Author: Salome Bernhart
In the current era of digital advancements, data collection holds significant importance for users, connecting the virtual realm to the real world. As we interact with platforms like Google, ChatGPT and various other social media networks on a daily basis, we often provide our data and engage in activities without retaining control or ownership over the information generated. This practice raises critical questions about the value and implications of our personal data and interactions.
Data collection not only shapes the digital landscape but also influences the services and content we encounter. Platforms analyze user behaviour, preferences, and trends to deliver personalized experiences, targeted advertisements, and relevant recommendations. However, this exchange often disadvantages users, as they relinquish their data without adequate control or compensation.
Tipping the Data Scales
People often hand over their data to companies without receiving equal value, tipping the balance in favor of the platform. This denies users control over their data, triggering concerns about privacy, security, and ethical data use.
Privacy is paramount. Users demand secure data handling but without control, they’re in the dark about its collection and use. This opacity can result in privacy breaches, unsolicited data sharing, and misuse, exposing users to identity theft and intrusive ads. For instance, the 2021 LinkedIn debacle revealed the personal data of 700 million users.
Security intertwines with privacy. Platforms’ inability to safeguard user data from breaches and cyberattacks is concerning. These breaches, unfortunately frequent, put user data in jeopardy. The 2022 average data breach cost skyrocketed to $4.35 million, further deepening the data contribution imbalance due to users’ limited recourse.
The advent of blockchain technology, smart contracts, Non-Fungible Tokens (NFTs), and Soulbound Tokens (SBTs) presents an opportunity to revolutionize data handling. By emphasizing user control and data ownership, we can instil trust and inspire innovation in the digital landscape.
User Power in the Data Playground
Recognizing the significance of data ownership and control, emerging standards like EIP-6551 and ERC-5173 in the Ethereum ecosystem and new privacy-focused L2 blockchains, promote principles such as data composability, portability and privacy. These standards aim to empower users by offering frameworks that enhance their control and participation in data-related activities.
Data composability refers to the ability to combine and utilize data from various sources in a cohesive manner. It allows users to leverage their data across different platforms and services, enabling a more interconnected and personalized digital experience. By embracing data composability, users can harness the full potential of their data, creating synergies between different applications and unlocking new possibilities.
Similarly, data portability emphasizes users’ right to access and transfer their data between different platforms and services. It enables individuals to maintain ownership and control over their personal information, promoting transparency and empowering users to decide how their data is utilized. Data portability enables seamless transitions between platforms, reducing vendor lock-in and fostering a more user-centric approach.
ERC-6551 NFTs enable transactions, dApp interactions, token holding, and more
ERC-6551 is a new standard that improves the capabilities of NFTs on the Ethereum blockchain. It overcomes the limitations of the previous standard, ERC-721, which restricted NFTs from interacting with smart contracts, owning additional assets, and adapting to changing needs. By introducing ERC-6551, Ethereum expands the possibilities for NFTs and enables them to be used in new and exciting ways.
With the deployment of the Ethereum Improvement Proposal 6551 (EIP-6551) on May 7, 2023, ERC-6551 introduces a concept called Token-Bound Accounts (TBAs). Meaning each ERC-721 token can now have its own smart contract wallet, which allows NFTs to perform transactions, interact with decentralized applications, hold other tokens or NFTs, and even establish their on-chain identity.
The adoption of ERC-6551 significantly expands the functionality of NFTs, making them more versatile and valuable. NFTs with ERC-6551 can now engage in transactions, collaborate with various programs, hold a diverse range of assets, and even serve as unique identifiers on the blockchain. ERC-6551 can transform into a non-custodial comprehensive wallet that gives the individual complete ownership, transaction tracking, and utility records.
In a recent article, NFT Composability Expert Rob Secord highlights the drawbacks associated with ERC-6551 technology. One concern is the manipulation of upgradeable NFT contracts, which allows the contract owner to gain ownership of all NFTs and withdraw their assets. Another risk is the absence of proper time locks, enabling assets to be drained from an NFT just before a sale, resulting in an empty NFT for the buyer. To mitigate these risks, thorough security audits are necessary during the implementation of ERC-6551. Additionally, the lack of standardization and multiple implementations make it challenging for users to understand the features and capabilities of different “Smart Wallets” linked to their NFTs. Therefore, developers and users must be vigilant about these risks, take necessary precautions, and prioritize security to safeguard against potential exploits.
Lomads, is actively exploring ERC-6551 to implement NFT wallet solution that further enhances the user experience of the platform. Recognizing the potential risks involved, Lomads is committed to implementing appropriate measures to mitigate any issues related to upgradeable NFT contracts and asset draining.
EIP-5173 NFTs offer ongoing profit potential to past owners, even after selling their tokens
EIP-5173 is a multigenerational reward mechanism that can reward previous NFTs owners. It proposes a profit-sharing framework called nFR for EIP-721 tokens (NFTs) on the Ethereum blockchain. This framework allows previous NFT owners to benefit from future price increases even after selling their tokens. By introducing a giving circle concept, participants collaborate to build greater wealth through each other’s success. The FR implementation ensures that both buyers and sellers receive future rewards, fostering a fair and mutually beneficial economic rule.
The motivation behind this proposal is to address unfair trading practices and create a more equitable system for all market participants. In traditional trading, average traders often face challenges due to asymmetry of information and techniques employed by various actors, leading to losses by the majority of traders.
