2. Problem Statement
Despite the promise of decentralized identity (DID) systems to revolutionize how individuals manage and protect their digital identities, traditional DID protocols have struggled to achieve widespread adoption. Several inherent limitations, particularly those related to centralized proofing, high operational costs, and slow adoption rates, have hindered their effectiveness and scalability.
Centralized Proofing
At the heart of traditional DID systems is the concept of credentialing, where users' identity claims—such as Know Your Customer (KYC) information or social media verifications—are validated by entities known as provers. These proversare responsible for issuing attestations that can be used across various platforms and services. However, even though the underlying infrastructure of DID protocols is decentralized, the proofing process itself remains largely centralized.This centralization introduces several critical issues:
Single Point of Failure: The reliance on a single prover or a small group of provers to validate identity claims creates potential bottlenecks and single points of failure. If a prover is compromised or becomes unavailable, the entire credentialing process can be disrupted, undermining the security and reliability of the DID system.
Trust Issues: Verifiers—entities that rely on these credentials, such as banks, exchanges, or DeFi platforms—must individually assess and trust each prover's processes. This often requires verifiers to undertake complex and costly due diligence to ensure that the credentials they accept are valid and trustworthy. The subjective nature of this trust assessment further complicates the process and can lead to inconsistent standards across different verifiers.
Limited Scalability: Centralized provers are limited in their capacity to handle large volumes of credentialing requests. As the number of users and services relying on DID protocols grows, centralized provers may struggle to scale effectively, leading to delays and reduced efficiency in the credentialing process.
High Costs
The centralization of the proofing process not only introduces vulnerabilities but also significantly drives up costs. Specialized provers, such as KYC providers, typically charge high fees for their services, which are then passed on to both verifiers and end-users. These costs create a barrier to entry for many potential users and verifiers, limiting the adoption of DID protocols.
Prohibitive Costs for Verifiers: Verifiers, such as financial institutions or DeFi platforms, often face substantial costs to integrate and trust a prover's credentials. These costs include not only the direct fees charged by provers but also the operational expenses associated with verifying and maintaining trust in the proofing process. For smaller organizations or those operating in low-margin sectors, these costs can be prohibitive, deterring them from adopting DID protocols.
Burden on End-Users: End-users, who are the ultimate beneficiaries of decentralized identity systems, also bear the brunt of these costs. Whether through direct fees or higher service charges passed down by verifiers, users face financial barriers that can prevent them from fully utilizing DID systems. This cost burden is particularly challenging in regions with low economic resources, further exacerbating the digital divide.
Slow Adoption
The combination of centralized proofing and high costs has led to slow adoption of traditional DID protocols. Despite the potential benefits of decentralized identity systems, many organizations and users remain hesitant to adopt these technologies due to the complexities and expenses involved.
Complex Onboarding Processes: The need for verifiers to independently assess and integrate with each prover results in complex and time-consuming onboarding processes. This complexity discourages many potential verifiers from adopting DID protocols, as the perceived effort outweighs the benefits.
Limited Credential Reusability: The centralization of proofing also limits the reusability of credentials across different platforms and services. Since each verifier must independently trust a prover's credentials, users may find that their credentials are not universally accepted, reducing the utility of DID systems and further slowing adoption.
Market Fragmentation: The reliance on centralized provers leads to a fragmented market, where different verifiers and provers operate in silos, each with their own standards and processes. This fragmentation prevents the creation of a cohesive and interoperable decentralized identity ecosystem, further hindering widespread adoption.
Summary
The centralized nature of proofing in traditional DID systems, coupled with high operational costs and slow adoption rates, presents significant challenges to the widespread adoption and effectiveness of decentralized identity protocols. These limitations prevent users from fully realizing the benefits of decentralized identity, such as enhanced privacy, security, and control over personal data.MOTI’s Decentralized Attestation Network seeks to address these challenges by fundamentally rethinking how credentialing is conducted within DID systems, paving the way for a more secure, scalable, and cost-effective approach to decentralized identity.
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