On Universal Profiles by Lukso: the new On-chain Identity Paradigm?
This article introduces the concept of Universal Profiles (UPs), created by Lukso.
UPs are a new standard for on-chain identity, abstracting the complexity and enhancing the user experience (UX) of blockchain interactions. This responds to the growing need for a better UX, heightened security measures, and best practices to interact with crypto.
We’ve all been there, trying to onboard our friends into crypto: just download Rabby, then sign up for an exchange, complete KYC, deposit some fiat, buy some crypto, and then send them to your wallet so you can interact with dApps.
And no wonder most of them give up.
As dApps evolve multichain, the need for tools that enable a seamless experience within DeFi becomes fundamental.
Beyond the Money
The realm of crypto extends beyond financial transactions.
Let’s consider the concept of on-chain identity, for instance.
Despite advancements in other areas, the way we interact with dApps through wallets is still the weakest link of the chain.
The current infrastructure of blockchains hasn’t made them suitable yet to develop sophisticated on-chain identity primitives. Most interactions with EVM networks occur through externally owned accounts (EOA), which are simply a set of public and private keys – pretty much just a string of numbers.
While wallets simplify the handling of these keys, they still present many inefficiencies, notably regarding flexibility and UX: EOAs are limited to showing token balances and are unable to store additional data that might be relevant to a user.
Furthermore, there is no way to prove your identity on-chain, although NFTs have attempted to do so to a certain extent.
Losing an EOA can equate to losing one’s reputation in the crypto space.
While Etherscan allows for labeling addresses, this solution is not permanent and is still subject to risks.
What if a major deployer, such as the Bored Ape Yacht Club deployer were to disappear? Would they still be able to reclaim their old identity from a new wallet?
The complexity and technical knowledge required to leverage transaction histories for identity verification are not user-friendly, and go way beyond what we would expect from the everyday users.
Moreover, the inevitable loss of funds when a user loses its private key adds to the burden.
A private key cannot be recovered. Once it’s lost, your money's gone with it.
Also, a private key can’t be changed and is not upgradable. As a static string, the key is unable to react to events happening or upgrade with new features (e.g. no extra permission, delegation, segregation of risk, or security).
This proves to be increasingly cumbersome for most.
How can we onboard Web2 people and creators without requiring them to possess the technical knowledge required to go through all this mumbo jumbo?
The way we interact with crypto applications needs to be completely redefined.
Topics like on-chain identity and smart contract interactions need standardization and flexibility to streamline onboarding and facilitate new use cases.
Lukso and Universal Profiles
Among the entities striving to enhance on-chain identity, this piece focuses on Lukso. UPs are the main primitive and building block of the Lukso ecosystem.
What is Lukso?
Lukso is a Proof-of-Stake, EVM-compatible L1 that launched in May 2023. Its core values are focused on solving the issue of on-chain identity to maximize “the user experience and allow more flexibility and interaction”. Their solution is Universal Profiles (UP), revolutionizing how users interact with blockchains from using EOA wallets (like we do nowadays) to smart-contract-based accounts.
The UPs developed by Lukso are based on a set of standards referred to as the Lukso Standard Proposals (LSPs) as well as the ERC725 token standard, proposed by the Lukso team. LSPs can be seen as improvements over Ethereum token standards (to make them more flexible, e.g. host metadata, and make smart contracts readable).
In particular, UPs are based on LSP0, an implementation of the ERC725 standard.
Here’s a summary of all LSPs that allow the development of UPs.
The ERC725 Standard
The ERC725 is a new standard for interactions between blockchains and accounts, facilitating the creation of a blockchain-based identity. This standard is developed out of the growing need for more functionalities to be added beyond what EAOs can do.
The proposal describes replacing EAO with smart contract accounts that can be controlled by multiple keys and other smart contracts, as an Account Abstraction solution to the problem of on-chain identity.
