Token Review: Litentry (LIT)
Today we are going to introduce a new cryptocurrency: Litentry (LIT)!
OVERVIEW
To understand Litentry, you must appreciate the problem to be solved. In short, it all boils down to decentralized identity management.
How do you attach unique identities to certain users on a decentralized blockchain?
How do you know that a particular wallet address with which we are dealing is controlled by a unique individual?
Without attaching an identity to an address, the potential that DeFi (Decentralized Finance) can achieve has certain limitations.
What is Litentry?
Litentry is a project that is developing a platform that can aggregate and manage decentralized identifiers or DIDs in many different blockchains. Therefore, basically, it is a platform for projects and agreements for managing and using DIDs as input for new and exciting functions.
More importantly though. Litentry is trying to build a protocol that will allow these DIDs to be used privately and securely. Litentry performs cross-chain transactions, with the goal of becoming Parachain of the Polkadot network. I have already talked about Polkadot in this article. It handles service requests from Litentry users, who claim it is a security-centric project, through DID (Decentralized Identifier).
The demand for integrated identities data is expected to largely come from decentralized applications that are fueled by personal identity data. Besides interoperability, the identifier plays a critical role in scenarios where the server requests the client for identity data, such as KYC, credit
scores, or credentials, in an attempt to provide services. In the past and present, many applications require users to provide their information from third-party applications or directly track user activities to obtain the information they need. This inevitably compromises users due to privacy invasion and personal data breach.
How it Works?
Let’s take a look at the user side technology, and the primary piece of technology here is the Litentry mobile app. The app will be integrated with the Litentry Network and will allow users to participate in the governance process and access Identity-Based Services. The app could also be linked to other networks and even some traditional identity verification systems. They will also be able to manage LIT incentives here and also use it as a crypto wallet. The app will include the Litentry authenticator. This is the mobile identity and data hub for the Web 3.0 ecosystem. You can actually get a sense of how this looks over here on the initial proposal of the app over in their docs.
On a more technical level, the Litentry runtime protocol will be able to link an account across all other chains using that unique identifier. The users on Litentry can sign transactions attached to their unique identity with a private key. The benefits of this are that the user data can be shared but privately. Nothing about the user themselves apart from the unique identifier is actually shared. This identifier can also be linked to unchain crypto assets to verify information relevant for credit delegation etc.
DEEPENING
In the Overview section I introduced you Litentry (LIT) and I said that is a project that is developing a platform that can aggregate and manage decentralized identifiers or DIDs in many different blockchains. Therefore, basically, it is a platform for projects and agreements for managing and using DIDs as input for new and exciting functions. Litentry is trying to build a protocol that will allow these DIDs to be used privately and securely. Litentry performs cross-chain transactions, with the goal of becoming Parachain of the Polkadot network. It handles service requests from Litentry users, who claim it is a security-centric project, through DID (Decentralized Identifier).
Tokenomics
There is a total supply of 100 million LIT. These tokens were split according to the following:
* 15% to the Litentry team
* 8% went to the seed investors
* 12% to private sale and further sales
* 17% will be reserved for the foundation to be used as grants
* 3% to Binance launch pool
* 5% to remain as network incentives in parachain auction system.
Therefore, as far as the initial release is concerned, I think it is quite fair. If we include the distribution of founders into a wider range of network incentives, including the startup pool. The full 65% will eventually be released to the community. However, from an investment perspective, it is important to determine potential supply resistance based on the token unlocking schedule. There is no doubt that users are worried that the initial sales will be dumped on the market.
The 3% released in the Binance launch pool has been distributed and is in circulating supply. Parachain auctions and collective reward inflation will only start in November 2025. Once the block reward starts, the inflation rate will be determined by the amount pledged on the network. The participation rate of the target network is 70%, which means an inflation rate of 5%. For the proof-of-stake blockchain, this is actually quite mild. Therefore, from a supply perspective, it is impossible to face supply saturation or inflation. All of these have played a positive role in long-term price increases.
Token (LIT)
LIT is a native utility token on the Litentry network and performs several different functions.
First of all, it is used to pay for expenses. Users must pay several different fees on the network. This includes fees such as transaction fees to prevent spam from network matching fees, which are paid by the app to the identity stager. This motivates more people to invest in identities on the network, paying verification fees to the so-called identity guardians, who are responsible for verifying mortgage identities and collating data into acceptable identities. Therefore, this is the utility generated from the network cost. But LIT tokens are also used for staking purposes. An identity registrar is a third party that can build an indexed identity database. Then query these databases for scattered identifiers. To ensure that these registrars participate. They have monetary incentives and restraints.
In February Litentry was also listed on the famous exchange Binance.
Being able to verify the unique identity of the wallet address is the missing key to many other services that DeFi relies on to provide centralized finance. Under collateralized lending and credit delegation, the functions that have not yet appeared on the DeFi menu. Not until we can verify identities, and even then DeFi currently lacks the mechanisms to fully identify how decentralized networks are. All these problems can be solved by Litentrie's technology. In addition, considering that it can be upgraded to a Polkadot parachain. This means that it will now be built on one of the most exciting ecosystems in the crypto space.
With this article about Litentry we have discovered new things about this project! I would like to know your opinion about LIT!
Next Sunday I’ll introduce you a new cryptocurrency!
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