of solutions that enable this in the space.

Other reasons we heard from our expert audience on why their clients care about SSI…

“Providing new privacy enhanced experience for end users”
“Overcome surveillance capitalism”
“Increased trust and removing friction”
“End-to-end transparency & correlatability for compliance use cases; protecting business confidentiality”
“A recognition that the public favors solutions that value their privacy.”

IF EVERYONE WANTS SELF-SOVEREIGN IDENTITY, WHY ISN’T IT BEING ADOPTED MORE WIDELY?

The wide range of partners we have here at cheqd allowed us the opportunity then to flip the previous question and ask our expert audience what the biggest blockers they have heard from their clients in being able to consider SSI adoption.

The picture that emerges is an impression — whether justified or not — of technical standards not being mature enough (60% of respondents) and lacking/limited interoperability with products of other SSI software or existing enterprise systems (55% of respondents). To be fair, this is a clear rallying cry for the self-sovereign identity software industry: the developer experience of integrating, for example, Sign-in with Apple takes only a few lines of code, but implementing an SSI solution could take dozens to hundreds of person-hours of effort.

That might be slightly unfair as a comparison to make, or comparing apples to oranges since SSI goes far beyond what a simple single sign-on achieves. But the reality is that enterprise clients are, in all likelihood, actually comparing it to Apple’s (or Facebook’s / Google’s / traditional identity verification providers’) developer experience at a surface level.

This neatly brings us to the rest of the top 5 blockers: unclear understanding of return-on-investment for investing in SSI solutions (55% of respondents), lack of knowledge of the benefits SSI brings among decision-makers (50% of respondents), and lack of commercial/business models (30% of respondents). These all broadly fit into the theme of being able to articulate the business value of why SSI is beneficial. Educating stakeholders is a common refrain that comes up in the free-text responses.

Our purpose here in showing these answers is not to cast a shadow of doom-and-gloom on the prospects that self-sovereign identity has. Instead, we wanted to transparently highlight the areas the industry experts themselves have identified as spots where the whole sector could improve. We’re assessing and responding to this data ourselves at cheqd to see where we could improve.

Going back to the general survey for a second, it’s interesting to note that a larger portion of the general audience thinks the technical standards in SSI are mature enough for widespread use (28% agree, 38% neutral) compared to the results we saw from blockers faced by the expert audience.

Once again, an overwhelming portion of respondents (61%) agreed that Web 3.0 / blockchain apps need integrated digital identity solutions. They are also passionate that there aren’t any alternatives besides SSI they strongly believe in.

There is one thing that more than 70% of respondents from our expert audience agreed would have the biggest impact in driving the adoption of SSI among their enterprise customers: payment mechanisms for digital identity exchanges. Onwards to Trend #3

Trend #3: Privacy-preserving commercial models for digital identity exchange could radically accelerate the adoption of self-sovereign identity

One of the core hypotheses behind cheqd’s inception is that a lack of commercial models — which are privacy-preserving as well — is hampering the lack of SSI adoption. We described this in The business models of identity as follows (excerpted):

… the time and resource cost an issuing/verifying organisation incurs must not be ignored for a viable and sustainable self-sovereign identity ecosystem.

For instance, government-issued credentials should be made free / as cheap as possible to acquire as they are funded through taxes and/or one-off fees. This is crucial as government-issued credentials are often the genesis of trusted data in many industry contexts.

However, in other scenarios where an issuing/verifying organisation is not a publicly-funded organisation, we do see an unmet need for compensating organisations that carry out the work of verifying digital identity. These organisations are the root of trust that make SSI credentials held by an identity subject more trustworthy and have greater utility.

In that blog post, we described this as the flywheel for SSI adoption: trustworthy digital credentials that are cheaper to consume and produce compared to the current costs of KYC/KYB verification services will, over time, increase the volume of credentials in circulation and hence drive these costs down for all users and companies to make consumption cheaper and easier.

Flywheel of adoption

The virtuous cycle of SSI adoption, accelerated by viable commercial models

As we saw in Trend #2, maintaining the privacy of users while they interact with companies is something that people deeply cared about. After all, if the gains that were gained from adopting self-sovereign identity were compromised by correlating payments recorded on an immutable ledger, these benefits are washed away. Obviously, cheqd will be designing and building with this in mind!

70.3% of respondents from the expert audience agreed with our internal thinking that privacy-preserving payment mechanisms for identity exchange would have a large impact on driving SSI adoption. The challenge, so far, has been models that achieve value exchange while maintaining privacy in transactions.

The Sovrin whitepaper in 2018 proposed a payment mechanism called holder-pays-issuer; an example of this is when I pay a government agency a fee to be issued a passport document. There’s a direct exchange of value here since it costs the government agency some money to process the request.

This model can also be extended to verifier-pays-holder; an example of this would be if I charged a bank that wants to KYC me for access to a copy of a digital passport credential. These two models clocked in at about 32–41% of respondents believing holder-pays-issuer or verifier-pays-issuer would have a large impact.

However, our hypothesis here at cheqd has always been that while there may be some credentials where people are willing to “buy” them (paying to get the credential) or where companies would be willing to “buy” the rights to have a peek at a holders’ wallet, it would be hard to convince all people in an ecosystem to change their behaviour towards this.

What we believe is a more viable commercial model is one where verifier-pays-issuer, i.e., the recipient of the information pays the person who created the credential. 62.2% of the expert audience respondents said verifier-pays-issuer would have a “large impact” on SSI adoption.

We don’t take it lightly that establishing such a model is hard to do while maintaining privacy. Our methodology here is to not create a locked credential — as that breaks interoperability and portability — but to allow issuers to charge for access to the revocation status of a credential.

Drivers licenses as an example of verifier-pays-issuer

I could show my drivers license to at a grocery store to prove my age when buying alcohol. Since the checkout staff only care about deriving my age from the date of birth, they don’t need to care whether the drivers license is actually valid (e.g., it could have been “cancelled” if it was reported as stolen) as long as it is document that was issued by a competent authority. This is analogous to showing a Verifiable Credential, where the recipient can see that the credential is cryptographically untampered.

However, if I took the same drivers license to go rent a car, the car rental agency would likely way to check if the license was issued by a competent authority and that it wasn’t otherwise disqualified/revoked (e.g., reported as stolen, revoked due to dangerous driving, etc). This is analogous to presenting the Verifiable Credential and being able to read it being free, with the receipient/verifier having the option of paying for a revocation status check. The revocation status here is an attribute of the drivers license document controlled by the issuer, and not an attribute of the license holder themself.

It’s important to clarify here that there is no one-size-fits-all, and we don’t plan on mandating any particular price point for credentials on the cheqd network. Instead, we believe that some credentials will likely be free to consume as well as check revocation statuses for, some will be charged out by holders of the credentials, and some will be “free” to present with an additional charge to check revocation status.

On that point, we recognise that having stable-pricing mechanisms is important for this economy of function. 40.6% of respondents said stable pricing would make a large impact, with 45.9% saying it would make a moderate impact. This aligns with our thinking in terms of how we plan on handling payments in stable dollar-equivalent payment means such as stablecoins. It forms part of our tokenomics vision that encourages flexibility and competition in the market.

Watch our talk The Seven Deadly Sins of Commercialising SSI from Internet Identity Workshop 2021 to dive deeper into how we’re thinking of tackling the challenges of privacy-preserving payments for digital credential exchanges.

Trend #4: Identity is a foundational building block for DeFi and Web 3.0

cheqd is a rapidly-growing digital identity startup, and we always want to ensure that we’re targeting our resources on areas that will have the greatest impact/traction. While it may not be 100% correlatable, instead of asking our survey audience generically about where self-sovereign identity might have the most impact, we phrased the question to ask them where we should focus our efforts.
cheqd is a rapidly-growing digital identity startup, and we always want to ensure that we’re targeting our resources on areas that will have the greatest impact/traction. While it may not be 100% correlatable, instead of asking our survey audience generically about where self-sovereign identity might have the most impact, we phrased the question to ask them where we should focus our efforts.

DeFi and Web 3.0 applications are unique in the sense that “your reputation travels with you”, as described by a16z. Web 3.0 services have a high degree of switchability: don’t like a particular wallet, exchange, or dApp? There’s probably a different app or service to which you can port your user experience to, while retaining history.

Regulations such as the Travel Rule bring new compliance requirements on crypto businesses (which Nota Bene focuses on), and as more regulators get interested in “digital dollars” or Central Bank Digital Currencies (CBDCs), cryptocurrencies will face greater scrutiny. Other efforts have arisen more natively from the blockchain industry, such as Centre Consortium’s Verite, which aims to bring decentralized identity to crypto finance.

A lot of these CeDeFi use cases above are a variation of Know Your Customer (KYC) and Know Your Business (KYB) processes — but the concept of identity isn’t just related to KYC / KYB. For instance, it’s painfully common for low-reputation crypto projects to be a “rug pull”. (Simon Taylor’s Fintech Brain Food newsletter covers the intersection of DeFi and identity pretty well on a regular basis.)

Interestingly, our survey respondents were relatively lukewarm towards the idea of applying SSI to traditional finance (or, “TradFi”). Our hypothesis is that this might be due to either…

…an acknowledgement that the traditional finance sector moves very slowly. We’d phrased the question as what we should focus on this year.
…a bias due to our audience demographics.

THE INTERSECTION OF IDENTITY AND NFTS

Much like the issue of uncertain reputation in the case of “Who’s behind this particular crypto transaction, anyway?” — as demonstrated in the case of potential insider-trading of the Meebits NFT collection or Chainalysis’s report on rampant “wash trading” for these digital assets. A transaction involving a valuable NFT has the same issues as a high-value (fungible) token transfer does. OpenSea, one of the world’s largest NFT marketplaces, had to bring in special countermeasures to combat scammers who pretended to be from their own support team.

Bored ape

Widespread interest in the NFT space is regardless creating a dangerous proliferation of projects that attempt to create “digital credentials” using NFTsPseudonymous identity, tied to a user handle or to a wallet address — the way that an NFT would be — is still an identity. The fundamental problem with using transferrable tokens to handle identity or reputation is that it’s hard to determine whether the reputation was earned or bought. Think of an employee pass, a driver’s license — or even something more pseudonymous such as a gamer profile. These are digital footprints that are earned through effort, and should not be transferrable.

Ethereum name service

Ethereum Name System (ENS) domains — like the one above — make the user experience of wallets simpler with the trade-off of making interactions more correlatable

Then there’s the issue of how strongly correlatable and privacy-leaking NFTs can be, due to the nature of them being linked to on-chain handles such as Ethereum Name System (ENS) domains. Many people willingly mention their .eth addresses on their social media, such as Twitter, making it trivially easy to follow any interactions with other wallet addresses, and understand what specific NFTs/assets that particular person owns.

