The DeFi sector is missing something essential, blockchain project says

Non-collateralized borrowing and larger loans could start to be offered by the DeFi sector if decentralized digital identities are rolled out, a blockchain project says.

Metaverse claims digital identities are an essential piece of infrastructure that’s currently missing from this thriving industry — despite the fact that they would allow protocols to offer personalized services, and achieve regulatory compliance.

Digital identities normally consist of data including an online user’s search history, social media activity, usernames, national ID number, date of birth, and current location. The team behind Metaverse claims that this information can be put to good use without compromising privacy, as users will have the freedom to give protocols access to a limited set of non-intrusive information.

This can subsequently enable protocols to assess a candidate’s ability to repay a loan, and eliminate some of the risks associated with crypto lending.

In explaining how sensitive data can be utilized without exposing someone’s anonymity, Metaverse pointed to cryptographic technologies such as zero-knowledge proofs. Examples would include confirming someone is over 18 without seeing their date of birth — or evaluating whether a borrower has repaid loans on time without discovering which lenders they’ve transacted with in the past.

The team told Cointelegraph: “For our fourth anniversary, Metaverse is creating the next evolution of decentralized ledgers, which focuses on decentralized digital identities and digital assets. With new features like the interoperable Metaverse Virtual Machine (MVM), Hybrid Consensus Algorithm built on the Substrate framework, programmable decentralized digital identities and more, this evolution brings together the best from our legacy chain and merges it with new innovative modules to create Metaverse — The New Reality.”

Challenges… and opportunities

According to Metaverse, the big challenge that’s facing the crypto community right now centers on cross-platform compatibility — ensuring that the self-same digital identity can be used across multiple blockchains. 

In time, it hopes its digital identity solution, known as avatars, will become standardized across crypto and traditional finance, providing anyone with the ability to securely manage their personal data and anonymously share it with third parties. Avatars could also pave the way for business models based on decentralized trust to establish dominance in the Web3 ecosystem.

With payment giants such as PayPal and Mastercard now embracing cryptocurrencies and blockchain — with Visa considering Bitcoin integration — Metaverse believes that digital identities are going to play a big role in eliminating the threat of centralization.

In the first quarter of 2021, the project is set to unveil its New Metaverse main infrastructure and launch the Hyperspace mainnet. Its technology is also going to be integrated into the Gene Finance protocol. As the year progresses, Metaverse plans to support developers who wish to build new DeFi products using its technology.

Metaverse was first founded all the way back in 2016, making it one of the only projects to survive the harsh crypto winter seen in 2018.

Over the coming months, the project believes that a plethora of powerful use cases for digital identities will emerge — offering an effective way of proving ownership of digital assets in an increasingly tokenized world. Metaverse also believes its infrastructure could offer a 21st-century approach to registering copyright over intellectual property.

As well as facilitating millions of transactions, Metaverse says it has served as a secure platform for 3,000 digital assets and 5,700 digital identities. The blockchain is planning to migrate to Substrate in 2021 — paving the way for a greater number of transactions per second and smart contract functionality, without compromising on its core values.