A short guide to understanding Proof of Humanity

I was fascinated when I stumbled across the proof of humanity platform,for once I felt some relief as I have often grappled with how to approach the complex world of decentralized finance and web3.

“Decentralization” is a parlance that is often through around carelessly by many, some misunderstand it as a system that supports anyone from anywhere.

When Uniswap,1inch etc did their airdrops,there were individuals that received multiple airdrops because they at different point in time had interacted with such dapps through multiple wallets.

What is Proof of Humanity?

It’s a registry of humans on the Ethereum blockchain,it’s powered in collaboration with the team at Kleros.

With a simple tool like Cointool, one can generated thousands of addresses(with the private keys and mnemonic phrases) with a simple click under less than 30 seconds.

I believe if DeFi and the blockchain space will fully reach its potential,it will have to solve the problem of identity.

Current consequences of the identity problem

“ Everything rises and falls on Identity”

1. Hacks : Hacks are commonly reported in crypto,in post-mortem analysis of such occurrences,we often find the addresses associated with such operation and all other addresses used for such a scheme.

2. Voting : In the event of voting in a DAO,most DAO have governing councils that are elected,but in the case when an individual or group of individuals desperately want to influence the outcome of a vote,all they need to do is create multiple accounts and vote from such account.

A example is that of Kleros(the co-creator of PoH),many people have noticed and reported that certain individuals have multiple accounts on the platform and at such can be randomly drawn into courts and judge cases against themselves and people.

Elections are often a contested arena in many nations of the world,many do not believe the outcome of such results.

The one address,one vote is a facade,it does not work,supposing a proposal was submitted for voting and it garnered 1000 Yes and 500 No ,how certain are we that one single individual can did not vote with multiple addresses,so at the end of the day,we did not have 1000 people voting but unknown number of people with 1000 votes,so at the end of the day 20 people may vote and influence the outcome of a decision when they are stacked against 100 people.

Money talks and money is the name of the game

3. Identity based solutions : in the case of credit scoring for securing loans,credits will not be given to users whose identity cannot be verified.

No wonder,we have overcollaterized loans.

But why should we keep a registry?

1. Hacks : Back to the problem of hacks,if we build systems that can only be access with real verifiable identities like those of Proof of Humanity,it will make it harder to carry out hacks,let’s take the example of Dapp Y

Let’s say Dapp Y integrated proof of humanity for login purposes and on a faithful day Mr X who has a registered identity on PoH accessed the dapp and exploited it,now we have a concrete place to start our investigation.

We can simply pull up his id and photos,report it to various exchanges and law enforcement agencies and I tell you,it will be hard to execute a hack,even if they use privacy tools like Tornado cash to hide their privacy,from the source(PoH registry) will have their identity.

2. Voting : Let’s take for example any protocol out there and implemented a solution like Proof of Humanity and require all who wish to vote on proposals to have a PoH identity.

One may argue that the outcome may still be influenced,yes such arguments may be true but it’s minimized in such cases.

Let use Alice for example,He wants to influence the outcome of a certain vote,here is why it’s difficult

  • All proposals have deadlines at which votes may be valid,all votes after such period are invalid.
  • To be a registered member in the PoH registry takes time : it’s not an instantaneous process like conventional accounts creation in Ethereum and other blockchains,you need to be vouched by someone else and after that it will be supported to the decision of the kleros court,all these processes take time.
  • Restrictions : A DAO may impose rules that prohibit accounts less that are less than X time old to vote,this will prevent vote influencing in a mighty way.
  • Still bent on influencing the vote : Alice may convince already registered identities to vote in a certain direction but he is limited to how many identities he can convince,this is unlike when he and others can create multiple accounts and vote from.

3. Identity based solutions : Recently Aave crossed over $20 billion in total valued locked,there are many private corporations that are looking into DeFi and if they are to come in,solutions like PoH will be handy.

Certifications and reputation systems may also integrate it,imagine a job recruiting firm on the blockchain,employers may relate with certain info about the applicant.

Other use cases for Proof of Humanity

1. Universal basic income : I recently came across a documentary about the “play to earn” model with the axie infinity game,there are people in many developing nations of the world where they earn as low as $60 per month and during the lockdown,the axie infinity was indeed a life saver.

Every verified identity on the Proof of Humanity registry gets 1 $UBI tokens streamed to their wallet per hour,they may choose to withdraw it anytime and use for any purpose.

2. Inheritance planning : It was reported sometime ago of a man who had over $500m worth in XRP and his family could not access them upon his death,we can mitigate such occurrences by using platforms like PoH,a man can create a private registry with all eligible individuals for his inheritance and how much each is eligible to.

3. Social recovery : There are many who lament the fact that they could have been wealthier if they had not lost access to their wallets.

With PoH,we may select 12 individuals who do not know each other and split the 12 mnemonic phrases(private key) between them,the owner of the wallet is kept private,the individuals who each store a single piece of that phrases do not know each other nor the owner of the wallet.

The seed phrases may be split and stored with multiple users to prevent the occurrence of loss. In the event of a loss,the system may be called upon for recovery.

Some proposals on how to make the $UBI token more valuable

1. Security deposit : Currently to register on the PoH platform,one must bond 0.18 ETH,this is of course refunded upon successful registration. With this approach to onboarding,ETH is the underlying asset that is sought after,we may change this to $UBI,there exists two $UBI pools and users may acquire $UBI from there.

We may peg the bond tokens to “X” amount of $UBI tokens

2. Minimum balance :New users will receive tokens hourly but after let’s say Y amount of time,they will only receive $UBI tokens if they have a minimum balance in their wallet.

For example,one month after registration,each user would have received 720 $UBI tokens(1 $UBI per hour for 24hrs *30 days),we may require them to always hold a minimum of let’s say 400 $UBI tokens to be eligible to continue receiving tokens. This is discourage massive selloffs

3. No loss lotteries : A no loss lottery may start accepting $UBI tokens,this way users save and play the lottery as well.

4. Online shop that accepts only $UBI :The protocol may create its own store or integrate with shops or payment providers to start accepting $UBI tokens. This should not be limited only to online shops,users may even start accepting $UBI

5. Yield farming strategies : Integrate with ecosystems like those of Yearn Finance etc.

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Blockchain youtuber and informant