Enabling Exchanges to Solve Sybil Attacks for the Entire Crypto Ecosystem

Owned by David Gold
Nov 20, 2020
2 min read

 

The Problem

Many projects and businesses desire to giveaway crypto through airdrops or contests.  Unfortunately, without conducting expensive Know Your Customer (KYC) it is impossible to prevent Sybil Attacks.  This greatly restricts the opportunities that projects and businesses have to develope and promote their solutions.

 

Centralized Exchange Opportunity

As ta largest repository of KYC’d crypto user, Exchanges are in a unique position to help solve this challenge and to generate positive PR and gain additional users.  All it would take is for an Exchanges to be able to easily enable its users to verifiably represent to a third party that they are a unique individual per the KYC of the Exchange.  The FIO Protocol can enable that.

 

Enabling Verified Crypto Addresses for Exchanges Users

The FIO Protocol was launched with $5.7M in venture capital including $1M from Exchanges labs.  FIO enables an easy way for Exchanges to empower its users to cryptographically prove to a third party that they are a KYC’d Exchanges User via FIO Addresses.

 

FIO Addresses are non-fungible tokens on the FIO delegated proof of stake blockchain. They are human readable wallet addresses that can be mapped to public addresses of any/all blockchains. 

 

FIO Addresses have a unique construct of:  username@domain.  The FIO Domain (@domain) is itself a non-fungible token that can be owned by a different party than that which owns the full FIO Address NFT (username@domain).  So, Exchanges can own the NFT for domains like @Exchanges, @Exchangesuser, @Exchangesverified, etc. and be in full control of them via a FIO private key. 

 

Exchanges simply needs to create a FIO Address for each KYC’d Exchanges user (or alternately enable them to opt-in) on a specific FIO Domain that Exchanges selects for this purpose and map it to the appropriate public address for that user on the Exchanges exchange. 

 

For example, Exchanges might use @Exchangesverified for this purpose.  It would then tell the crypto community that any FIO Address on the @Exchangesverified domain is from a KYC’d Exchanges user.  Projects and companies desiring to run airdrops and contests without having to require KYC to avoid Sybil attacks would simply ask participants to provide their @Exchangesverified FIO Address (e.g., david@Exchangesverified). Rewards from the airdrop/contest would be sent to the winners @Exchangesverfied FIO Address and would be received by the winner in their Exchanges exchange account.

 

How Hard is this Technically?

Registering, mapping and re-mapping FIO Addresses is straight forward via API calls.  Blockchains that require a memo/account reference can be supported in the mapping.

 

How Safe is This?

FIO Address and Domains and the mapping of those are controlled cryptographically by the owner’s FIO Private key which would be Exchanges in this case. The FIO Protocol is a fork of EOS with 21 active and 15 backup block producers across more than 20 countries.  The FIO Protocol is integrated into a fast growing list of currently 13 major wallets and exchanges including Bitmax Exchange, ChangeNow, Edge Wallet, Coinomi Wallet, ShapeShift and more.

 

Additional Benefits

Exchanges users would also be able to use their FIO Address to make deposits or have others send crypto to their Exchanges account from FIO Enabled wallets/exchanges.  In the future, certainly regulatory requirements could be fulfilled via verified FIO Address such as support for the Travel Rule.