12 September 2024
Ethereum Open Community Projects L2 Standards Working Group
Vitalik Buterin recognized three essential transitions for Ethereum: scaling via L2 rollups to scale back prices, enhancing pockets safety by way of good contract wallets for higher safety and consumer expertise, and advancing privateness via privacy-preserving mechanisms. This text explores how integrating W3C Decentralized Identifiers (DIDs) and Verifiable Credentials (VCs) can handle a few of these challenges by bettering the administration of identities, keys, and addresses, leveraging current decentralized identification options to assist Ethereum’s transitions effectively to maneuver to a extra L2-based world.
As Vitalik Buterin identified in a sequence of 2023 articles, notably his Three Transitions article, Ethereum is transitioning from a younger experimental know-how right into a mature tech stack that would deliver an open, world, and permissionless expertise to common customers. Nevertheless, he believes that there are three main technical transitions that the stack must bear, roughly concurrently:
- L2 Scaling Transition: This includes transferring the ecosystem to rollups to deal with the excessive transaction prices on Ethereum, which have reached $3.75 and even $82.48 throughout a bull run
- Pockets Safety Transition: The shift to good contract wallets (account abstraction) is critical for enhanced consumer consolation and safety in storing funds and non-financial property, transferring away from centralized exchanges and single non-custodial wallets.
- Privateness Transition: Making certain privacy-preserving funds transfers and growing different privacy-preserving mechanisms comparable to social restoration and identification techniques is important to forestall customers from resorting to centralized options that supply just some or nearly no privateness.
Vitalik emphasizes that these transitions are essential and difficult because of the intense coordination required to implement them. Specifically, he mentioned the implications of those transitions on the connection between customers and addresses, cost techniques, and key administration processes. The connection between customers and their addresses, and key rotation/restoration are a significant concern each technically and from a usability standpoint – UX determines success or failure irrespective of how good the underlying know-how is.
On this article, we are going to delve into these latter points and talk about how options from one other ecosystem, particularly the one centered on decentralized identification, additionally also known as self-sovereign identification, can considerably help with the transitions with out having to reinvent too many wheels.
The issue assertion within the context of Ethereum’s technical transitions might be summarized as follows in accordance with Vitalik:
- Complicated Funds: The transitions make easy actions like paying somebody extra advanced, requiring extra info than simply an handle as a result of the consumer wants to find out which funds to make use of, the place to ship it to, and particular cost directions typically involving identification info.
- Sensible Contract Wallets: Sensible Contract wallets add technical points that should be addressed, comparable to guaranteeing wallets monitor ETH despatched by good contract code together with monitoring throughout networks.
- Privateness Challenges: Privateness-preserving transactions, if carried out, introduce new challenges, comparable to needing a “spending public key” and encrypted info for the recipient to seek out the cost and learn how to choose it up.
- Id Modifications: The idea of an “handle” will change, probably requiring a mix of a number of addresses, encryption keys, and different knowledge to work together with a consumer.
These factors, due to this fact, increase the query of how we handle identification, addresses, and their keys collectively, and in a approach that doesn’t confuse the consumer, and compromise the safety of their property.
Given the above downside assertion, the idea of an “handle” within the Ethereum ecosystem, is evolving, with the normal thought of an handle as a single cryptographic identifier turning into out of date. As a substitute, “directions for learn how to work together with me” will contain a mix of addresses on a number of Layer 2 (L2) platforms, stealth meta-addresses, encryption keys, and different knowledge. In his article, Vitalik factors out that one doable strategy can be utilizing the Ethereum Title Service (ENS) information to include all identification info. Sending somebody an ENS title like “alice.eth” would enable them to entry all the required particulars for interplay, together with cost and privacy-preserving strategies. Nevertheless, this methodology has drawbacks, comparable to tying an excessive amount of to at least one’s title and the lack to have trustless counterfactual names, that are important for sending tokens to new customers and not using a prior blockchain interplay. As well as, the ENS system is a rent-seeking system. Subsequently, extra broadly, it’s not equitable and doesn’t assure continued possession of 1’s identification; that isn’t a tenable state of affairs. Another answer includes keystore contracts that maintain all identification info. These contracts might be counterfactual-friendly and should not tied to a selected title, permitting for extra flexibility and privateness.
This brings us to the subject of keys controlling “addresses”. Particularly, key rotation and key restoration in a multi-address Ethereum Ecosystem. Key rotation is simply turning into an necessary characteristic with good contract wallets and account abstraction the place the controlling handle of a wise contract pockets would possibly change as a result of a key’s rotated or recovered which necessitates a brand new controlling handle. Regardless of key rotation or key restoration, the normal methodology can be to run onchain-procedures on every handle individually. That is impractical on account of fuel prices, counterfactual addresses, and privateness issues. As talked about earlier than, Vitalik proposes the utilization of keystore contracts that exist in a single location and level to verification logic at totally different addresses. This may enable the creation of a proof of the present spending key for transactions. This requires a restoration structure that separates verification logic and asset holdings, simplifying the restoration course of by requiring solely a cross-network proof for restoration.