It’s interesting to see the emphasis on DeFi / Web 3.0 in contrast to NFTs. This is a strong sign that there is an understanding of the distinction between these, despite the overall dominance of NFTs adoption in the marketplace. NFTs was the lowest-ranked use case in our survey.

Pest control authentication

Pest Control is the official authentication group for Banksy artwork

With valuations of non-fungible tokens such as Bored Ape Yacht Club (BAYC) soaring exponentially, NFT buyers may also care about the provenance of their digital artwork. This doesn’t mean the same as KYC: for instance, the official artwork authentication group for Banksy is a service called Pest Control. Many NFT artists also similarly skew towards pseudonymous identities and may want to offer the assurance on the provenance of easily right-clickable digital artwork — which helps provide assurance that maintains high valuations for an NFT collection — while preserving the privacy of buyers, sellers, and creators.

THE CASE FOR SELF-SOVEREIGN IDENTITY IN DEFI/WEB 3.0

One of the breakout use cases we saw for SSI was “one-click sign-in with cheqd”, with identity verification baked into onboarding. This is analogous to the ubiquitous Login with Google / Facebook / Twitter / [insert other large Web 2.0 service] buttons that you may see online. (More recently, Magic.link raised a $27 million Series A to bring such single sign-on technology to Web 3.0 apps as well.) However…the traditional Login with X button doesn’t prove my real identity: it’s just a shortcut method to bypassing a username and password setup. You wouldn’t really expect a username+password to be sufficient enough to prove reputation in the context of Know Your Customer (KYC), and also in scenarios where pseudonymous identity is sufficient. For example, a lot of decentralised finance (DeFi) or decentralised autonomous organisations (DAOs) may not require KYC in the traditional finance (TradFi) sense, but would perhaps care about preventing sockpuppet accounts from influencing governance decisions in their community.


Overall, we saw strong interest in this space on pseudonymous forms of identity and online reputation to various degrees. Crypto adopters might care about an inherently private means of proving their own reputation, the provenance of digital assets, or strong privacy-preserving mechanisms for validating whether they are transacting with the actual person/project they intend to interact with.

In the SSI context, one of the areas we’re keen to explore is to move beyond the usage of “well-known URIs” (Uniform Resource Identifier) to determine whether a Decentralized Identifier (DID) is trustworthy. This is achieved by tying a DID back to a web endpoint/domain name…which ultimately anchors things back to the very centralised public-key infrastructure (PKI) that DIDs aim to disrupt.

A pseudonymous online reputation is also valuable for traditional real-world and Web 2.0 services. We explore this in the next section.

Trend #5: Healthcare, Social Media, and Government use cases lead the pack among “traditional” sectors where SSI can be applied


HEALTHCARE & TRAVEL

The Covid-19 pandemic has undoubtedly been one of the largest-scale and most deeply-impactful periods in recent human memory, with loss of life and health effects that will likely linger for decades. It has also been a period of “forced experiments” that accelerated the adoption of digital/online services, as large parts of the world came to grips with new realities of what a hybrid workforce looks like.

“How do I prove my Covid-19 vaccination status, or test results, with a high degree of trustworthiness?” has been an especially important question that societies and governments have had to grapple with. Given this lived experience, it’s unsurprising that healthcare stood out as one of the top use cases in our survey. Covid-19 vaccination/testing results, provided through self-sovereign digital credentials, provide one possible solution to this question — without the need to create massive, global/regional databases of health records (arguably a bad idea) or having to rely on paper/PDFs (easily spoofed).

IATA airlines

A wide range of airlines are trialling Covid-19 records under the IATA Travel Pass scheme, built on SSI credentials

For example, one of cheqd’s key partners — Evernym — built the International Airport Transport Association (IATA)’s Travel Pass scheme. Local governments, health agencies, and international organisations such as IATA allow travellers to easily, securely, and digitally prove their compliance with Covid-19 regulations. This is now officially accepted by dozens of airlines and governments around the world, as the world takes tentative steps to re-open.

cheqd’s co-founders have personal/professional experience with the use of SSI in travel and healthcare…

Fraser Edwards (CEO) worked on the Known Traveler Digital Identity (KTDI) initiative, a collaboration for the use of SSI digital ID for international travel between the World Economic Forum (WEF), the Dutch government, and the Canadian government.

Ankur Banerjee (CTO) was one of the key architects for the early trial phase of NHS Digital Staff Passports. Since then, Digital Staff Passports has evovled to an NHSX initiative being rolled out across certain NHS trusts with invovlement from Truu (a cheqd network partner), Microsoft (who built Azure AD Verifiable Credentials)Condatis, and Evernym.

GOVERNMENT

Without the involvement of governments across the world, these healthcare (and travel) use cases described above would have never really seen the light of day. One of the pioneers in terms of laying legal/regulatory framework guidance as well as funding technical research in this has been the European Union government, especially through its Next Generation Internet Initiative: the European Self-Sovereign Identity Framework Lab (eSSIF-Lab).
eSSIF-Lab

European Union’s Self-Sovereign Identity Framework Lab (eSSIF-Lab) is one of the 

Read Evernym’s analysis of the EU Digital Identity Architecture and Reference Framework, written in collaboration with ValidatedIDIntesi Group, and iLabs which explains the latest developments in how the EU guidance impacting SSI is evolving.

It’s no surprise that the EU, with its multi-nation bloc, recognised the need for portable digital identity credentials that would work across all the EU nations without needing to resort to massive EU-wide databases. The European Blockchain Services Infrastructure (EBSI) and eSSIF-Lab provide an early look at what an ecosystem focussed on user-controlled digital identity could look like.

EBSI

European Blockchain Services Infrastructure (EBSI) potential market, by the numbers

Other early pioneering government initiatives in self-sovereign identity are the IDUnion network in Germany (which has cheqd network partners Danube TecheSatusEuropean EPC Competence Center, and Spherity as members); and the Government of Canada with has a rich ecosystem of national and provincial initiatives for SSI.

Governments have a strong fit with the identity space, as a lot of the “genesis” of identity attributes are often derived from government-issued credentials. Many governments around the world are also keen on improving the citizen/resident experience, building on technology stacks that don’t have strong vendor lock-in.

Trend 5, therefore, helps us show the growing interest in how the first credentials in any SSI ecosystem can be created from government entities.

Methodology

We feel it’s worth providing some insight into how we constructed and ran the survey. Overall, we had 114 completed respondents to the general survey (with a completion rate of 65.8%; pretty high given that average survey completion rates are around 10–33%). The estimated audience/population size this survey was offered to was ~12,000. Taking the sample size of respondents into consideration, it allows us to state a confidence level of 95% (with a margin of error of 9%) for the trends and conclusions drawn from this survey.

We also asked all respondents to self-score their knowledge of decentralised digital identity and Web 3.0 from low to high. Our audience composition likely resulted in most rating themselves average to high (between 5–10 on our scale), due to their industry background in these topics.

At the end of the general survey, we identified 45 respondents as either pre-qualified experts from our partners or self-identified as having a high degree of knowledge of digital identity / Web 3.0. We had 37 completed respondents to this deep-dive survey (with a completion rate of 84.6%). This group included experts from some of the world’s most prestigious early-stage to late-stage digital identity companies and Web 3.0 partners. Given the estimated population size (~90 qualified individuals) this survey was offered, the sample size of respondents allows us to state a confidence level of 90% (with a margin of error of 10%) for additional insights derived from the expert audience group.

TOOLS

We used Typeform for this survey as we both valued the branching options it offers, whilst also appreciating the overall user experience it offers. One of the consistent pieces of feedback that we received was that the respondents enjoyed answering the survey and found it a “slick” experience.

One of the issues we encountered with Typeform was that we used its auto-estimation feature to calculate the estimated length of the survey (in minutes). This led us to state that the survey would take “7+ minutes” to complete. What we didn’t realise at the time is that Typeform stops counting survey length after 7 minutes. We also validated the “7 minutes” length by running through the survey internally, but during this internal testing, we didn’t provide extended free-text answers — which many of our respondents did. As a consequence, the average completion time was approx. 31 minutes, which was significantly higher than the expectations we set with people. (Since this is an average figure, some people would have spent significantly shorter, while others longer. This may even include the time when the survey was left open in the background in a tab.)

Another issue we ran into was Typeform being unable to export answers to multi-select questions in a consistent format, which took us 2+ weeks of back-and-forth with their customer support team. (Thankfully, they were proactive in offering us service credits.)

Despite the challenges we faced, the extremely high completion rate and overall positive sentiment towards the survey showed us that when a survey is designed to be engaging and feel quick, it makes respondents likely to respond in detail and offer rich insights. We’ll be more careful about setting the expectations right when designing future surveys on the time commitment needed. Typeform enabled us to build this experience, and we foresee us continuing to use it, above tools such as SurveyMonkey.

We also used Datawrapper to generate visualisations that could be embedded easily, since they offer the ability to have dynamic and interactive embeds, the ability to download static images, and auto-suggest “sensible” defaults for visualisations. They also guarantee to keep the charts alive regardless of whether our account there is deleted, thus preventing link rot, and don’t track as much data as competing solutions such as Google Charts.

QUESTION FORMULATION

Generally, we tried to keep to consistent usage of ranking scales and Likert Scales because these offer a clear picture of how badly something is wanted, rather than a simple indication that there is somewhat of a desire without a clear way of comparing one to another. For example, just asking respondents whether to pick amongst a list would tell us what percentage overall voted for a choice, but wouldn’t tell us how they ranked the options against each other when forced to make the choice.

Similarly, the usage of “Strongly Agree to Strongly Disagree” allows us to understand degrees of agreement/disagreement to a statement, rather than a simple yes/no binary choice. We took a lot of care to phrase statements in a neutral fashion (as far as possible) and then present a choice against Likert Scale, as well as blending in statements that implied the opposite sentiment to previous statements — as this allows us to check whether the spread of opinions is a mirror image or not. This helps validate whether someone is simply going down a column, picking the same choice, to breeze through the survey as quickly as possible.

We wanted to make this survey overall more quantitative as it is far easier to retrieve more results, plus analyse and inform our strategy with a more data-driven approach. That said, the offering of free-text input proved worthwhile; we loved the range of comments and opinions, as can be seen from some of the quotes we pulled out above.

AUDIENCE DEMOGRAPHICS OF THE RESPONDENTS

When approaching this survey, we had two key objectives. First, we wanted to uncover deep insights from our partners that could help strengthen our understanding of what is most needed from cheqd. Secondly, we wanted to be open enough to resonate with those with less specific knowledge, since such persons can help provide a more objective and generalist perspective on us as a company and the direction we should head in.

