EN | Prove More, Share Less - Verifiable Credentials in Lace | MERGE Madrid 2025

All right. Hello everyone. I'm excited to be here talking with you. Good morning. Uh thanks for joining us today.

I'm here with my colleague Yuri and we're going to be talking to you about a new initiative that we are building called Lace ID. We're also going to introduce to you a technology called verifiable credentials and talk a little bit about how you can use this technology to prove more while sharing less of your personal data online. So, a little bit about what we're going to cover today. First going to look at what the problem is with personal data. Um, how we got to this place and what a solution might look like.

Uh, we'll look at the tools that we are building lace ID on top of. Take a little bit of a look at one of our use cases and what's coming ahead on our road map. Then I'm going to hand it over to Yuri. And Yuri's going to talk to us about how you as a developer or a business can utilize this technology to build your own self-s sovereign identity solutions. And also he's going to talk to us about some of the privacy concerns, the compliance challenges, and how this technology addresses those.

So let's get into it. So why is personal data broken? What's what's the real problem here that we're facing? So, we'll look at those stats in a second, but I want to zoom out a bit first and look at kind of the the information age that we have all grown accustomed to that we're all now used to. Uh, we've seen with the rapid technology innovation and disruption that has uh been kind of a a constant for us in the past decade or two, we've seen entirely new payment networks, social platforms, even digital economies pop up seemingly overnight.

And while these have been an overall positive for us, they've improved our user experience. They've allowed us to do new things online and connect with people in new ways, the kind of the data layer that is responsible for storing and processing the sensitive personal data that we have to disclose and utilize to access these platforms. That layer didn't really get the same intention or attention in its design as this innovation took place. So the result of that is it's pretty scary. Hundreds of millions of accounts uh are exposed every year.

We have almost a dozen data breaches every day. That's that's pretty scary. We have billions of dollars lost to identity fraud and identity breaches. So I think we can all agree that this is a problem. Um it's probably not one that's talked about quite enough, but we're going to talk about it here today and figure out what we can do to solve it.

So what we what can we do or or or what does a a future state look like where users don't have to overshare their personal data when they're accessing a platform when they're going through an authentication or a verification process or a future state where as a result of those interactions, institutions and platforms aren't required to store that sensitive data and thus be subjects or targets to attacks of hackers or malicious actors. that want to expose that data, sell it and leave you as a uni user vulnerable to a scary number of things. So a future state one that we are designing and building towards is really centered around uh a term and a a concept called verifiable credentials. What a verifiable credential is is essentially a record or a representation of some aspect of your digital identity. That could be your government issued ID.

It could be a proof of your age, could be a proof of some reputation or or merit that you hold online for a given platform. But we call it a verifiable credential because in a context of a user uh sharing that that information uh when they wish to that uh that proof is actually the same type of cryptographic proof that is built on the same public key cryptography that our blockchains are secured by. So it's it's kind of an interesting uh duality where in the same way that digital assets and blockchains have kind of introduced a modern solution to this the kind of the outdated nature of uh of our financial systems that have kind of come into light as we've seen this innovation recently. uh that same technology is what's allowing us to present solutions to personal personal data problems um in the same kind of paradigm. So um I'm just going to catch up here because I think I skipped a slide.

Yeah. So in in this paradigm where where users have these digital credentials in their wallet, actually I'm here now. Um I'm going to skip on. So I'm going to talk now about the tools and the platforms that we're using to make this solution, make this technology possible and commercially viable. Um you know this is a huge undertaking.

So going about building all of this ourselves would be a massive undertaking that we are fortunate to not have to be faced with. So the first tool or asset that we have and that we're building with is Lace Wallet. Lace is a non-custodial crypto wallet application uh originally built on the Cardano blockchain uh and it's trusted by the Cardano ecosystem and users within the broader broader web three web 3 ecosystem as a whole. So lace will be kind of the user interface that users that hold and interact with their digital identities and verifiable credentials. it'll be the interface that they'll use to actually go about conducting operations and carrying out tasks with those things.

Second thing or tool is Hyperledger. So, Hyperledger Identis is an open-source infrastructure uh that is essentially a developer platform or toolkit that allows us as a team, individual developers and other companies to come in and very quickly commercialize and bring to life uh solutions revolving around digital identities and personal data online. So when we combine these two things, we're very fortunate to be able to have these at our disposal and immediately move towards looking at commercial use cases and solving real user problems. We can kind of take a step ahead um and and skip over the kind of uh cumbersome building process and look immediately towards the the market and uh delivering commercial value. So there's a little bit of a sneak peek of of of lace ID.

