Decentralization is at the forefront of everyone’s mind when it comes to the most important aspects of crypto. As time ticks on, more products and solutions that compromise on certain core crypto beliefs emerge. However, this can come at the benefit of potentially enchanted performance, and increased adoption.
Today, we’ll be briefing you on Kinto. Kinto is an admittedly open chain that requires KYC. While it may not be breaking boundaries when it comes to the topic of decentralization and anonymity, Kinto is going in a direction mostly unexplored when it comes to increasing crypto adoption. In the age of airdrops, Kinto may spoil some of the fun as one of its attractive features is its sybil-resistant infrastructure.
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Background on Kinto
Kinto brands itself as the ‘safety 1st L2’. It is a secure layer-2 that helps focus exclusively on finance for people and institutions to bridge from TradFi to DeFi. Kinto places an emphasis on the necessity of KYC procedures due to regulatory requirements and chain analysis tools. Existing compliance checks can be seamlessly integrated into Kinto's framework for enhanced security. This is a different approach from other chains and protocols which might take a less invasive, but more exclusive approach by simplifying geo-blocking users. While $WLD may be pumping right now, WorldCoin initially faced a lot of criticism for it’s open-and-notorious retina scanning.
Through the eyes of Kinto, there are currently a few important things that a protocol should have in order to retain users.
Gasless and Seedless transactions via account abstraction.
Protocol Protection/ Insurance for users in the event of an exploit.
Sustainable Incentives instead of growth hacking.
Less fragmentation between chains.
The obvious thought that comes to mind when crypto natives think about KYC chains is institutions eg. JP Morgan, Blackrock, etc. creating their own chains. This is a massive market, whether one supports it or not. One big barrier for institutions creating private chains hinders the flow of money, lacking the composability essence of crypto. KYC listing participants breaks composability; Kinto suggests layering KYC for specific assets or use cases like airdrops. KYC's high-cost challenges effectiveness; mentions nuances in implementing varying levels of KYC.
Institutions face challenges accessing blockchain due to compliance and security concerns. Kinto addresses compliance, security, and insurance issues for institutions coming on-chain. Kinto plans to offer private transactions through layer-3 in the future. They focus on creating value for users without them needing to know the underlying blockchain technology.
As it pertains to adoption so far, over 6,000 users verified with the KYC process completed; 4,000 wallets were created. The next phase includes incentivizing DeFi hack victims to join Kinto for enhanced safety measures. Businesses may focus on utilizing protocols without requiring tokens, emphasizing community, incentives, and protocols. The potential shift towards businesses building directly on protocols without the necessity of a token is ed as a positive development.
Stablecoins are back in the public eye with the launch of Ethena…
This Thursday at 12 PM EST, we’ll be hosting our 3rd episode of Revelo Roundtable. We’ll be discussing the stablecoin space with a guest panel including Ethena, Mountain Protocol, Liquity, and Gyroscope… See you there!
Insights from Kinto Co-Founder
Kinto was Co-Founded by Ramon Recuero, who also previously founded Babylon finance. Babylon Finance faced challenges following the hack of Rari Capital, leading to a loss of user trust. Closure due to market conditions led to insights into the importance of user security.
Ramon believes that a layered approach provides a better user experience and more time to act in emergencies. Despite concerns about hacks, the layered approach offers added security and control over personal information. Kinto's unique design allows users to maintain ownership of their KYC data while choosing their KYC provider. Data is stored securely with trusted providers like Plaid, ensuring privacy even in the event of a hack. Synaps, a unified identity verification platform, and Plaid support 85 countries for onboarding, covering Asia, Africa, Europe, and the US.
The inspiration from popular fintech platforms is evident with the team expression ambitions including reducing the time to create a wallet to 15 seconds instead of 15 minutes, and other things of this nature.
Security Concerns?
Kinto states that it doesn't store personal data; providers handle it. Encrypted mapping is used for user identification. Updates to user information through providers ensure compliance with AML regulations for secure transactions on Kinto. Automatic updates from providers regarding sanctions ensure compliant interactions within applications using Kinto.
The team states that for individuals, KYC costs range from $1-3, while business processes are more complex.
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