We created this survey in a way that not all questions were meant to be completed by every respondent. For example, if someone was to indicate in certain questions that they held limited knowledge of self-sovereign identity, we used branching logic to ensure these individuals did not provide answers without enough prior insight as this could taint the overall results. We also chose to accommodate a larger audience to improve the overall reliability survey, as if we had just surveyed those immediately involved in SSI (i.e. current and prospective partners), we’d likely witness a level of confirmation bias about the overall level of understanding of the space and what is more sorely needed.

We also noted that surveys that take too much time drastically worsen the overall results, as questions towards the beginning get more love. Therefore, on top of leveraging branching logic to help improve the accuracy of results, we also used the branching logic feature to help limit time spent on questions that either didn’t have relevance to the respondent or would leave them unable to answer, thereby simply selecting any option so to proceed.

ANONYMITY/PSEUDONYMITY OF RESPONDENTS

This was important to us for obvious reasons: both for what we stand for at cheqd but also for the validity of results. When forced to provide their identity people will generally answer less honestly and often overly positively. However, we did want to be able to guide respondents down the right path based on their level of experience and area of expertise.

To balance these somewhat competing needs, we opted to ask for aggregated demographic information to guide the branching logic of the survey and waited until the end to offer the opportunity to provide any more personal information.

What’s next

To recap, we identified the following key trends from our survey:

  1. Trend #1: Maintaining privacy and control of their own data is of paramount importance to web users
  2. Trend #2: Users — and the companies/organisations where they want to use self-sovereign identity — have vastly different motivations
  3. Trend #3: Privacy-preserving commercial models for digital identity exchange could radically accelerate the adoption of self-sovereign identity
  4. Trend #4: Identity is a foundational building block for DeFi and Web 3.0
  5. Trend #5: Healthcare, Social Media, and Government use cases lead the pack among “traditional” sectors where SSI can be applied

There is plenty more that could be extracted from the survey, which is a testament to our community and respondents for providing such thought-provoking insight. Stay tuned for our following blog posts, where we go into greater detail about trends in the Web 3.0/Cosmos ecosystems, and in the standards stack of self-sovereign identity.

All of our charts can be found on Datawrapper River and are reusable under a Creative Commons Attribution-ShareAlike 4.0 License. The aggregated, non-identifiable survey responses can also be accessed under the same licensing terms for anyone who is interested in re-using this survey.

We’d love to hear your thoughts and take about the state of self-sovereign identity and how it intersects with the Web 3.0 ecosystem. To find out more about SSI and digital identity, follow cheqd on LinkedIn or Twitter.

cheqd’s product vision for 2022

2022 Product Vision-2

Co-authored by Fraser EdwardsRoss Power, and Alex Tweeddale

We’re incredibly excited to begin the year after the successful launch of the cheqd network and CHEQ token at the end of 2021 and can’t wait to share with you what’s coming next. Read more about what we’ve achieved in cheqd’s 2021 year in review from our CEO and co-founder, Fraser Edwards.

This blog will offer insights into our priorities and next steps for the cheqd network.

cheqd ecosystem partners

cheqd’s ecosystem of partners: ranging from self-sovereign identity vendors to Web3.0 companies

Bringing on board a wide range of partners and participants

Our priority at the launch of cheqd network was to establish a public, decentralised network with core decentralised identity functionality and governance mechanisms. It has been exciting to welcome 45+ validators on board, including 20+ self-sovereign identity (SSI) application vendors, digital identity startups, investors, and Cosmos-native / cross-chain network validators. Many individual entities and organisations who participated as validators in the cheqd testnet also helped to make our software releases more stable and provided invaluable feedback, and we were excited to welcome many of them onto our mainnet as well.

Special shoutouts go to the Osmosis DEX team and community for incentivising out token pairs on the DEXNotional Labs for relaying us to other Cosmos chains (and for a lot of support during the launch phase); and to OmniFlix for providing us with the ability to proving the ability to transfer, stake, and vote on governance proposals via their Keplr wallet integration.

Metrics from the cheqd blockchain explorer

KEY ACHIEVEMENTS, BY THE NUMBERS

  1. CHEQ was listed on Osmosis, the largest DEX (decentralised exchange) in the Cosmos ecosystem, with CHEQ:OSMO (Osmosis pool #602 statistics) and CHEQ:ATOM (Osmosis pool #617 statistics) liquidity pools established by the community.
  2. CHEQ was listed by Gate.io, a top 10 trading CEX (centralised exchange), with millions of CHEQ tokens in volume traded. We hope to be available in more venues soon.
  3. Approximately 25% of the total supply of the network is being staked on validators, giving our community the ability to reap staking rewards and participate in decentralised governance that controls the network.

TL;DR: What’s coming next in cheqd?

We are excited to expand on our vision for a public, decentralised identity network that establishes business models for self-sovereign identity. To do this, we will build on top of the core identity and token functionality that we shipped with our mainnet launch towards the end of last year. Future releases of cheqd product software would ship, once accepted by the network and community using governance proposals, at the end of every calendar month.

cheqd’s product vision for 2022 overview

cheqd product roadmap overview for 2022

Our three focus areas for product roadmap development in the year ahead can be broken down into:
  1. Identity: Core identity functionality for our partners to build compelling self-sovereign identity use-cases on top of the cheqd network.
  2. Web 3.0 Core: Core Web 3.0 functionality adds deeper integration for our network and token into the Cosmos and other blockchain ecosystems.
  3. Web 3.0 Exploratory: Emerging Web 3.0 use-cases such as decentralised exchanges (DEX) ecosystems; decentralised autonomous organisations (DAOs); identity for non-fungible tokens (NFTs), and in general, DeFi applications.

We would love to hear feedback from our community and our partners on our product roadmap described below. Within the next few weeks, our team will launch a product roadmap survey that allows everyone to provide feedback on what matters to you and where we should be focussing. If you’re interested in taking part in this, please ensure you have signed up for our newsletter or are in our Telegram group. Stay tuned for more details!

Deep-dive into cheqd’s product roadmap for 2022

Our focus is to expand the utility of the cheqd network for decentralised identity use cases. This is our core mission and vision and — the reason why — we have such a broad interest within the self-sovereign identity (SSI) vendor ecosystem.

We want to get to a point, quickly, where we can provide compelling answers to “What identity capabilities does cheqd network provide, and how do I build it into my apps as an app developer / software vendor?”

Equally important as a focus area is deeper integrations with the Cosmos and wider Web 3.0 ecosystem. Digital identity is a burning need across DeFi, CeDeFi, and “traditional” Web 2.0 apps that cuts across as a “horizontal”, as well as being extremely important in “verticals” such as NFTs and online/offline reputation.

In the sections below, we’ll talk you through our immediate product roadmap priorities, as well as future product improvements later in the year, based on these two categories.

Quick Wins product roadmap items (Q1 2022)

Each new release of cheqd software that we ship would aim for incrementally improving core functionality, which improves life for users (individual and enterprise), token holders, node operators and app developers. In this category (which we’ve called “Quick Wins”), we have product features and improvements where the approach is well-known and understood within the SSI and Web 3.0 industries.
cheqd’s product vision for 2022 digital identity

Product roadmap items related to digital identity for cheqd in 2022

Identity

Much of the basic identity functionality is currently live on the cheqd mainnet, but we’ve been working on stability and security improvements (due to go live by the end of January 2022) before we begin guiding app developers in earnest. Here are our product ideas in the identity space we believe will have the greatest impact in the short term.

TUTORIALS FOR DEVELOPERS ON USING THE IDENTITY AND TOKEN FUNCTIONALITY OF CHEQD NETWORK

Simple tutorials that help app developers answer the question “How can I integrate cheqd into my app?” is a clear improvement in the developer experience we will offer soon. Our documentation site (and our Medium blog) will be the home for these resources.

We are also eternally grateful to the members of our cheqd Community Slack for helping each other out and often highlighting tips, tricks, and resources.

INTEGRATIONS WITH INDUSTRY-STANDARD IDENTITY PROJECTS SUCH AS DIF’S UNIVERSAL DID RESOLVER PROJECT

Not every app developer needs the ability to write Decentralised Identifiers (DIDs) onto the cheqd network ledger: some would only need the ability to query and resolve DID Documents for did:cheqd identifiers. Even developers who do want to write DIDs typically rely on projects such as DIF’s Universal DID Resolver to handle reading DIDs for a wide range of methods.

Publishing a Universal Resolver driver for did:cheqd will simplify the experience for SSI vendors and app developers to utilise REST APIs and other interfaces to resolve DIDs on the cheqd network.

NEW & IMPROVED DECENTRALISED IDENTITY FUNCTIONALITY

We designed the did:cheqd method to account for new developments in the World Wide Web Consortium (W3C) Decentralized Identifiers (DIDs) specification that are not present in the did:indy method, such as the ability to have multiple controllers associated with a DID. We also believe that there are alternatives within the DID Core specification now (such as Verification Methods) that remove the need for separately publishing credential definitions as their own separate entity; and a more DID-spec compatible way of publishing schemas on ledger on the cheqd network.

We know though that there are still areas we can improve on. Looking further, we aim to publish an implementation report for our DID method against the DID Core Specification Test Suite to transparently show what capabilities our DID method has, and a roadmap on how we aim to improve it.

Product roadmap items related to Web 3.0 Core for cheqd in 2022

Web 3.0 Core

WIDER INTEGRATION WITH COSMOS ECOSYSTEM

CHEQ tokens are currently only usable on the Keplr Wallet browser extension for Chrome since only the browser plug-in supports auto-discovering new Cosmos networks.

We recognise that this is a clear area where we can improve the user experience for token holders, for instance, by providing native support for CHEQ tokens in other Cosmos wallet applications and on mobile platforms. Making CHEQ available on mobile wallet apps takes time, as wallet developers need to manually add support for the cheqd network and then get software updates approved by the Apple App Store or Google Play Store. (Foiled by centralised gatekeepers!)

We also know a niche of token holders in our community who prefer to protect their tokens with higher-grade security offered by hardware wallets (such as Ledger), which also require a manual approval and validation process.

Participation in governance proposals and staking to validators is currently possible due to our friends at OmniFlix, and without them, we would not have been able to launch our mainnet. We want to expand this in Q1, by offering further choices of platforms that offer this functionality to our token holders.

BRIDGE TO ETHEREUM NETWORKS

As we build payment rails for digital identity (more on that below), we want to offer issuers, verifiers, and holders a choice on the means of settlement. We believe that widely-adopted stablecoins such as USDC offer price-stable currencies to designate such transactions, and therefore bridging to Ethereum makes obvious sense.