We're going to take a look at what it looks like in practice and also talk about our our first use case that we'll be we'll be going to market with. So kind of from a high level we can see that lace ID will exist almost as an identity center within lace wallet. There'll be a place where you can set up uh and and manage your core DID which stands for digital identity document which kind of serves as the underpinning for additional credentials that you can go and create whether that's a proof of your uniqueness as a human, proof of your age, any type of um record or representation of your identity data that you may need to use when going going out and completing an authentication or verification process to access and utilize the platforms that you've grown accustomed to. So looking at our use case, for those of you who are active in the web 3 world, you're very familiar with Discord as a platform and very familiar with the problem that I'm going to discuss in a second. But for those who aren't, uh, Discord is a social platform where projects, companies, communities can create, uh, chat communities where users and community members can converse, exchange ideas, share information.

And Discord is a integral part of a web 3 community. uh it's it's really the main place that uh a project or a company's uh members can go and and and speak, connect, exchange information. But the problem with these Discord communities is the security verification mechanisms that are present and common uh they aren't doing their job by any means. And these simple kind of capture verifications, they don't effectively prevent the malicious actors, the scammers, the bots from coming in and really wreaking havoc on users in the in these communities. And kind of the most uh impactful fallout from this is new unsuspecting users that are excited to be exploring these ecosystems get targeted by these malicious actors.

They're convinced to ex uh expose their keys to share information that essentially allows them to lose access to their funds. They hand over information that they shouldn't. And this is really detrimental to the livelihood and the health of the web 3 world because it's such a critical point of interaction and it's such a critical place where users go to get started uh exploring and kind of get started on their web 3 journey. So what we're doing with lace ID to solve this problem is uh you can you can begin to understand it by what we call proof of humanity. So as a user in lace ID you'll be able to essentially begin by going through a KYC verification process.

And with that with that KYC verification complete you'll be issued a verifiable credential that essentially proves you are a unique individual. And what you can do with that credential when you're joining a new Discord server, you can present that to the security verification mechanism. And what that will enable is a kind of a security checkpoint that prevents uh malicious actors, whether that's a scammer creating multiple accounts. uh whether whether it's a malicious actor that's creating a bot to go and spin up dozens or even hundreds of accounts to enter these communities, it forces you as a new entrant into one of these communities to be to prove yourself and and attribute your role in a community as your individual self. So, it's really the first kind of full full stop gap proof uh prevention mechanism for this problem that is wreaking havoc on our communities today.

And just like we talked about previously, these verifiable credentials you'll be able to share without actually exposing certainly not your passport uh but actually expose you won't expose any of that sensitive personal data. You'll just be sharing a cryptographic proof that says yes, I am a human. There is a a trusted way that we can verify that, but I don't have to hand over that sensitive data and have that go sit on a server or be stored in a place that is vulnerable and potentially could be hacked or exposed. So that's kind of a brief look at at our first use case. Going to look a bit further ahead now at what's coming up next.

So we just talked about our proof of humanity use case that's going to be going live, we hope, Q2 of 2026. Following that, we're going to essentially extend that same uh reusable KYC premise or use case uh but apply it to uh institutional scenarios, whether that's uh a DeFi application that has a regulatory requirement to have their users complete KYC or it's some more traditional online online finance application uh that has the same requirement. So it'll essentially extend this initial concept that we will prove out uh with the Discord use case and uh make it applicable to additional actions and and behaviors and experiences that users want to have within the DeFi world and beyond. Following the institutional access, we're going to look at something really cool which is essentially creating these novel types of credentials surrounding reputation. So whatever your behavioral pattern may be, whether that's uh your activity on a trading platform, your merits on a voting platform, anything that you might be able to use or or a community might be able to use to establish credibility, establish more trustful interactions between users, we will enable you to create credentials that you can then uh use within these platform contexts, associate them with yourself as a user, and make it possible for more trusted interactions uh and more safe interactions to take place on these platforms.

So that's what's coming ahead for us. I'm going to hand it over to Yuri now. Here's your clicker, sir. He's going to talk to you guys a bit about how you can get started building with SSI and beyond. Yeah.

