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Introducing Identity Matching and Identity Staking

There are many companies that create a permissionless or permissioned multi-side marketplace to match the supply market and demand market. The matching of identity information consists of a major part of the marketplacees. For example, LinkedIn matches the demand and supply of professional skills, Tinder matches the demand and supply of the requirement of a partner, and Tandem matches the demand and supply of language preferences like which language a person want to learn. The successes of these products have proved identity matching has a big market.


But in terms of identity’s privacy, there is following two main problems:


1. The user data stored in centralized storage, the user has the risk of man-made errors. In addition to that, a lot of platform applications get profits mostly by selling user data. Even for big internet giant companies, Every year we hear data leaking or password compromised news.

2. In a multi-side platform, a buyer wants to get more sellers, a seller wants to get more buyers, a good way to do that is to have more attractive information for the other side. But it often involves identity’s privacy, like if a user is open to a new job or if a user is in a relationship. Users only want to make this private data public to the matchwinner instead of every buyer. The cost of a data crawler to collect user information is very low.


Litentry has designed the Identity Staking and Identity Matching mechanism based on Blockchain, which could solve the above two problems and introduce an efficient identity matching marketplace with privacy protected.


Identity Staking


The more high-quality identities in the network, the more efficient the matching market and identity matching is, to incentivize more user into the marketplace with privacy protected, we have designed Identity Staking in Litentry Network.


In short, identity staking is the process that an identity owner sends the snapshot of their identity document and DID to the identities pool of blockchain, and authorize the read permissions to the validator node. The identity document is encrypted and saved in a decentralized database like IPFS or on-chain key-value store, and DID is stored on chain.


After a user has staked his/her identity, the user will continuously get rewards from the Litentry Network. It comes from two way:


1. Each block of the Litentry blockchain will have a fixed amount of native token, thus every block an identity staker will get rewarded according to the ratio of staking identity value to the value of the entire identities pool. The staking document value will be quantitated by the identity guardian during the staking process.


2. In the identity matching process, each successful or failed match will give the involved identity staker a calculated percentage of matching fees.





Identity Matching


Normally the matching process takes place at a centralized server or in the cloud, the process and algorithm are in the black box with an unknown or even non-existed privacy protection.


Litentry uses blockchain to make the identity matching process transparent with certainty.


Litentry uses DID as an anchor for identity documents, and stores DIDs and included data types of its identity document to an identities pool, with (staking) identity documents encrypted and stored in decentralized storage, which ensures that no private data is stored on a single node in the network.


Litentry implements blind matching-making with random anonymous identities picked from on-chain identities pool, and matching data is processed by the substrate off-chain worker. The network sends the matchwinner’s DID as a matching opportunity back to the matching buyer. The buyer does not have access to other identities in the identities pool but only the matchwinner's DID, thus match buyer pays the LIT token in exchange for a matching opportunity.





With identity staking and identity matching, we construct the basic economic model of the identity-based network without selling any user data. the for more information, please refer to Litentry Lite Paper.




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