We also want to provide access to the ability to acquire CHEQ tokens using ERC-based tokens, not just Cosmos-based tokens, and therefore further secure our decentralised governance on our proof-of-stake network.

IMPROVED AUTOMATION & TOOLING FOR MANAGING VALIDATOR NODES ON CHEQD NETWORK

We’re thrilled with the engagement we’ve had to date from the 45+ node operators validating on the cheqd network. Many of these are SSI vendors new to the Cosmos ecosystem, and therefore, we want to significantly simplify the experience for running and managing validator nodes for the long-term health of the network.

We will also continue to maintain our testnet as a playground for app developers to build and test applications. In the coming weeks, we’ll launch a testnet faucet, making it easier to request test CHEQ tokens instead of the current manual process.

All of this will mean our own product & engineering team can spend more time building groundbreaking functionality!

Strategic product roadmap items (Q2 2022 and beyond)

This category is for big, audacious goals (which we’ve called “Strategic”) for product features that are new, never-seen-before innovations that are tougher to implement because there’s a lot more research and development that goes into them.

cheqd’s product vision for 2022 digital identity slide

Product roadmap items related to digital identity for cheqd in 2022

Identity

PAYMENT RAILS FOR DIGITAL IDENTITY EXCHANGE

cheqd’s product vision for 2022 payment flows

Payment flows in exchange for digital credentials overview for cheqd network

We believe that for self-sovereign identity to take a foothold in the Web 3.0 ecosystem, it needs customisable payment mechanisms that allow for various different business models for Verifiable Credential (VC) exchange. Our product principles when designing these payment rails are:

  1. Payment mechanisms must be robust, secure, and privacy-preserving: The single most important feedback that we’ve heard time and again from the SSI community is they are cautiously optimistic about viable commercial models but don’t want it to come at the expense of compromising the privacy of data holders. We have dedicated a lot of time and research internally to define an implementation roadmap that allows us to achieve this, by leveraging the additional capabilities switching to the Cosmos blockchain framework gives us. The approach we aim to implement would offer capabilities beyond those currently defined in the Hyperledger Aries Payment Decorator RFC.
  2. No single payment fits every use case, so enable flexibility: Fundamentally, cheqd isn’t going to mandate a single payment mechanism across our network, as we recognise that different industries, use cases, and ecosystems have different needs. Some credentials (such as those issued by a government or regulatory agencies) will likely be free or priced to recover costs only, whereas other digital credentials may allow either issuers or the holders of credentials to charge the recipient. We aim to offer multiple options, thus offering choice to the issuers and/or holders of credentials to adopt models such as holder-pays-issuer (“As an individual, I’d like a way to pay the issuer of digital credential”, e.g., paying the government to get a digital passport); verifier-pays-holder (“As a recipient of a credential, I’m happy to pay a small fee to the holder”; e.g., the holder giving access to a digital passport credential); and verifier-pays-issuer (“As a recipient of a credential, I’m happy to pay the issuer of the credential a small fee for additional metadata”; e.g., checking the revocation status of a credential.)
  3. “Payment” doesn’t necessarily mean “locked” credential: A common misconception is that adding payments to an identity exchange flow means the credential is somehow “locked” (or encrypted), with access only granted on payment. That is certainly one possible model, but we also believe there are other, viable alternatives, which don’t have the same hurdles. An example of this would be freemium models of payment, where basic credential exchanges are always free, and an optional payment may be made for access to certain metadata.

We presented a session called the Seven Deadly Sins of Commercialising SSI at last year’s Internet Identity Workshop (IIW), where we shared our thoughts on the gotchas of adding commercial models to decentralised identity. I encourage you to watch this video, as it lays out a lot of our internal thinking on how we plan on tackling these pitfalls.

CLIENT SDKS IN MORE PROGRAMMING LANGUAGES

The current implementation of a client SDK that integrates identity and token functionality on the cheqd network is based on Verifiable Data Registry (VDR) Tools SDK, from one of our key partners Evernym (one of the largest SSI software vendors in the world, recently acquired by cybersecurity software company Avast). VDR Tools SDK is an open-source library that is an offshoot of Hyperledger Indy SDK, which many SSI software vendors are familiar with and use in their products. However, we also recognise that other software vendors prefer to use programming languages/frameworks based on JavaScript, Python, and Go (instead of Rust, which VDR Tools SDK uses). This could be down to other languages being easier to hire developers for, engineering choice to align with the rest of their tech stack, etc. We’ve had significant interest from SSI software developers who currently use Hyperledger Aries Cloud Agent Python (ACA-Py)Hyperledger Aries Framework Go, and Hyperledger Aries Framework JavaScript (written in TypeScript) and have expressed a desire for cheqd network support in programming frameworks they currently use. More broadly, to handle token functionality, Cosmos SDK offers a variety of APIs using RPC, REST, and gRPC endpoints, but this requires the client app developer to understand and construct Cosmos transactions. One of the ways we’re looking at making this simpler is to build alternatives to native CHEQ token support in VDR Tools SDK using CosmJS, a widely-adopted TypeScript library for handling Cosmos interactions. This would offer flexibility to app developers and software vendors with a choice of different programming frameworks to simplify the task of integrating cheqd’s identity as well as token functionality in their existing apps.

BETTER INTEROPERABILITY AND SUPPORT FOR EMERGING IDENTITY STANDARDS

We are also excited to explore the possibilities that are enabled by emerging standards in identity, such as BBS+ signatures (read more for an explanation on why BBS+ signatures provide significant advancements to Verifiable Credentials) and Decentralized Identity Foundation (DIF) Wallet and Credential Presentation Exchange (WACI PEx).

cheqd’s product vision for 2022 web 3.0 core slide

Product roadmap items related to Web 3.0 Core for cheqd in 2022

Web 3.0 Core

NATIVE, CROSS-CHAIN IDENTITY PRIMITIVES FOR COSMOS ECOSYSTEM

DIDs on the cheqd network are specifically stored on our mainnet ledger. Since Verifiable Credentials (VCs) are stored off-ledger for privacy reasons, integrating identity functionality doesn’t necessarily need on-chain resolution, unlike most other blockchain use cases.

However, the Cosmos blockchain ecosystem also has other identity efforts underway, such as the Cosmos Cash DID method and Interchain Identifiers (IIDs) which we are keeping our eyes on and are excited to see materialise. We are proud to be backed by Tendermint Ventures (among others) and want to bring our expertise in digital, self-sovereign identity that can be leveraged by all Cosmos projects.

SMART CONTRACTS USING COSMWASM

For those who are not aware of the term, CosmWasm is a secure, multi-chain smart contract framework that uses WebAssembly (Wasm) virtual machines on top of the Cosmos SDK.

CosmWasm will allow us to customise further aspects of payment mechanisms offered via the cheqd network, for instance, allowing for reputation management of issuers/verifiers, and techniques to preserve privacy during credential exchanges. It will also enable third-party app developers to extend the functionality of cheqd products.

Similar to the previous cross-chain identity primitives goal, CosmWasm also utilises the Inter-Blockchain Communication (IBC) Protocol for multi-chain support.

ESTABLISH OURSELVES AS A LEADER IN DECENTRALISED GOVERNANCE FOR IDENTITY

Core to our vision for the cheqd network is inspiring others within the identity space to make decentralised governance a de-facto aspect of identity networks. Many existing decentralised identity networks rely on closed, permissioned governance mechanisms. This is due to a belief that controlling the validators (who can write to the network) somehow adds “more trust”.

But…the reality is that even on permissioned identity networks, validators don’t attest to or validate the contents of a DID document for accuracy. Limiting governance to a select set of participants is sometimes really due to technical limitations, which then gets retconned to also include governance frameworks.

In our opinion, trust, whether in the contents of DID documents or credentials, sits within trust frameworks as described by Trust Over IP (ToIP). Just because a user presents a digital credential, even in current SSI networks assuming that as trustworthy isn’t and shouldn’t be automatic.

We see DID reads/writes on the cheqd network ledger behaving as a neutral verifiable data registry, backed by a public permissionless governance framework that ensures not even the core team at cheqd can unilaterally make changes. Since governance votes on a proof-of-stake Cosmos network can also be cast by token holders, for the first time it also offers the actual users and organisations — our community — the ability to participate in and influence the direction of the cheqd network.

By enabling democratic, decentralised decision making and governance at the network level, organisations, and in particular, consortiums, will be able to create specific ecosystem governance frameworks quickly and efficiently, which tie into cheqd network governance. This will increase the efficiency of decisions whilst maintaining full transparency for those involved in the ecosystem.

We’ll also be continuing to engage with working groups in the SSI space, such as Decentralized Identity Foundation (DIF)Trust over IP (ToIP)World Wide Web Consortium (W3C) Credentials Community Group (CCG)EU Self-Sovereign Identity Framework (eSSIF)International Association for Trusted Blockchain Applications (INATBA), and Good Health Pass, to name a few. We’re excited to announce the appointment of our very own Governance Lead at cheqd, Alex Tweeddale, who will be playing a key role in the ToIP Utility Foundry Working Group.

Web 3.0 Exploratory

As the year progresses, we will keep an eye out to explore emerging Web 3.0 use cases such as new developments in decentralised exchanges (DEX) ecosystems (especially when they integrate with Cosmos DEXs); decentralised autonomous organisations (DAOs); identity for non-fungible tokens (NFTs), and in general, DeFi applications. If you see an issue you think we should be solving, let us know as there is so much out there and we don’t want to miss other compelling uses of our technology!

We have a few really cool ideas in this category that combine product features described above in new and interesting ways that we’re cooking up inside the product & engineering team. I can’t go into too much detail and spoil the surprise there, but watch this space. 😉

Tell us what you think!

We would love your feedback on our product vision for 2022. We welcome engagement and feedback across a range of different forums, such as our Community Slack and Governance Framework discussion board (best for extended, in-depth discussions), or on Medium.

Within the next few weeks, our team will launch a product roadmap survey that allows everyone to provide feedback on what matters to you and where we should be focussing. In addition to the forums listed above, if you’re interested in taking part in this please ensure you have signed up for our newsletter or are in our Telegram group. Stay tuned for more details!

We, at cheqd, help companies leverage SSI. cheqd’s network is built on a blockchain with a dedicated token for payment, which enables new business models for verifiers, holders and issuers. In these business models, verifiable credentials are exchanged in a trusted, reusable, safer, and cheaper way — alongside a customisable fee. Find out more about cheqd’s solutions for self-sovereign identity (SSI).