The nFR framework aims to level the playing field by establishing a giving circle where participants contribute to each other’s success. Through this framework, NFT owners can participate in a gift-economy model, similar to the open-source spirit, fostering community interdependence and shared benefits.
The nFR proposal sets a standard interface for profit sharing throughout the token’s ownership history. It incentivizes traders to actively engage in the token’s price discovery process. By tracking transactions and recording price changes, the nFR framework aims to ensure that the value of NFTs reflects the contributions made by their owners.
This transparent approach discourages unfair practices and encourages transparency and fairness. It is important to note that the nFR framework is not a Ponzi scheme, as it distributes profits only when they are achieved, and future return shares depend on actual profits made by subsequent token holders. By embracing EIP-5173, NFTs become more than collectibles, gaining an additional layer of value and promoting a collaborative and fair trading environment within the Ethereum ecosystem.
Lomads is thrilled about the potential of EIP-5173 and will soon start working towards offering its customers the option to launch and utilize these NFTs in the upcoming months.
The Seal of Identity: Soulbound Tokens (SBTs)
Soulbound Tokens (SBTs) are permanent, non-transferable NFTs that serve as verifiable proof of personal achievements, credentials, and other traits. Inspired by World of Warcraft’s “soulbound” items, SBTs tie specific information to an individual’s private blockchain wallet.
SBTs offer several key benefits. They allow individuals to securely verify personal information, such as educational degrees, professional certifications, awards, identity, and medical history. By storing this information in an individual’s private blockchain wallet, SBTs provide verifiable proof of achievements and credentials.
Using SBTs gives individuals greater control over their personal information, allowing them to securely share it when needed. The blockchain’s immutability ensures the stored information cannot be tampered with, enhancing trust and reliability in the verification process.
Moreover, SBTs establish trust in scenarios where verifying personal information is crucial. They can serve as digital passes, validating eligibility for exclusive memberships or restricted areas. The blockchain’s immutability simplifies the verification process, reducing the need for manual checks and potential errors.
Although SBTs cannot be transferred like traditional NFTs, their value lies in providing a secure and reliable method for verifying personal information. By leveraging blockchain technology, SBTs empower individuals to control their achievements and credentials, promoting trust, transparency, and the sharing of verified information across various domains.
Lomads has developed the Lomads Protocol, a self-sovereign identity system that utilizes SBTs. This protocol enables organizations to refine rewards, governance voice shares, and access with unprecedented finesse and efficiency. It creates a future where membership signifies a tangible connection between contributors and the organizations they belong to, rather than just being a label.
Privacy Shield: Unraveling Zero-Knowledge Proof Technology
Zero-knowledge-proof (ZKP) blockchains and protocols have the potential to empower individuals by granting them control over their data and enabling privacy-preserving monetization opportunities. ZKP ensures data privacy while validating its authenticity, allowing users to be compensated for their valuable data. By generating cryptographic proofs, users can verify that their data is being used according to their specified permissions. This allows individuals to participate in data-sharing arrangements that respect their privacy and give them control over data usage and monetization. With ZKP protocols, users can confidently engage in data exchanges with third parties, monetizing their activity and data assets without compromising privacy. Additionally, ZKP enables individuals to prove the truth of a statement or claim without revealing the underlying information, which is especially valuable in scenarios involving censorship or surveillance.
While this technology is revolutionary, Lomads contemplates how to make it accessible to its users. A key benefit of the Lomads platform is the automation of permissions for popular tools like GitHub, Notion, and Discord. Users can store their contact details/user IDs on their SBTs and encrypt them using private key encryption. When accessing a platform, users grant permission to decrypt the necessary information. While this approach is not exactly the ZKP protocol, it represents a step towards its implementation, which Lomads is actively exploring.
Redefining the Rules of Data
By highlighting the importance of data privacy, ownership, control, composability, and portability, standards like ERC-6551, EIP-5173, ZKPs and SBT can challenge prevailing norms and advocate for a paradigm shift in how we perceive and value our digital interactions. They encourage users to demand transparency, fair compensation, and the ability to shape the direction of their data’s utilization.
In an era where data has become a valuable asset driving technological advancements and shaping industries, understanding the implications of our data contributions is crucial. The current model, where users provide data and interactions freely without retaining control or ownership, is no longer sustainable. By promoting data composability and portability, we can work towards a more equitable and responsible digital ecosystem that respects users’ rights and interests, ensuring that they retain control over their valuable data in an interconnected digital world.
Furthermore, these standards also have the potential to reshape the relationship between users and platforms. By empowering users with control over their data, platforms are encouraged to adopt fairer practices, prioritize user privacy, and offer more transparent compensation models. This shift towards user-centricity can foster trust and create a healthier digital environment for all stakeholders involved.
Envisioning a New Dawn for Data and NFTs
The adoption of standards like ERC-6551, EIP-5173, ZKPs and the utilization of SBTs represents a significant step forward in the future of data privacy, ownership and NFTs. These advancements empower users to have greater control over their data, ensuring transparency, fairness, and the ability to shape its utilization. By embracing these frameworks, we can create a more user-centric and equitable digital landscape where individuals retain control over their valuable data in a safer, censorship-resistant interconnected world.
Lomads addresses two challenges in the web3 landscape: fluid work structures and individual data sovereignty. Current tools hinder agility and require redundant supervision, while data privacy remains a concern. Lomads provides a platform and protocol. The platform automates compensation and permissions using Soulbound Tokens (SBTs), streamlining workflows with popular integrations. The protocol enables self-sovereign identity, refining rewards, access and governance.
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