Sumsub | KYC Gated Smart Contract Interaction

SIGN Protocol Case Study - KYC Gated Smart Contract Interaction

KYC & AML Screening

KYC (Know Your Customer) and AML (Anti-Money Laundering) checks are essential compliance measures in the cryptocurrency industry. KYC requires customers to provide personal information and identification documents, while AML focuses on preventing money laundering by monitoring financial transactions. Given the anonymous nature of digital currencies, these procedures are sometimes required to ensure compliance with international law. KYC/AML can be used to build trust among users and regulators, contributing to the legitimate and responsible growth of the cryptocurrency sector.

Challenge: Bringing KYC Status Onchain

Off Chain platforms such as Sumsub, Persona, and Veriff are commonly used to conduct KYC/AML checks online. These KYC products are typically integrated into online financial platforms that require users to verify their identities before enabling access to regulated financial products. Businesses integrate these reputable platforms to securely handle the collection and screening of users personal identity information.

Onchain applications wishing to implement KYC/AML gated access control for specific smart contract functions face challenges in trustlessly and securely porting their users off chain KYC/AML verification status on chain.

Case Study: ZetaChain KYC-Gated Airdrop

Scenario

ZetaChain, a new L1 blockchain with built-in interoperability, required KYC and AML checks on contributors receiving an airdrop greater than 200 ZETA; additionally, they prevented airdrop claiming from OFAC sanctioned geographies.

ZetaChain used EthSign’s TokenTable to conduct their KYC-gated airdrop on January 31st, 2024 to facilitate a compliant, streamlined airdrop for both ZETA recipients and the ZetaChain team.

SIGN Protocol Implementation

In order to restrict non-KYC’ed addresses from claiming ZETA via TokenTable, the off-chain KYC verification status of recipient addresses must be communicated to TokenTable’s Unlocker smart contract.

SIGN Attestation Protocol was implemented in parallel with SumSub to a) bind the airdrop recipient's wallet address to an their KYC verification status, and b) to port recipient addresses’ KYC verification status on-chain so that TokenTable’s Unlocker smart contract can validate it.

The airdrop claiming flow is as follows:

  1. Whitelisted wallets from non-sanctioned geographies are able to connect to claims.zetachain.com.

  2. Claimers can view how much ZETA they have available to claim, and any lockup terms.

  3. Conduct KYC verification via Sumsub by submitting their government ID.

  4. To bind their address and KYC verification, claimers must use SIGN Protocol to sign an attestation message that is a hash of their address and KYC status using the following Schema.

data (string) : {
"name":"zeta kyc schema","
data":
[{"type":"string","name":"applicant"},
{"type":"string","name":"applicantId"}]}

Impact

Total 17,789,923 ZETA airdropped to KYC’ed claimers valued at $29,709,171.41 ($1.67/ZETA on 2/1/2024).

“Working with the product and team has been a pleasure. The combination of SIGN Protocol and TokenTable enabled an airdrop experience that was safe, transparent, and seamless for users, with the flexibility and attention to detail that was needed for such a critical moment for ZetaChain. As well, the team has been incredible in helping make sure users are heard and helping resolve any issues that came up at any step of the process.”

Brandon Truong, lead product contributor for ZetaChain.

As of Febuary 5th, 2024:

  • 14786 — Total KYC whitelisted addresses

  • 13736 — Total KYC applicants

  • 12858 — Passed KYC

  • 295 — Rejected due to block list/fraud

  • KYC pass rate - 98.21%

  • Median verification time - 14 sec

SIGN Protocol, TokenTable, & EthSign

Sign Protocol is EthSign’s underlying omni-chain attestation protocol, enabling users to attest and verify any information on-chain freely. Attestations are digital signatures on structured data used to build more trust on-chain. Smart contract logic can be configured dependent on attested data. There is a wide range of use cases for on-chain attestations, such as on-chain KYC, RWA ownership attestations, integration with DeFi logic, and more!

TokenTable is used by projects to automatically unlock, distribute, and oversee a company’s token supply. TokenTable uses smart contracts to mitigate human error and third-party custody risk enhancing efficiency and transparency for web3 founders, investors, and employees.

EthSign is a decentralized electronic signature platform that provides transparency and security by removing dependencies on third parties to maintain and secure contracts.

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