The new version of cheqd testnet is out — we’re gearing up for the mainnet launch

new version of cheqd testnet

cheqd has launched v2 of its testnet for a token-incentivised SSI network built on the Cosmos blockchain framework. This new testnet follows on from our open-source announcement and incorporates tokenomics for mainnet as well as the cheqd Governance Framework.

Over the past week, we have been testing out a new version of the cheqd-node software. Transparently, we wanted to message and release this last week but held off to investigate why some node operators were reporting errors during the installation process.

This turns out to have been an issue due to a few outdated links in the documentation, which have all been comprehensively updated and cross-checked.

The most important thing about the new release is that it’s a breaking change: the existing testnet (“v1”) will be deprecated. In its place, we’ve set up a new testnet network (“v2”) which is officially the new cheqd testnet going forward.

Since we open-sourced our code in August 2021, we’ve had partners from the self-sovereign identity space as well as community members come onboard our initial network. We’d love to explain what’s happening next in our product roadmap and what brought about this breaking change.

What are the major changes in cheqd testnet v2?

When we initially launched cheqd’s testnet v1 in July 2021, we were still in the process of finalising the tokenomics that would be deployed on the network. This meant that our cheqd node software used the default parameters from a Cosmos SDK network along with identity transactions implemented on the Hyperledger Indy transaction model.

We have since then published our tokenomics model for the cheqd SSI network and a series of blog posts walking through the cheqd Governance Framework.

Our tokenomics blog post is the best starting point to understand those changes but to summarise on the impact for node operators (on cheqd mainnet):

  1. We will have an overall supply of 1 billion $CHEQ tokens. Our original testnet had this as a fixed amount with no inflation. The consequence of this is that node operators would have received rewards only from transaction fees on the network, and there would have been no block rewards consistently for new block creation. Based on conversation and feedback from the community, we have now changed this to incorporate a level of inflation (1–4%) using Cosmos’s built-in mechanism, which dynamically sets the inflation rate within a range based on how many tokens are bonded via staking.
  2. The goal for the percentage of bonded tokens is currently set to 60% of the overall supply. This was benchmarked against a number of projects, and we feel this strikes a balance between securing the network and paying for identity transactions.
  3. We’ve also set parameters for the governance module based on the cheqd governance framework.
You can also watch our tokenomics webinar as an alternative to the tokenomics blog post if you prefer.

How do I join cheqd testnet v2?

We have updated all of the documentation related to node setup and management, so if you want to set up a node on the v0.2.3 release, check out the Github repo for cheqd-node.

If you are an existing node operator: we recommend using a new virtual machine/host (ideally). This will ensure you don’t run into any issues due to old configuration files. If you can’t spin up a new virtual machine, you can uninstall the old version of the node using:

apt remove cheqd-node

Please also make sure that you’ve removed old app directories and configuration files. More details are available on our Debian package overview.

Getting started as a node operator on cheqd testnet v2

  1. Install the cheqd-node software on a hosting platform of your choice.
  2. When you have a node successfully installed, please fill out our node operator onboarding form so that you can acquire CHEQ testnet tokens required for staking on the network.
  3. Once you have received your tokens, promote your node to a validator.
  4. If successfully configured, your node would become the latest validator on the cheqd Testnet! Say hi to the other node operators on the #testnet-node-operators channel.

Any time you have questions or need support, join our cheqd Community Slack and ask for help.

What’s new in the cheqd-node release v0.2.3?

cheqd-node v0.2.3 is our last major milestone release planned for cheqd-node before we launch the cheqd mainnet. It incorporates the following breaking/major changes:

ACCOUNT NAMES NOW START WITH THE “CHEQD” PREFIX RATHER THAN “COSMOS”

Impact: The new account name format is one of the reasons why this node release version is incompatible with cheqd testnet v1.

THE LOWEST DENOMINATION OF $CHEQ TOKENS

Another major change is that the lowest denomination of a token has been changed to 1 nano $CHEQ (“ncheq”), which is 10^-9 CHEQ. The previous testnet had 1 CHEQ as the smallest denomination, which would not have allowed for very precise pricing for transactions. We always wanted to make this change, as we foresee this being a potential issue in the future. This is similar to how Cosmos ATOM uses 10^-6 ATOM as the smallest unit.

Impact: All transactions (transfers, balances, etc.) are now calculated in ncheq. Please make sure you double-check your calculations for transactions so that the transaction amount in ncheq works out to the right value in whole CHEQ terms.

For more details, please see ADR 004: Token fractions.

GENESIS PARAMETERS AND COSMOS SDK UPDATE

All genesis parameters have been updated to reflect what they would be on the mainnet. (More details are outlined in ADR 005: Genesis parameters.)

We also upgraded from Cosmos SDK v0.42 to v0.44 since it’s a security release that contains breaking changes in the underlying SDK. Cosmos v0.43 was discontinued and superseded. We wanted to ensure that this important security update was accounted for before the mainnet launch.

BUILDING A CHEQD DID METHOD COMPLIANT WITH W3C SPECIFICATIONS

We’ve removed the NYM transaction type from this release. We thought long and hard about whether we wanted to keep the same transaction types as Hyperledger Indy, especially since Hyperledger Indy was designed before the W3C specifications in SSI were finalised. Indy, therefore, makes certain assumptions and choices that result in it being incompatible with the W3C DID Core specifications.

Impact: We have work-in-progress to make the cheqd DID method compliant with W3C specifications. We believe this is the right choice to make to limit future tech debt.

Our communication layer is still planned to work with Hyperledger Aries. Integrating a W3C specification compliant DID method would make it easier in the future to extend Aries to support other W3C-compliant DID methods and Verifiable Data Registries, which we see as an exciting leap forward for the SSI community.

For SDKs/client libraries, we still plan to have at least one implementation of a client library that supports Indycreds and cheqd DID method credentials.

What’s next for cheqd’s product roadmap?

We hope the summary above explains the changes that we have made and the rationale for them. As always, we welcome feedback on our product releases and keen to take any feedback onboard.

October / November 2021 is an exciting time for the cheqd team, as we have major milestones planned. Our product and engineering team strongly believes in releasing early and often to ship iterations of the product regularly and provide updates.

LAUNCH THE CHEQD MAINNET

Based on current projections, we aim to launch v1 of the cheqd mainnet by the end of October 2021 or latest, by November 2021. Our main objective is to implement relatively stable and finalised ledger APIs/functions, giving app developers confidence to build against the network.

It will have minimum viable functionality for a stable, production-grade network that offers a new range of functionality for SSI application vendors, digital identity companies, enterprises that need to issue/receive digital credentials, and node operators from a DeFi background.

This would include:

  1. Finalised tokenomics implemented (this is already present on cheqd testnet v2)
  2. A W3C compliant DID method
  3. Final stability changes and bugfixes

OPEN-SOURCE OUR INFRASTRUCTURE TOOLING REPOSITORY

Many of our node operators run standalone virtual machines, but we have also received interest in more sophisticated setups. Our engineering team has been working on DevOps tooling using Terraform for deploying multi-node, multi-region deployments on AWS using Elastic Container Service (ECS) on Fargate.

We want to open-source and provide this to the community as another available node operator who might want to run more than one node or to have a more robust infrastructure setup. While we currently only work with AWS, we hope to support other cloud platforms in the future and welcome contributions from the open source-community from anyone who wants to contribute automation assets.

PUBLIC PRODUCT ROADMAP WEBSITE

We recognise that our community is excited to find out more about what we do next, discuss and provide feedback on our product roadmap in more detail.

As a sneak peek, these would include:

  1. More robust support for the W3C-compliant cheqd DID method in client libraries
  2. Support for revocation registries and BBS+ signatures
  3. Holder-pays-issuer, verifier-pays-issuers, and other charging mechanisms
  4. Block explorer and/or monitoring tools for node operators and general public

Join us on testnet and say hi 👋

We highly appreciate all the interest from the community in participating in the cheqd testnet and building a vision together for an authentic data network. To all of our existing testnet node operators, thank you. ❤️

If you would like to learn about our partner programme for self-sovereign identity vendors, please reach out to us at [email protected].

Please feel free to ask us any questions on the cheqd Community Slack. We also hugely believe in the value of the community supporting and engaging with each other, so whenever you see someone in need of support, feel free to jump in.

Onwards and upwards,
The cheqd product team 🚀

cheqd’s testnet is public — and we’ve open sourced our code

cheqd’s testnet is public — and we’ve open sourced our code

cheqd has open-sourced its code for a token-incentivised SSI network built on the Cosmos blockchain framework. We’re expanding beyond private beta to a public testnet, with plans for publishing further details about tokenomics and governance in future releases.

We’re excited at cheqd to announce that we’re open-sourcing the early version of the code we’ve been building for the past few months for a purpose-built self-sovereign identity (SSI) using the Cosmos blockchain framework with the $CHEQ token. As we progress on our product roadmap, this marks another major milestone for the cheqd product & engineering team.

cheqd private beta testnet partners

cheqd private beta testnet partners

Our persistent cheqd testnet has been live in private beta for just about a month with our initial launch partners: EvernymOutlier Ventures, and DIDx.

About cheqd’s open-source repositories

With this step, we’re expanding the ability for anyone with the capability to run a node to be able to participate in the public beta of the cheqd testnet. Our code is being released on cheqd’s GitHub organisation page under the Apache 2.0 License, which will allow open source contributors to use, modify, remix and deploy our software and join our testnet (at present) and the cheqd mainnet (when launched).

The repositories that we’re releasing to the public are:

  1. cheqd-node: The server/node portion of the purpose-built network for decentralised identity. This is where the code for our public-permissionless SSI network analogous to the Hyperledger Indy node will live. In one of our previous blog posts, we explained why we built our stack on Cosmos instead of Hyperledger Indy or other frameworks.
  2. cheqd-SDK: A Rust client library for ledger-independent self-sovereign identity (SSI) operations on Verifiable Data Registries (VDRs). Integrates with cheqd-node server-side. This repository is built in collaboration with our partners at Evernym and is currently a mirror of Evernym VDR Tools. This repository is analogous to the Hyperledger Indy SDK that current SSI application vendors embed in their products.

What has changed since the private beta?

Our testnet launch in July 2021 gave us valuable feedback from our early adopters in being able to refine where our engineering teams should focus on. While we initially planned to release a Cosmos-based Decentralized Identifiers (DIDs) specification for August, the feedback we received was to focus on making the installation and upgrade processes easier.

We’ve therefore worked towards making installation packages and releases (along with documentation) available in the following formats:

  1. Debian (.deb) package installer, targeting Ubuntu 20.04 LTS (the Linux distribution most Hyperledger Indy node operators should be familiar with)
  2. Docker containers, as a more platform-independent way of deploying the cheqd blockchain node software
  3. Linux binary packages, as a baseline for other Linux distributions
  4. Instructions on how to build any of the above from the source.