Hello guys, and thank you for your interest in self-ser identity solution. Over the next 10 minutes, I will try to inspire you and motivate to build the right self identity solution using lace wallet, lace ID and any other third party KYC provider or verification tool. So what does it mean to start build a right self-s serving solution? First of all, there is the biggest problem. It's adoption.

adoption because it's really hard to convince the government or any other institution that they should uh share some data with user and allow this user to dis to own this data. Nobody wants to lose this power and that's why it's probably the biggest obstacle in self-s sovereign adoption technology adoption. At the same time, self-server identity is already being adopted by developed countries. You know, Canada, USA and even United Kingdom adopted digital ID for their citizens and uh this is a tiny but very important step in this journey. There are four main uh obstacles to build a self-serving identity.

If you want to start, you should keep in mind these things and uh we are here to help you uh to make a right choice and right technical decision. So first of all there is a trust triangle issuer holder and verifier and there are tons of promises from SSI that all these three party should trust to each other in order to collaborate and build different use cases without this trust everything is going to be either silent solution that works in the boundaries of particular institution or it's going to be a custom solution and uh application that um doesn't use all power of self-s sovereign domain user education and awareness. I would refer to the same case in United Kingdom when there is a lot of noise where people don't want to install this application because they want they don't want government to track their data and they a little bit scary. What is wrong with this? Yes, it's a user education and awareness in the lace wallet and lace ID.

We are starting identity center. We're going to educate people what does it mean to use the blockchain technology? What does it mean to use your identity? How can you protect your data and which rules is applied in particular use cases? uh when you're going to share something uh we have this frequently act frequently asked questions video tutorials and identity center that is going to solve this problem and all of your users and the users of lace wallet are going to be ready to participate in self- server identity flows integration into your solution.

There are plenty of opensourced and public identity solutions. what things you need to choose is it European wallet is it open wallet foundation something for USA it's hard to say because you should be compliant with within particular territory and country and um everyone is offering this solution there is W3C foundation and the distributed identity foundation they set up the right protocols and uh compliant rules to use particular programming tools in the lace wallet. Lace ID uses Linux Foundation decentralized trust identities. It's a public open source platform that contains all required components for you to build your solution. So you can build iss verification and even use lace wallet which is also open source to build your custom or white box solution.

Just refer to our booth for more details if you want to proceed. and uh standardization and compatibility. It's a pretty simple question. It's all about how system talks to each other. In order to use the full power of SSI, you need to collaborate.

It's you need to shift the focus from your use case and be user centric. And uh I want you to convince and inspire that don't afraid to give user more power and give him real power to use everything that you issue to the user. This is the better future that we can build together. Okay. Governance.

Governance is uh the main things that can help you to build the right self-server solution. Governance is a set of rules, set of anchors that you can trust and uh um issuers and verifiers that are valid to participate in particular use cases. It's a matter of collaboration. So if you are KYC provider, if you are provider of decentralized finance services, it's essential to set up right partnership, trust each other and uh have a user that can use KYC from you and participate in the centralized finance flows in order to perform some actions. So collaboration between vendors and the focus on the user happiness.

This is a nice slide about how particular organization, government in institution can build the trust and acceptance network. Trust network is a guys who are able to issue something and you definitely can trust them and acceptance network is another institution who are going to use your credentials. Okay. Uh this is my favorite part. There were plenty uh speeches about compliance and I don't want to repeat uh how it's important and uh uh why crypto and decentralized finance are struggling because of compliance.

This is a real pain. Privacy. Privacy is amazing question. Uh, do you know what is the price of your personal data? No.

It might be up to 30 euro if you apply for after party dinner and share your personal information. And do you know how this information is going to be use it? Who is going to sell it? Who is going to buy it?

Okay. Uh do you want to have um some solution when you visit a doctor and that get annoying targeted advertisement with magic pills? Yes. No. Or even better solution.

You want to buy expensive property or land. You collected all bunch of documents and uh information about your bank account. But someone else won this auction. And um are you sure that the information about your address, bank account and other stuff is secure? No.

Why? Yes, it's a matter of privacy and compliance. And this is one of the biggest difficulties in the self-server identity domain. How to be compliant and preserve user privacy? uh we know how to do this and um let me elaborate

lace ID and lace wallet is a gateway that and and umbrella that gives you access to Cardano decentralization midnight network it's a new blockchain I will tell a few words about this later and the Bitcoin blockchain at the same time it gives you access to own your identity and hold your verifiable credentials and imagine the amount of use cases you can implement by having access.

And that's that. Out of time.

One, two, three.

We're out of time, guys, but thank you very much for being here. Thanks for listening.

Sorry, guys. It was a little bit longer. Um for more details visit our booth and we will cover your cases and they will help you to build the right self-s sovereign identity with lace ID and lace wallet. Thank you.