On this context, Decentralized Identifiers can leverage keystore contracts to empower a modular verification logic for contract accounts that verifies zk proofs via a selected validation module and embeds a system to standardize onchain executions.
Including privateness measures, comparable to encrypted pointers and zk proofs, will increase complexity. Nevertheless, it affords potential synergies with keystore contracts for persistent addresses for the reason that persistent handle could possibly be “cloaked” in a zk proof.
What does this all imply for good contract wallets? Historically, wallets have been designed to safe property by defending the non-public key related to on-chain property. If the important thing was to be modified, the previous one could possibly be safely disclosed with none threat. Nevertheless, in a zero-knowledge world wallets want to guard knowledge apart from property. The instance of Zupass, a ZK-SNARK-based identity system, illustrates that customers can maintain knowledge domestically and solely reveal it when obligatory. Nevertheless, dropping the info’s encryption key means dropping entry to all encrypted knowledge. Subsequently, the administration of encryption keys can be turning into more and more necessary. Vitalik means that a number of gadgets or secret sharing amongst (key) “guardians” could possibly be used to mitigate the chance of dropping encryption keys. Nevertheless, this strategy shouldn’t be appropriate for asset restoration because of the potential threat of collusion amongst “guardians”. Lastly, the idea of an handle as a consumer’s on-chain identifier must change, and, due to this fact, wallets should handle each asset restoration and encryption key restoration to keep away from overwhelming customers with advanced restoration processes aka poor UX. For instance, Sign In With Ethereum depends on the onchain handle and the consumer’s non-public key controlling that key to generate the authentication message. Nevertheless, there isn’t a notion of a one-to-many relationship on this strategy, and no notion of a wise contract pockets as the first delegate of the consumer. The verifying celebration, additionally referred to as the relying celebration, due to this fact, can’t assess the scope of the authorization(s) required for the consumer when logging through which is essential relying on the performance the verifying celebration makes out there to the consumer handle.
The Three Transitions are extra than simply technical enhancements; they characterize radical shifts in how customers interact with Ethereum-based stacks, particularly within the areas of identification, key administration, and addresses, thereby, evolving the Ethereum ecosystem from its present state right into a extra user-friendly and accessible platform that prioritizes scalability, safety, and value. Subsequently, one would naturally ask the next query: Are there instruments and frameworks already out there that could possibly be utilized by the neighborhood, particularly relating to identification, key administration, and privateness to ease the transitions? The reply to that could be a particular sure. Specifically, the ecosystem that has developed across the idea of decentralized identification and its requirements, frameworks, and quite a few reference implementations has produced tooling that’s readily usable inside the Ethereum stack.
What’s the Decentralized Id Ecosystem?
The decentralized identification ecosystem is concentrated on giving people management over their digital identities with out counting on centralized authorities. It leverages blockchain know-how and cryptographic rules to make sure privateness, safety, and user-centric identification administration. On the core of this ecosystem are two key ideas: Decentralized Identifiers (DIDs) and Verifiable Credentials (VCs).
Decentralized Identifiers (DIDs):
DIDs are a brand new kind of identifier that allows verifiable, self-sovereign digital identities. They’re distinctive, globally resolvable identifiers related to a topic, comparable to a person, group, or system. DIDs are decentralized by design, that means they don’t depend on a central registry or authority for his or her creation or administration. As a substitute, they’re created and managed by the customers or entities appearing on their behalf. DIDs usually make the most of public-key cryptography to make sure safe interactions and permit the topic to show possession and management of their identification and carry out particular licensed actions comparable to assertions, authentication, authorization, and encryption.
Verifiable Credentials are digital credentials that include claims a couple of topic’s identification, attributes, or {qualifications}, issued by trusted entities often called issuers. VCs are tamper-evident and cryptographically signed to make sure their integrity and authenticity. Importantly, VCs are transportable and might be introduced by the topic to verifiers, comparable to service suppliers or relying events, with out the necessity for these verifiers to contact the issuer instantly. This permits seamless and privacy-preserving identification verification throughout totally different domains and contexts.
A number of key gamers and organizations are contributing to the event and adoption of decentralized identification applied sciences:
- Decentralized Identity Foundation (DIF): DIF is a consortium of organizations collaborating to develop requirements and protocols for decentralized identification techniques. It promotes interoperability and innovation within the area.
- World Wide Web Consortium (W3C): W3C hosts the Credentials Neighborhood Group, which incubates work on verifiable credentials and associated applied sciences, and the Decentralized Identifier and Verifiable Credentials Working Teams, that are growing updates to the respective specs
- Hyperledger Indy: Hyperledger Indy is an open-source venture below the Linux Basis. It’s centered on offering instruments and libraries for constructing decentralized identification techniques.