We’re also exploring support for other platforms in the future, for example, a Snap package for other Linux distributions.

One challenge with having a private beta was the logistical challenge of allowing prospective node operators to freely browse and decide to install the code at their own pace, rather than individually trying to coordinate access to the repositories.

What functionality is currently available on cheqd testnet?

Our existing node operators (and prospective ones) asked us, “Great, I have a node working. What can I do next?!”

We aimed, therefore, to make this milestone one where prospective users could go through an end-to-end journey of setting up a node and being able to read/write DIDs on the ledger.

While it’s early days, the cheqd Cosmos Command Line Interface (CLI) user guide we’ve started building defines what can be done on our testnet. We started this by asking the following:

Basic Cosmos node setup and the “cheq” token

  • Creating, managing, and configuring accounts and keys on a cheqd Cosmos node. These are set up steps that new node operators need to do to get started.
  • Our public-permissionless model is based on proof-of-stake, so we walk through how to stake and participate in network consensus.
  • Basic token functionality for holding and transferring our tokens, called “cheq, to other accounts on the network.

Basic decentralised identity primitives

  • Writing Decentralized Identifiers (DIDs) entries on a ledger paying for DID writes on the cheqd testnet using testnet tokens. As our CEO, Fraser Edwards, and Javed Khattak (our CFO) described in this blog post why self-sovereign identity needs a token; we want to enable new business models for digital identity.
  • NYM is the term used by Hyperledger Indy for Decentralized Identifiers (DIDs) that are created on the ledger. For the sake of explaining with similar concepts as current Hyperledger Indy implementations, on our testnet transactions to add a DID to the ledger are called NYM transactions. Future releases of our software are likely to replace the NYM terminology with DID for better understanding.

What’s coming next in cheqd testnet functionality?

Our broad goal is to launch cheqd’s mainnet with the $CHEQ token around October 2021. It will have minimum viable functionality for a stable, production-grade network that offers a new range of functionality for SSI application vendors, digital identity companies, enterprises that need to issue/receive digital credentials, and node operators from a DeFi background.

The two major aims we’ve set ourselves for the next milestone, by the end of September 2021 is to make available:

  • Define how tokenomics will work on our network: We aim to describe how our cheqd Cosmos network will behave and what the initial economic parameters will be. (Stay tuned as we announce a live tokenomics session soon!)
  • Our governance framework for a public-permissionless SSI network: Alex Tweeddale, our Governance & Compliance Lead, introduced the concept of “entropy” in the governance model we aim to construct. This will help to get closer to decentralised governance that gives the community far greater influence on how the cheqd network will run than current permissioned SSI networks allow.
  • Explanations of architectural decisions that will guide application developers on how to integrate and build against our software.

We are also exploring mechanisms to showcase our product roadmap and guidance on how community members can influence the aspects above in a simple, easy to understand and accessible fashion.

How to get involved in the cheqd testnet

If you’re interested in running a node yourself or otherwise getting involved in the code/governance of cheqd, here’s where you can get started:

About cheqd

We’re building a secure network that enables individuals to take full control of their personal data. Through our network, anyone can verify identities quickly and securely.

We help companies monetise self-sovereign identity to stay viable, profitable and more successful than before. Issuers of data benefit from a recurring revenue stream whenever that data is used in the future without needing to process it constantly. Recipients of data can lower their costs since any data they receive is digital, trustable and re-usable, reducing the processing overhead.

Ultimately, we’re making it easier for individuals and organisations to trust each other.

For partnership and node operator queries for cheqd, please get in touch at [email protected].

Follow the cheqd community

We would love to know your thoughts as always either as comments on the article or via any of our other channels below!

Make sure to join our rapidly growing Telegram community to stay updated with our most recent news and insights.

P.S. We’re also on Twitter and LinkedIn, make sure to cheq in!

Announcing cheqd’s testnet for a new, incentivised decentralised identity

testnet for a new, incentivised decentralised identity

cheqd has launched a testnet on Cosmos with EvernymOutlier Ventures, and DIDx, and we’re excited to be expanding our vision for an incentivised self-sovereign identity

Earlier this monthcheqd outlined its vision for a new self-sovereign identity (SSI) network on the Cosmos blockchain framework.

Today, I’m excited to say that we’ve taken our first step in making this reality come true, with cheqd launching a persistent testnet in collaboration with our early external partnersEvernymOutlier Ventures, and DIDx.

cheqd Testnet launch on our 2021 product roadmap

This marks a major milestone for the cheqd team, and demonstrates that we are on track as defined in our product roadmap. Our key milestones include:

  1. Internal Devnet (June 2021)cheqd is currently running an internal developers-only network of our new Cosmos-based blockchain for build/test purposes.
  2. Beta product & Testnet (we’re here now — July 2021): Our goal was to have a persistent network accessible to developers to build apps against. This was our target to get up and running with external partners, and we’re glad to have our launch partners onboard.
  3. Cosmos-based Decentralised Identifier (DID) method (target date — August 2021): We aim to publish a DID method specification compliant with World Wide Web Consortium (W3C) standards that the open-source community can use.
  4. General availability & Prodnet (target date — October 2021): A production-grade, persistent and public permissionless multi-operator Cosmos-based blockchain network with a token for rewarding incentives. cheqd currently does not have any plans for either a public or private token sale. Our team is hard at work to ensure that the Prodnet launch is carried out in compliance with relevant financial and digital asset regulations in relevant jurisdictions around the world. As such, we want to be transparent that this target date is subject to any relevant regulatory approvals.
  5. Prodnet+ (target date — late 2021 onwards): Once we have achieved a stable Prodnet release, we will continue working on enhancing our network and product with new functionality that expands the possibilities of what use cases self-sovereign identity applications can support. We have exciting ideas here that we will announce as we make our product delivery timelines more concrete.

Say hello to the “cheq” token 👋

When we were planning internally on rebranding to cheqd, we immediately converged on the idea of calling our token “cheq”. Paper cheques (or checks, for our American readers) have existed for decades as a mechanism of payment, and often linked to artefacts such as signatures and identity of people.

We like the idea of reclaiming “cheq” as a term in the decentralised world as dual-purpose word that blends the worlds of digital identity and payments. It fits well with our mission on how we’re building a commercial engine for checked and trusted data ecosystems.

The cheqd testnet ceremony

The genesis ceremony for the cheqd testnet was carried out on Wednesday, 21 July 2021. (This is one of the reasons why we really wanted to announce our rebrand last week!) Prior to the genesis ceremony, we had asked all our launch partners to setup a node with a Cosmos cheqd node with the beta software code.

During the ceremony, we minted 1 billion cheq test tokens as well as the genesis configuration required to connect up all the nodes into the testnet. We’d planned for the ceremony to take 1.5 hours, but as these things go, we ended up extending this to 2 hours as to fix teething issues during peer configuration.

The balance minted with cheq test tokens was distributed as follows:

  1. 20% cheq test tokens distributed to the founding validators: We wanted to model the fact that in real life, different validator nodes would have different amounts staked.
  2. 80% cheq test tokens was set aside for future validators, treasury, and cold storage: We distributed the majority of the tokens minted as set aside for future use.

The cheqd testnet currently involves four Cosmos validator nodes, one from each founding launch partner. The functionalities available at the moment allow anyone with access to the nodes to:

  1. Create Cosmos accounts that can hold cheq test tokens
  2. Create DIDs that can be written to the cheqd testnet, and pay for it with cheq test tokens
  3. Automation to speed up basic testnet cheqd node deployment

We wanted to get this code early with external partners, so that we can start capturing feedback from potential real node operators in the future.

To make the process of distributing the 20% cheq test tokens among the founding validators randomised, an appointed representative from each of the founding validators rolled three dice using DuckDuckGo. After multiple rounds of die rolls (and an impromptu guitar solo!) we ended up with this distribution:

  1. Outlier Ventures at 9%
  2. cheqd at 5%
  3. Evernym at 4%
  4. DIDx at 2%

As we open up the network to more validators, we’ll distribute more cheq test tokens on a randomised basis. We will be working in the background over the next few weeks to onboard additional validator nodes, initially as a manual process and then expanding it to make it public and open for anyone to join the network. We will continue working on tooling and services to make this process easier.

Please note that the values above are purely for testnet purposes, and not indicative of our plans for cheqd mainnet.

What are your plans for the future?

Our next major milestone is to make cheqd’s Cosmos node repositories open to the public by mid-August 2021. We’re using the intervening time to:

  1. Incorporate feedback from early validator operators: We’re making enhancements and bugfixes from the initial node operators to our documentation, automation needed to set up the node, and basic token/identity functionality.
  2. End-to-end walkthrough on creating a test DID and paying for it with cheq test tokens: This will give a clear idea for the basic journey a real organisational user might go through to test tokens.
  3. Adding more early validator nodes: We hope to continue expanding the validators on the network to further node operators. We are actively looking to add more partners, so if you are an SSI vendor, a digital identity company, or an existing node operator for Cosmos validator nodes please reach out to us at [email protected].

Beyond the mid-August 2021 milestone, we plan on building/releasing the following:

  1. Public, permissionless governance models for decentralised identity: We’re quite excited about the possibilities of how the Trust over IP Foundation and other SSI governance models can be regulated in a decentralised fashion, through voting on chain.
  2. Testnet faucet for app developers: We want to make it easy to acquire cheq testnet tokens for testing, as more app developers build client side links to the new cheqd network.
  3. Simulating governance and tokenomics parameters: In our opinion, one of the best ways to involve the community behind cheqd is to include them in decisions around how the tokenomics and distribution on the cheqd mainnet will work, and we want to validate these ideas on the cheqd testnet.
  4. A community specifically for node operators and developers: We want to create a community/platform specifically for developers and node operators to capture their feedback and get the discussion going with our product and engineering teams. We’ve already seen the value these tight feedback loops have in terms of highlighting the areas of improvement, and we certainly want to continue this thread.

Stay tuned for more things in our product roadmap that we want to show to the community, and we really look forward to incorporating ideas democratically from the Cosmos and self-sovereign identity communities.

What are our launch partners saying

The cheqd team wouldn’t be here today without our nascent community, and without the support of the founding validators who have joined our network.

Here’s what the cheqd testnet launch partners had to say:

EVERNYM

After years of working with companies that are exploring and implementing digital credentials, it has become clear that solid business models are needed for mass adoption. This is why we are supporting cheqd and helping them to build their network. Their focus is on enabling the incentives for all parties, while simultaneously preserving privacy and security. It is this combination that will drive use on a global scale.

