Identity Solutions

Singularity Finance (SFI) aims to establish a robust foundational identity solution that empowers individuals to maintain their identities onchain. This innovative approach enables both permissioned and non-permissioned products to coexist on the same Layer-2 (L2) blockchain, facilitating compliance with Anti-Money Laundering (AML) regulations for permissioned products.

Identity Components

The identity solution incorporates several key due diligence checks, which can be updated periodically:

• KYC (Know Your Customer): This process is essential for onboarding individuals and requires personal information such as name, date of birth, passport details, and potentially a selfie or liveness check.

• KYB (Know Your Business): This check is designed for onboarding businesses and institutions, involving verification of organisational structure, jurisdiction, addresses, organisation charts, and beneficial owners.

• Wallet Screening: This includes AML, terrorist financing (TF), and sanctions checks on wallet addresses, with each address assigned a risk score based on its transaction history.

Architecture

The identity solution is built on the following critical components:

• Blockchain Layer: The Layer 2 solution enhances transaction speed and reduces costs, making onchain identity management efficient.

• Smart Contracts: These contracts manage the creation, verification, and administration of verification tokens.

• Data Security: All offchain identity data is encrypted using standard protocols to safeguard user information.

• API Integrations: APIs facilitate seamless integration with various KYC/KYB providers and other third-party services.

Flows

The identity solution operates through a straightforward process:

• Initiation: Users begin the onboarding process via the decentralised application (dApp), selecting whether they are an individual (KYC) or a business (KYB).

• Data Submission: Individuals submit necessary information, while businesses provide detailed organisational data.

• Secure Transmission: All data is encrypted and transmitted securely to trusted KYC/KYB providers, ensuring compliance with data protection regulations. Validation: KYC/KYB providers verify the submitted information against government databases and other reliable sources.

• Verification Token Creation: Upon successful verification, a unique token is generated and linked to the user's blockchain address, confirming compliance without disclosing personal data onchain.

• Ongoing Monitoring: Users must regularly update their KYC/KYB information to maintain compliance. Wallet activities are monitored for suspicious behaviour, and flagged addresses may require re-verification or temporary access restrictions.

This verification process is designed for simplicity. Once onboarded, users can access various services within the Singularity Finance ecosystem, manage their verification status, view their history, and update their information through a central dashboard. The L2 employs smart contracts to verify valid tokens when users access permissioned products, ensuring automatic compliance. Users can selectively share parts of their identity information with different protocols or services, while personal data remains securely stored offchain.

Benefits

One of the key advantages of Singularity Finance’s identity solution is the ability to reuse verified ID across various services within the ecosystem.

• Single Verification, Multiple Access: Once users complete the KYC or KYB process, they do not need to undergo verification again for different services within Singularity Finance. For instance, a verified identity for a DeFi lending platform can be used for staking or trading without additional checks.

• Consistent Compliance: Once users complete the KYC or KYB process, they do not need to undergo verification again for different services within Singularity Finance. For instance, a verified identity for a DeFi lending platform can be used for staking or trading without additional checks.

• Enhanced Security and Privacy: The verification token is the only onchain data linked to the wallet, ensuring that personal information remains secure. Each service accesses only the necessary verification token, protecting full identity details from unnecessary exposure.

• Example Scenario: Alice is an individual who has completed the KYC process on Singularity Finance. Her verified identity is linked to her wallet address. When she participates in a permissioned dApp transaction, and later wishes to lend assets on another permissioned DeFi lending platform within the same ecosystem, the lending platform automatically recognises her verified status through her wallet's verification token. This seamless transition enhances Alice's overall user experience by allowing her to engage with multiple services quickly and efficiently.

Future Enhancements

Looking ahead, the identity solution plans to incorporate:

• Decentralised Identity (DID) Integration: This will explore decentralised identity frameworks to enhance user control and interoperability across different blockchains.

• Advanced Risk Analytics: The use of AI and machine learning will improve wallet screening and risk assessment, enhancing threat detection capabilities.