UPs are flexible, upgradable, standardized, and akin to social media profiles, enhancing security with features like password recovery. They offer a streamlined UX to access blockchains to create a whole new wave of possibilities based on interoperability.
Imagine a Web2 social media profile. UP are profile-like accounts that you can use to log in to your favorite protocols, websites, or wallets.
This standard has been authored by Fabian Vogelsteller from Lukso, who is also a co-creator of the ERC 20 standard and Web3.js, the largest Web3 library used by developers.
Why ERC 725?
ERC 725 paves the way for an implementation of self-sovereign identity, by allowing users to own and manage their on-chain identity.
As such, ERC725 can be referred to as an “open, portable standard for identities that will enable decentralized reputation, governance, and more”.
In particular, what’s great about ERC725 is the concept of “identity ownership”, where users will have complete control over their personal information, without the cumbersome task of verifying their identity with each new service provider.
ERC725 creates a unique solution to generate a “globally recognized identity”, shared across services and platforms, with granular access control that reduces the risk of data breaches or unauthorized access.
Furthermore, to maximize its impact, ERC725 is compatible with all EVM chains and existing standards and dApps.
The ERC725 is combined with LSPs, with each of the LSPs systematically enhancing UPs’ UX and flexibility. For a full overview of how each of them is interwoven into the UPS architecture I highly recommend looking at Squigs’ amazing piece (coming soon).
Here a summarized examples of how ERC725 is contextualized within other LSPs as the architecture behind UP:
There are two different types of LSPs, defining either Interface Standards or Metadata standards. Here’s a view behind the curtains of what UPs look like structurally.
What are Universal Profiles?
After we have explained the background behind UPs, it’s now time to have practical examples of how they revolutionize interactions with blockchains.
Universal Profiles are.. well.. universal profiles that act as a single login across a wide range of dApps, abstracting the complexity of Web3 onboarding.
What’s the easiest way to get into Web3?
Just create a new profile! Like you would do on any other social media.
UPs can be accessed from multiple devices and allow granular control of the access you provide to your data. Furthermore, they allow different levels of permissions on what they can do (some just update, some transfer, some interact with smart contracts, and others sign in to dApps) opening up new use cases.
Through UPs, you’ll also be able to recover your password if you lost it, with future possibilities to include systems of social recovery, through your network.
How do UPs change the user journey?
UPs revolutionize the user journey, eliminating the need for seed phrases. The device used to control your UPs can also be replaced, and you can have different levels of permissions for different devices.
They also support gasless transactions, with third parties covering fees (“let me pay for your gas fees grandma”), and can store comprehensive identity information, acting as a complete identity profile.
Those are, by themselves, some of the biggest hurdles whenever onboarding new users to Web3.
Food for Thought
With their straightforward appearance and versatility, UPs are a very powerful account standard that can revolutionize the way we interact with dApps.
Through this simplification UPs open up new possibilities for community building and user interactions (e.g. through much easier UX for messaging).
This also changes the current structure of social media networks where now all primitives can be created separately as building blocks, leveraging UPs - allowing users to leverage the same profile across countless interactions.
Compared to other custom solutions built nowadays, UPs are designed as a very generic primitive that works for anything, where others can then build further functionalities on top of it.
Not only, imagine how SocialFi or GambleFi protocols could leverage the human interaction element fostered by UPs to develop:
A Web3 Social Media
Loyalty or referral programs
User reputation system
Design social interactions within their protocols
Last but not least, a note on privacy.
Seed phrases are complex on purpose to avoid having a non-pseudonymous identity preserving privacy.
Some users might be more careful about their profiles on-chain and for that reason, UPs might be seen as sacrificing some privacy in favor of flexibility and accessibility.
Further stuff being built on top of UPs:
https://twitter.com/callmefico/status/1735347078220451890
https://twitter.com/lukso_io/status/1730602218485592524
https://twitter.com/ERC725Account/status/1734937180001214906