— Steve Havas, CEO of Evernym

DIDX

DIDx is excited to be part of the founding validators for the cheqd test network to support our unique requirements for the Yoma use case to combine verifiable credential exchange with value exchange through a token based ecosystem. Combining these two capabilities unlock new opportunities and business models that traditional SSI technology don’t provide out of the box and this is why we are excited to be part of this journey.

— Lohan Spies, Founder & CEO of DIDx and CTO of Yoma

OUTLIER VENTURES

You can’t have Web 3.0 until you solve for a form of decentralised identity that works at scale and has a business model for network participants hardcoded into it. It’s because of this we have dedicated several years to help cheqd (and their predecessors) bring a permissionless, token optimised form of SSI and verifiable claims

— Jamie Burke, Founder & CEO of Outlier Ventures

Join the cheqd network and give us feedback

We would love to get more partners onboard on the cheqd testnet and look forward to feedback from the community. If you’re interested in becoming a validator, please reach out to us on [email protected].

The best route to make sure you hear about our general updates is to join our rapidly growing Telegram community.

P.S. We’re also on Twitter and LinkedIn, make sure to cheq in!

About cheqd

We’re building a secure network that enables individuals to take full control of their personal data. Through our network, anyone can verify identities quickly and securely.

We help companies monetise self-sovereign identity to stay viable, profitable and more successful than before. Issuers of data benefit from a recurring revenue stream whenever that data is used in the future without needing to process it constantly. Recipients of data can lower their costs since any data they receive is digital, trustable and re-usable, reducing the processing overhead.

Ultimately, we’re making it easier for individuals and organisations to trust each other.

For marketing or community queries for cheqd, please get in touch at [email protected].

cheqd is launching a self-sovereign identity network on Cosmos

cheqd is launching a self-sovereign identity network on Cosmos

Co-authored by Fraser Edwards and Ankur Banerjee

Announcing our 2021 product roadmap for an incentivised decentralised identity network with token-based payment rails.

We started cheqd this year to make digital identity secure, private, commercially sustainable, accessible, and inclusive. We are a small and lean but growing startup of people with deep expertise in identity and decentralised systems.

Our mission is to give people and companies the ability to control their own data and at the same time, enable trusted organisations that add reputation into digital identities to be compensated for the effort they put in for increasing the trustworthiness of data.

We believe the path to achieving this goal is through making self-sovereign identity (SSI) commercially viable through sustainable economic incentives. SSI is an emerging paradigm for exchanging trusted digital data related to people, companies, and things in a much more secure and privacy-preserving fashion that puts empowered control in the hands of data owners.

Today, we are excited to announce that cheqd is building its self-sovereign identity (SSI) network on the Cosmos blockchain framework, joining a community we look forward to working with and contributing to over the coming months and years.

cheqd-Blog-Diversity_of_open_source_projects

The Cosmos blockchain framework ecosystem has numerous major projects and networks

Since we started in March, we’ve been busy executing on how to make our vision come true. In this blog post, we will explain our product roadmap and why we believe this could be a game-changing shift for the trusted data economy.

Key milestones for cheqd’s product roadmap

Our product launch roadmap

Our ambition is to hit specific key milestones within the year 2021. We plan on starting with releasing core functionality and then iteratively releasing new product versions that enhance functionality.

  1. Internal Devnet (we’re here now — June 2021)cheqd is currently running an internal developers-only network of our new Cosmos-based blockchain for build/test purposes.
  2. Beta product & Testnet (target date — July 2021): Within a month from now, our goal is to have a persistent network accessible to developers to build apps against. We are lucky to have commitments already from 5+ external partners as node operators on the testnet. Big thanks to those partners who want to lead from the front, we’re looking forward to naming and working with you!
    We are actively looking to add more partners for our testnet launch, so if you are an SSI vendor, a digital identity company, or an existing node operator for Cosmos validator nodes please reach out to us at [email protected].
  3. Cosmos-based Decentralised Identifier (DID) method (target date — August 2021): We aim to publish a DID method specification compliant with World Wide Web Consortium (W3C) standards that can be used by the open-source community.
  4. General availability & Prodnet (target date — October 2021): A production-grade, persistent and public permissionless multi-operator Cosmos-based blockchain network with a token for rewarding incentives. cheqd currently does not have any plans for either a public or private token sale. Our team is hard at work to ensure that the Prodnet launch is carried out in compliance with relevant financial and digital asset regulations in relevant jurisdictions around the world. As such, we want to be transparent that this target date is subject to any relevant regulatory approvals.
  5. Prodnet+ (target date — late 2021 onwards): Once we have achieved a stable Prodnet release, we will continue working on enhancing our network and product with new functionality that expands the possibilities of what use cases self-sovereign identity applications can support. We have exciting ideas here that we will announce as we make our product delivery timelines more concrete.

We count ourselves lucky to have a team that is experienced in digital identity, blockchain, product innovation, technology delivery, and enterprise deployment. Our team at cheqd will aim to openly and transparently communicate product milestones over the coming months and years.

We thank our partners in this effort so far such as Outlier Ventures and Evernym for their contributions, guidance, and support — as well as our investors and shareholders. We recognise the need to cooperate widely within the digital identity industry and the Cosmos blockchain ecosystem and we aim to do this too.

What products are we building at cheqd

Our core product is an open-source blockchain network with an associated suite of tools that makes exchanging and paying for trusted data easy, inclusive, and secure.

We built this core on blockchain technology, as we believe no single company should be in control of such critical Web infrastructure. For the same reason, we believe it is important to open source the critical parts of our technology and contribute back to the community. Further, we have carried this philosophy into the governance of the network and look forward to sharing details in later blogs.

Our goal when designing this was to build a distributed and decentralised system that is:

  • highly-scalable, and able to accommodate large volumes of digital identity interactions and transactions
  • flexible, in a way that allows customisation for the needs of different ecosystems based on industry, geography, regulatory frameworks, etc.
  • community-driven, such that there is a large and active community of software code and business contributors making improvements
  • energy-efficient, compared to proof-of-work blockchains such as Bitcoin or Ethereum, as we believe this efficiency will be crucial for adoption by government organisations and enterprises

Let’s dive deeper into what we are building, following the principles above. cheqd’s initial product suite can be broken down into three parts.

A DECENTRALISED NETWORK FOR SECURE AND PRIVATE TRUSTED DATA EXCHANGE

We are building a Cosmos network blockchain that is standards-compliant with specifications on Decentralised Identifiers (DIDs) and Verifiable Credentials (VCs). In plain language, these are the building blocks that enable private and secure digital identity exchange.

We will not store any personally identifiable information on this blockchain to follow best practices and avoid any of the grey area(s) resulting from GDPR and similar legislation. The blockchain network on Cosmos orchestrated by us will be used to store the identifiers related to trusted organisations, in the same manner, that current decentralised identity networks adopted by governments (such as the EU Self-Sovereign Identity Framework) around the world do.

TOKEN-BASED PAYMENT RAILS FOR DIGITAL IDENTITY INTERACTIONS

Our core hypothesis is that that self-sovereign identity needs commercial models that accelerate its adoption. We want to provide a common and public infrastructure easily accessible to anyone and any organisation that provides B2B and B2B2C payment rails between issuers, holders, and receivers of trusted data.

Effectively, we are building tokens on the Cosmos blockchain framework as a decentralised finance (DeFi) mechanism to pay for digital identity interactions, such as writing Decentralised Identifiers (DIDs), Verifiable Credential (VC) issuance and exchange, checking the revocation status of credentials, etc.

We do not believe in a one-size-fits-all model for how these charging mechanisms and pricing models. cheqd is not and does not plan on dictating a single payment model. Rather, our product vision is to enable each ecosystem to decide this on their own through Layer 1 vs Layer 2 mechanisms and customisable tokenomics.

This public Cosmos blockchain token will reward all parties involved in a trusted data ecosystem: from the individuals the data belong to, the reputable organisations that issue and receive digital credentials, and the blockchain node operators network that provide the infrastructure to carry this out in a decentralised and democratic manner.

We acknowledge that using tokens as a payment rail is not yet widely adopted by large enterprises. We will address this in our roadmap by exploring partnerships with digital asset custodianship providers who can offer legal and technical custodianship of tokens. We hope by doing this we can reduce hurdles for adoption from enterprises and continue working towards making this process frictionless.

EASY-TO-USE SOFTWARE KITS FOR EXTERNAL APP DEVELOPERS TO INTEGRATE INTO THEIR OWN PRODUCTS

Any network is only as valuable and useful as the network effects arising from how many participants utilise that network. Our goal is to make it as easy as possible digital identity app developers currently building on Hyperledger Indy (the prime blockchain framework for SSI) and other DID methods to integrate our solution into their products with minimal disruption.

cheqd-Blog-Standards_compliant_cheqd_Cosmos_credentials

To that end, we are developing mobile client software development kits (SDKs) for iOS and Android. Our aim will be to make these SDKs drop-in replacements for existing Hyperledger Indy client SDKs while maintaining support for Indycreds. It is likely that users of SSI apps will continue the need to maintain access to their existing digital credentials anchored on Indy networks.

What we are more excited about though is that this modularised architecture will also provide app developers APIs for our new Cosmos-based and W3C standards compliant digital credentials. The rich and new functionality offered by our SDK will allow SSI app developers the opportunity to build new services previously not possible.

For the first time, app developers will be able to offer their B2B enterprise customers the capability to implement customisable economic models for how digital credentials issued and consumed are priced (including free!). And as potential node operators on this new incentivised network (although this is not a pre-requisite to using our SDKs in their apps), they could have recurring revenue streams from digital identity interactions.

At cheqd, we believe that for self-sovereign identity to truly be in control of the user, SSI app developers will need to support multiple DID methods — and potentially, future mechanisms of SSI that may not even use DID methods. People are unlikely to want to download multiple SSI apps just because the companies they interact with only support one kind of credential.

Our prediction is that more digital identity app developers will adopt a technology-agnostic approach that allows for plug-and-play integration of multiple DID networks. We strongly believe the capabilities of our public network and infrastructure will offer differentiated features.

We choose to go to the moon… not because they are easy, but because they are hard.

Into the Cosmos and beyond

In the next blog post, we will dive into our decision-making process behind how we settled on the Cosmos blockchain framework so make sure to follow us on Medium. You can also reach out to us on TelegramTwitter, and LinkedIn for discussions and updates.

We would love to know your thoughts or feedback on our direction using the Cosmos blockchain framework as comments on the article or via any of our other channels, take your pick!

