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The blockchain
June 22, 2022

Onboarding to Polymesh with third-party identity verification providers

Built for regulated tokenized assets, Polymesh has stringent requirements around identity. Every user must complete identity verification prior to using the blockchain.

Identity verification on Polymesh takes place during onboarding. To use Polymesh, all participants must first verify their identity through a customer due diligence (CDD) process with one of our designated CDD providers. 

In what follows, we’ll take a more detailed look at the issue of identity and how Polymesh builds identity into the core of the blockchain.

Identity verification on blockchain

Most public blockchains were built for pseudonymity and censorship resistance. These blockchains allow anyone to participate and find it difficult to comply with regulatory requirements like knowing who someone is. For regulated tokenized assets, this simply won’t do: securities regulators require participants to validate customer identities through Know-Your-Client (KYC) obligations and comply with other identity-based regulations. For example, US-based entities will be prohibited from interacting with entities on an OFAC sanctions list, who have been identified as constituting threats to the security, foreign policy, or economy of the United States. 

On general-purpose blockchains, it’s possible to add identity solutions as layer-2 add-ons, however these only create additional complexity in the end-to-end solution. Polymesh, on the other hand, is a blockchain built specifically for security tokens and builds identity into the foundation of its solution. 

Polymesh embeds an identity verification process (CDD) that generates an on-chain identity for every individual or entity that participates in the network, with claims attached as needed. On Polymesh, a user’s on-chain identity can only be tied to one person, and that one person can only have a single identity. This enables participants to more easily satisfy regulatory standards since tokenholders cannot subvert rules by holding assets under multiple identities. It also makes the chain more resilient and less vulnerable to Sybil attacks.

Decentralized identifiers on Polymesh can be mapped back to real-world individuals or organizations by the permissioned CDD provider responsible for onboarding and generating the identity. This provides additional assurance to ecosystem participants that there is a known real-world entity behind all on-chain interactions. This concept extends to the blockchain’s infrastructure layer as node operators are also required to be permissioned and regulated financial entities. 

Through Polymesh’s identity process, participants don’t have to worry about directly or indirectly interacting with any OFAC, EU, or UN-sanctioned entities or individuals.

Identity and onboarding to Polymesh

The most common way financial services providers comply with identification requirements is to have users provide them with personal information as verification, usually in the form of government-issued ID.

With Polymesh, every user onboarded validates their identity through a basic verification of your name, date of birth, and place of residence through a CDD provider. All users—whether issuers, investors, service providers, operators, stakers, or POLYX token holders—need to validate their identities through CDD to use the chain.

Once complete, any accounts a user creates will be securely and confidentially connected to this identity, allowing users to create new accounts and complete transactions as needed. And most importantly, any asset held by a user will be linked back to a real-world identity.

Users can onboard onto Polymesh using designated identity verification providers. Currently, Polymesh uses three CDD providers to bring identity verification to the chain: Fractal, Netki, and Jumio. The multiplicity of options for identity verification helps to preserve the decentralized nature of the blockchain. 

Once onboarded, issuers can enhance Polymesh’s base identity check with additional identity verification or due diligence actions to meet their desired assurance level. 

Ready to become verified on Polymesh? Head to onboarding.polymesh.network and choose a CDD provider to get started. 

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