- Sovrin Foundation: Sovrin Basis operates the Sovrin Community, a public permissioned blockchain designed for decentralized identification administration.
- Microsoft, IBM, and different tech firms: A number of main tech firms are actively concerned in growing decentralized identification options, contributing to requirements growth, and constructing reference implementations.
Requirements play a vital position in guaranteeing interoperability and compatibility inside the decentralized identification ecosystem. Some key requirements and reference implementations embody:
- Decentralized Identifier (DID) Specification: Defines the syntax and semantics of DIDs, together with strategies for his or her creation, decision, and administration.
- Verifiable Credentials Data Model: Specifies the construction and format of verifiable credentials, together with JSON-LD contexts for representing claims.
- DIDComm Messaging Protocol: Permits safe, non-public communication between DIDs utilizing end-to-end encryption and cryptographic authentication.
- SSI (Self-Sovereign Id) Protocols: Numerous protocols and frameworks, comparable to DID Auth, Presentation Exchange, and VC API, facilitate safe interactions and transactions inside the self-sovereign identification paradigm.
- Hyperledger Aries: A framework that gives a set of interoperable elements for constructing decentralized identification options, together with brokers, wallets, and protocols.
- Privado ID former Polygon ID: A set of instruments constructed for builders to create safe and trusted relationships between customers and functions within the Web3. It focuses on decentralized identification, giving customers management over their knowledge. The toolkit is predicated on the open-sourced iden3 protocol.
- QuarkID: An open-source DID answer presently deployed on ZKsync Period with digital credentials being issued by the Metropolis of Buenos Aires.
Beneath, we element how a decentralized identification framework might be efficiently utilized to the cross-network challenges for identification, handle, and key administration beforehand mentioned.
Utilizing Decentralized Identifiers (DIDs)
Downside: Managing identification for a consumer throughout numerous Ethereum networks is advanced.
DID Answer for Identities:
- DIDs present globally distinctive identifiers which are resolvable (to their DID Doc) and cryptographically verifiable throughout any blockchain community.
- Every DID is related to a DID Doc which comprises details about the connection of a DID with a set of cryptographic keys, the capabilities these keys can carry out comparable to verification, authentication, authorization, assertion, and encryption, in addition to service endpoints comparable to API endpoints to addresses managed by the keys listed within the DID Doc.
- The connection of DID to their DID Paperwork or respective cryptographic representations might be saved on any blockchain community, guaranteeing tamper-proof and chronic identification information.
DID Paperwork for Deal with Administration:
Downside: Customers have totally different addresses on the Ethereum mainnet, testnets, and Layer 2 options, together with counterfactual addresses.
DID Doc answer:
- A DID doc has a verificationMethod knowledge property permitting a DID proprietor or controller to specify symmetric and uneven cryptographic keys for any desired curve comparable to secp256k1 utilized by Ethereum stacks.
- The verificationMethod for a key additionally permits the consumer to specify an ID for the verification methodology. That is usually the DID plus a fraction as per the DID specification. This fragment permits two crucial issues. First, it means that you can specify a community identifier, for instance, “1” if the secret is an Ethereum key, and different numbers if that key shouldn’t be on an Ethereum community. As well as, the fragment might be prolonged to point if the important thing belongs to a counterfactual handle or a wise contract pockets. For instance, “did:ion:1234xxxxddd4444-#1-counter” would point out that the general public key recognized belongs to a counterfactual Ethereum handle. As well as, if required for sure causes to individually establish an handle on Polygon PoS vs Arbitrum One the “1” could possibly be changed by the chainId of the goal community, e.g. 137 for Polygon PoS.
- Lastly, a wise contract pockets might be given its personal DID and managed by the DIDs of the good contract pockets homeowners the place every proprietor identifies a number of controlling keys for the pockets as specified of their DID doc. This final level permits for 2 main enhancements for good contract wallets – key rotation aka key restoration, and an arbitrary variety of controlling keys with out revealing these controlling keys
DID Paperwork for Key Administration together with Social Restoration:
DID Answer for Identities:
Downside: Key restoration and key rotation for Ethereum addresses, notably good contract wallets, are advanced and should not user-friendly.
DID Doc answer:
- When a public key related to a DID should be rotated for safety or restoration functions, a consumer can merely replace a DID Doc and substitute the previous public key with a brand new public key within the verificationMethod utilizing one other controlling key. This is usually a key the consumer instantly controls, or if management has been delegated, by one other consumer controlling a DID listed as controller.
- Subsequently, this can be achieved for a Sensible Contract pockets. Every controller can independently replace the important thing within the verificationMethod related to their DID. That is sufficient as a result of the consumer can produce a cryptographic dedication that the replace was achieved appropriately that may be submitted to and verified by the good contract pockets.