We are also recruiting across a range of different roles. If you find one that you fancy, or want to come work for us, please drop us a line on [email protected].

The business models of identity

How cheqd is approaching its tokenomics for secure and trusted data ecosystems

Co-authored by Fraser Edwards and Ankur Banerjee

Identity is a construct of its subject (person, company, virtual thing) and surroundings (birth, country borders, online games). Identity, therefore, varies in how it manifests (passports, self-declared data or an outfit, real or virtual) but also how it is commercialised (or not).

Across the world, identity has been commercialised in too many ways to count. These range from transparent and simple relationships like paying for a passport to complex and opaque models like targeted advertising.

Self-Sovereign Identity (SSI) will replicate some of these models, destroy others and create entirely new ones too. Creating entirely new models is what we at cheqd are truly excited about.

In this blog post, we will explain some of the commercial models prevalent in digital identity, and how cheqd is building new models for the world of SSI.

First, let’s look at breaking down the current landscape…

How many parties are involved?

The full gamut of commercial models are first easiest to break down by the number of parties involved and the flow of information (abstracting some of the complexities in the background):

  • Uni-lateral, e.g. an International Certificate of Vaccination issued to a patient by their doctor. The details included in the certificate are generated by the doctor.
  • Bi-lateral, e.g. a Passport Office taking information from applicants to verify them before issuing them with a passport. In this scenario, it is likely that some of the information provided by the applicant is already known to the Passport Office, and there are details generated by the Passport Office.
  • Multi-lateral, e.g. BankID in Sweden where Know Your Customer (KYC), verification, and authentication are mutualised between banks (and now others).

Note here that the data subject, the individual or company whom the data is about, is always involved at some level in the exchanges above.

We know there are many other possible models, please do let us know in comments any particular others that should be called out.

Who pays whom in identity flows?

While the number of parties involved in an exchange is an important aspect, commercial models for digital identity can also be categorised based on the pricing construct applied between the parties involved in digital identity exchange.

Paid for by the individual/company (or the “identity subject”)

Free

Free, as in beer, to the individual. This is a credential that is given to an individual or company without any money changing hands.

An example of this would be a tax registration number or Social Security Number, which an individual or a company can get without paying anything.

Freemium

Most interactions are free, but some are paid.

An example of this would be a university degree, where the original degree is provided for no additional cost (beyond tuition fees), but additional copies of the degree need to be paid for.

TRANSACTIONAL

The issuer is paid per issuance or verification.

An example of this would be a passport application, where the applicant pays a one-time fee to the passport office to acquire the latest valid document.

Data mining

The interactions an individual/company has with an organisation is recorded, with the metadata and behaviour used to create weak identity profiles. The interactions appear free to the individual or company, but their identity profile is monetised by selling inferences to other companies.

business models of identity data mining cheqd blog

An example of this is programmatic targeted advertising, which are the intrusive ads we often come across online controlled by large ad networks. Some of the largest ones are run by Google, Facebook, Amazon, and Apple.

With targeted advertising, “You’re not the customer, you’re the product.”

Paid by verifying organisation(s), free for individual/company

DIRECT RELATIONSHIP WITH ONE ORGANISATION

An individual or company provides identity attributes to an organisation that needs to verify them. The organisation in turn bears the costs of the checks or pays someone else to do it. An example is the usual Know Your Customer (KYC) process for an individual/company to open a bank account. While the individual/company doesn’t pay for any identity verification checks, the bank (verifying organisation, in this case) might pay third parties to carry out checks on its behalf. These third parties are personal identity verification providers such as FinClusiveOnfidoAlloyHireRight etc or corporate identity verification providers such as Dun & Bradstreet. These identity providers in turn often get data from their own sources, such as government records. This model can be further extended based on what pricing basis is the verifying organisation is charged at by the third parties:

  • Pay-as-you-go: Each interaction is charged on a per-check basis (manual or per-API call)
  • Tiered subscriptions: Verifying organisations pay fees in blocks based on usage
  • All-you-can-eat: Verifying organisations pay a single fee regardless of how many ID verification checks they carry out.

MUTUALISED COSTS ACROSS MULTIPLE ORGANISATIONS

The cost of carrying out identity verification is split across the benefiting organisations, either equally or in proportion to use. This is often an extension of the direct model above. An example of this would be a consortium like BankID in Sweden, where the cost of KYC is spread across different organisations. The individual/company also does not pay in this scenario. Another example of this is how credit bureaus such as Experian,Equifax, TransUnion pool together information from financial institutions, but then re-sell the transformed data to other companies.

The missing individual

In each of the models above, there are organisations doing work to check identity attributes. The outcome of this is they add the weight of their authority, which is valuable to an individual/company. Each of the models above has a set of advantages and trade-offs, whether it be in cost, efficiency, privacy, or security. There is tremendous value in this variety of models by aligning incentives for those involved.

Current identity solutions largely put the incentives of issuing/verifying organisations over the individual/company. The identity subject (i.e., individual or company) at best has to directly pay (sometimes prohibitive) fees to acquire documents, and at worst often have no real control over their own data (as often in targeted advertising.)

Many further axes could be applied to the models above. One, in particular, we want to highlight is that the costs associated with acquiring and verifying identity depend on geographical as well as industry context.

Costs that are considered affordable in one country can be extortionate in others. Even within a country, affordability and access to verified identity may be prohibitive for disadvantaged demographics. The unfortunate consequence is exclusion due to a lack of verified identity that impacts large parts of society.

The virtuous flywheel for the trusted digital identity

Self-sovereign identity is a powerful transformational force that changes the balance of power in the favour of identity subjects (individuals/companies). Any commercial models for SSI needs to reward the identity subjects for participation, increase inclusion through easier access, and disincentive undesirable data-sharing behaviours.

On the other hand, the time and resource cost an issuing/verifying organisation incurs must not be ignored for a viable and sustainable self-sovereign identity ecosystem.

For instance, government-issued credentials should be made free / as cheap as possible to acquire as they are funded through taxes and/or one-off fees. This is crucial as government-issued credentials are often the genesis of trusted data in many industry contexts.

However, in other scenarios where an issuing/verifying organisation is not a publicly-funded organisation, we do see an unmet need for compensating organisations that carry out the work of verifying digital identity. These organisations are the root of trust that make SSI credentials held by an identity subject more trustworthy and have greater utility.

cheqd’s vision on the virtuous flywheel of self-sovereign identity growth

cheqd’s vision on the virtuous flywheel of self-sovereign identity growth

We believe this will create a virtuous flywheel for self-sovereign identity growth, where:

  • More issuing organisations are incentivised to give “back” trusted data to identity subjects. Data that belonged to or originated from identity subjects in the first place, but with the stamp of authority that the issuing organisation brings.
  • With more SSI credentials in circulation, more organisations will accept SSI credentials as it is an easier, more efficient, and more secure way of getting trusted data with the consent of the identity subject.
  • Growth in usage will attract more product companies (like cheqd) who build self-sovereign identity software, enrich features and functionality, and integrate SSI into their apps and services.
  • As SSI credentials become more common, the genesis data needed to verify identity will become cheaper, lowering the cost structure for creating trusted data.
  • Lower cost structures for creating trusted data will result in lower prices over time — than current, sometimes prohibitively expensive methods — for consuming verified identity data.
  • Lower prices to consume trusted data will give individuals and companies a richer ecosystem of organisations and services that accept SSI, leading to a better user experience that is more private and secure than the current relationship with how their data is used.

(N.B. We acknowledge we are using an analogy from Amazon here. While we do not necessarily agree with Amazon’s corporate stance on some issues, we do believe this is a useful analogy to explain how cheqd’s commercial model for self-sovereign identity will increase SSI adoption and growth. In the diagram, we use SSI as a catch-all to include verifiable credentials.)

Our approach to building a viable self-sovereign identity token network

cheqd is already building towards launching a standards-compliant, incentivised SSI network in 2021. The cheqd network will have a token that facilitates the virtuous flywheel. We went into some depth on why SSI models such as the Trust Over IP stack need an extension with an economic model in our previous blog post.

We are frequently asked for a simple description of our tokenomics model for the cheqd SSI network, but this ignores the complexity of how something deeply personal as identity is exchanged between different parties today. Hopefully, our explanation of the commercial models for digital identity will give a flavour for how diverse the interactions are.

All of these factors create a hugely complex marketplace to create a tokenomics model.

We believe at cheqd that a one-size-fits-all commercial model for digital identity will not accommodate the richness of current and future SSI use cases. We are approaching this problem by building a base layer that supports a variety of different tokenomics plug-ins, which can be customised based on the context of the ecosystem it is serving.

The analogy we like to use for cheqd’s approach with customisable tokenomics is trade rules between countries:

  • Bi-lateral or multi-lateral trade agreements: Specific agreements between countries for trade, setting out requirements, tariffs and the like.
    In the context of self-sovereign identity: Ecosystems (geographical, industry-based) should be able to define what economic policies they want to adopt, such as price points for credentials (including free and freemium), governance rules,
  • World Trade Organisation Rules: Where no bi-lateral or multi-lateral trade agreements exist, there are international baseline rules to fall back on.
    In the context of self-sovereign identity: When SSI credentials hop across between different ecosystems, there are baseline economic policies they can fall back to, thus making them portable across different ecosystems.
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cheqd’s suggested expansion of the Trust Over IP Stack with an economic layer

Using the numbering for Layers from our previous blog on the Trust Over IP stack, in the cheqd SSI network our vision is to translate this into:

  • Layer 1.1: A base layer of tokenomics so that any individual or organisation can interact with any other, regardless of industry or country. (“World Trade Organisation rules”)
  • Layer 1.2: Customisable tokenomics plugins such as: “verifier pays holder“, “verifier pays issuer“ or subscription models so that each ecosystem can define its incentives to suit itself and its users the best. (“Bi-lateral or multi-lateral rules”)
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Examples of commercial models in self-sovereign identity

We believe this will jumpstart a global, collaborative, vision for SSI whilst accounting for the complexity and nuance we have outlined above in terms of commercial models. We see the tokenomics plug-ins specifically dovetailing with the Trust over IP metamodel for governance frameworks to facilitate the easy creation of multiple ecosystems (such as Trinsic Ecosystems).

In future blog posts, we plan on explaining our vision for how governance would work on the cheqd SSI network, as well as expanding on our ideas about the virtuous flywheel of SSI growth with a deep dive on the new commercial models that can exist in this space.

Tell us what you think

cheqd welcomes comments and debates on our approach. We acknowledge that this is a new concept in the SSI world, and would love to know your thoughts or feedback as comments on the article. You can also reach out to us on Telegram, Twitter, and LinkedIn for discussions and updates.