Privateness (Zero-Data) Facet of DIDs and DID Paperwork
- DID Paperwork might be represented as zero-knowledge proofs by first merkelizing their JSON-LD doc, after which verifying Merkle Proofs of relationships of DID-to-key and DID-to-functional-capability (as represented via a number of cryptographic keys).
- Utilizing zk-SNARKs, particularly, permits environment friendly verification of cryptographic key claims on Ethereum networks.
- For instance, the zero-knowledge circuit for a legitimate key rotation replace of a DID doc would do two issues: a) confirm that the updating key’s within the DID doc and is a controlling key by verifying a Merkle proof of inclusion within the DID doc and b) confirm the digital signature of the controlling key over the foundation hash of the previous DID doc. The general public inputs to the proof can be the Merkle Root of the brand new merkelized DID Doc and the foundation hash of the previous DID doc, and the non-public inputs can be the Merkle proof and the digital signature. The good contract would solely must confirm the proof, test that the previous root hash was registered, after which replace the previous with the brand new root hash.
- This has the benefit that no info is leaked about which addresses management the good contract pockets. Each good contract pockets transaction could possibly be absolutely nameless if all transactions submitted to the good contract have a recursive zero-knowledge proof that verifies {that a}) the general public key belonging to the handle submitting the transaction is a controlling key of the DID that could be a good contract proprietor and b) {that a} zero-knowledge proof that the transaction was signed by the right quorum of signatures of the good contract pockets homeowners was correctly verified by a verifier within the circuit itself.
Utilizing Verifiable Credentials (VCs)
Downside: The entity performing a key operation comparable to a key rotation or a digital signature for a monetary transaction should show that it’s a authorized entity that meets all relevant compliance guidelines for a jurisdiction that has compliance oversight.
VC Answer for Compliant Key Operations:
- W3C VCs enable assertions to be made concerning the topic of the credential comparable to “Alice is a authorized enterprise in Brazil”, or, “This enterprise is a authorized entity within the US and a registered Dealer-Seller”, or, “The authorized US entity A is a legally registered Dealer-Seller and is legally licensed to behave on behalf of the authorized US entity B”.
- Given the standardized construction and public context reference information that specify the VC normal and particular VC varieties, every VC might be readily become a zk proof given a standardized, and publicly out there zk circuit. Revealing solely the authorized identification of the VC issuer as the foundation of belief, comparable to a KYC supplier.
- Such zk proofs, particularly, ZK-SNARKs might be submitted with any transaction and verified in a wise contract comparable to a wise contract pockets or a DeFi protocol.
- This enables for compliant transactions on Ethereum stacks with out revealing any delicate identification or different related compliance knowledge.
Helpful Implementations for Ethereum Networks
There are dozens of various implementations of the W3C DID specification. Whereas many DID strategies should not as scalable as obligatory, or not simply anchored on a blockchain, a number of DID strategies match the invoice for the Ethereum ecosystem – permissionless, blockchain-anchored, scalable, and low cost. All of those DID strategies are primarily based on the Sidetree Protocol. The Sidetree Protocol is a “Layer 2” DID protocol that may be carried out on prime of any occasion anchoring system, together with Ethereum, and is compliant with W3C pointers. The Sidetree protocol doesn’t require centralized authorities, distinctive protocol tokens, reliable intermediaries, or secondary consensus mechanisms. Particularly, the Sidetree protocol defines a core set of DID PKI state change operations, structured as delta-based Battle-Free Replicated Information Sorts (i.e. Create, Replace, Recuperate, or Deactivate), that mutate a Decentralized Identifier’s DID Doc state.
Subsequently, by leveraging an Ethereum-based implementation of Sidetree, the Ethereum ecosystem can make sure that every consumer has a self-sovereign identification, that’s each non-public and interoperable throughout totally different L2s and functions.
We consider that the mixing of W3C DIDs and VCs into Ethereum’s infrastructure is essential for navigating the upcoming transitions. They supply the required instruments for managing identities, keys, and handle safety, and privateness, and are aligned with the decentralized nature of blockchain know-how.
Sadly, the Ethereum ecosystem and the decentralized identification (DID) ecosystem haven’t intersected a lot, although each share a give attention to decentralization. The Ethereum ecosystem has primarily focused on advancing and scaling its blockchain know-how, whereas the DID ecosystem has prioritized growing requirements and protocols for governing digital identities. Because of this, alternatives for collaboration between these two ecosystems have been restricted.
We see the Three Transitions as a possibility to alter this and begin a better collaboration between the Decentralized Id and Ethereum ecosystems.
Acknowledgments
Particular thanks go to Eugenio Reggianini ([email protected]) for proofreading the manuscript and including necessary content material.
