DID unicorn encounters crisis: Humanity starts off on a disadvantage, Worldcoin is trapped in development difficulties.

Original text: Nancy, PANews

Translated text: Nancy, PANews

Recently, Humanity Protocol, a blockchain identity authentication platform, announced that it has raised $30 million in funding at a valuation of $1 billion. The CEO was exposed to have previously founded the unicorn company Tink Labs, which eventually went bankrupt, resulting in investors losing hundreds of millions of dollars. Meanwhile, Worldcoin, also in the DID field, is facing controversy due to the upcoming massive token unlock, global regulatory setbacks, and the failure of the OpenAI endorsement effect.

Humanity Protocol, a newly emerged unicorn, had a difficult start, while Worldcoin is deeply mired in reputation and business development challenges. The two 1 billion dollar market cap unicorns in the DID field are now facing a new test.

Using the DID protocol with palm recognition technology, the CEO’s former unicorn company filed for bankruptcy.

Humanity Protocol is considered a project in the same track as Worldcoin.

As a identity recognition system based on the Polygon CDK established in 2023, Humanity Protocol is developed in collaboration with Human Institute, Animoca Brands, and Polygon Labs. It aims to provide an easily accessible and non-intrusive method for establishing human proof in Web3 applications. Humanity Protocol plans to launch its testnet in the second quarter of this year, with a waiting list of over 510,000 people.

In terms of biometric technology, unlike Worldcoin’s use of iris scanning, Humanity Protocol uses palmprint recognition, which is considered to be a less invasive identity verification solution. However, iris recognition has advantages over palmprint in terms of uniqueness, stability, and non-replicability in identity recognition, making it more advantageous in terms of comprehensive security performance compared to other biometric technologies. Moreover, due to the high accuracy and stability requirements of this technology, as well as the high development difficulty and research and development cost, iris recognition has a greater advantage.

Humanity Protocol, like Worldcoin, introduces Zero-Knowledge Proof technology in terms of user data and identity ownership integrity. In terms of financing background, Worldcoin has completed multiple rounds of luxurious financing, achieving a valuation of 1 billion in Series A financing, while Humanity Protocol has also completed multiple rounds of financing. Currently, Humanity Protocol has announced that it has received a lead investment from Kingsway Capital, a seed round financing of $30 million with participation from over 20 institutions including Animoca Brands, Blockchain.com, and Shima Capital. It has also raised approximately $1.5 million from a group of KOLs, with an estimated valuation of $60 million for the KOL round, according to PANews.

Not only that, Humanity Protocol can also be easily accessed on smartphones, just like Worldcoin. The project will release an application that uses the smartphone’s camera to scan palm prints for identity verification, and later introduce another layer of security measures using palm vein networks and small infrared cameras for identity confirmation. In the future, this system is expected to be applied to the KYC process of financial platforms, and even enable access to physical places such as hotels and office buildings through palm prints. In addition, Humanity Protocol also plans to issue tokens for payment verification fees.

According to the co-founder of Polygon, Sandeep Nailwal, the Humanity Protocol not only can effectively resist Sybil Attacks, but also integrates verifiable credentials locally into the decentralized validator node network, laying the foundation for building a wider range of blockchain and real-world applications.

After being highly valued and receiving attention from the market, Humanity Protocol CEO Terence Kwok was later reported by foreign media Protos to have almost bankrupted a smartphone company valued at 1.5 billion dollars, burning 170 million dollars of investors’ funds.

According to reports, Terence Kwok founded Tink Labs, headquartered in Hong Kong, in 2012. The company had a global user base of 12 million and received investments from Fosun International (a subsidiary of Foxconn Technology Group), Innovation Works led by Kai-Fu Lee, and Cai Wensheng, the chairman of Meitu. Tink Labs primarily provides smartphones for hotel guests to use during their stay, aiming to offer an alternative solution to roaming charges and improve their hotel experience, while also selling collected customer preference data. Interestingly, one of the important reasons behind Tink Labs’ significant shareholders is Terence Kwok’s father, Kwok Tak-seng, who is a former star private banker at Goldman Sachs, serving high-net-worth clients such as Li Ka-shing and Guo Henian.

According to the Financial Times, Terence Kwok suffered losses due to aggressive expansion policies, cheaper and more accessible roaming fees, and the reluctance of hotels to pay for the phones they gave away. In 2017 and 2018 alone, losses amounted to nearly $200 million, and later faced a liquidity crisis. According to a former employee, Tink Labs’ investor SoftBank was concerned that the company “was transferring funds from its Japanese joint venture to other regions to sustain operations,” which led to the sudden halt of a major project. Kwok was reportedly unable to pay salaries to employees and contractors, and conducted a large-scale layoff before closing Tink Labs on August 1 of that year. In January 2020, Tink Labs’ European division began liquidation, followed by bankruptcy proceedings.

“Tink Labs former head of HR operations commented, ‘I never thought it would last, but I didn’t expect it to close so quickly. Kwok only cares about making money.’ According to previous reports by Fortune Insight, Terence Kwok also said during the startup period of Tink Labs, ‘Once the startup fails, I can return to campus, with the lowest opportunity cost. Starting a business for three months is like getting an MBA.’”

Worldcoin will soon unlock a large amount of tokens and face regulatory investigations in multiple countries.

Humanity Protocol has been widely discussed in the market, while Worldcoin is in a hot water due to issues such as token unlocking, regulation, and insiders cashing out at high positions.

According to recent analysis released by DeFi researcher @DefiSquared on X platform, Worldcoin could become the largest wealth transfer event in this cycle. Worldcoin has a serious inflation issue, with the fully diluted market capitalization of token WLD reaching as high as $60 billion. The daily depreciation of WLD is caused by the issuance of tokens for distribution and operator claims, and in the coming months, the unlock amount of WLD will increase significantly, which may lead to massive sell-offs.

According to the analysis by @DefiSquared, on the one hand, once the VC and team tokens of Worldcoin start unlocking, the supply of WLD will increase by 4% every day. According to Token Unlocks data, WLD will face a daily selling pressure of $31.5 million starting from July 24th (calculated based on the price on May 16th).

At the same time, Worldcoin recently revealed in a blog post that World Assets, a subsidiary responsible for token issuance, will conduct private sale of 500,000 to 1.5 million WLD tokens per week for the next 6 months, with a maximum value of $179 million based on current valuation. @DefiSquared pointed out that this portion of tokens accounts for 16.7% of the existing circulating supply (calculated based on a circulating supply of 210 million tokens on May 16), and they are sold at a discounted price. This funding comes from the “community” portion of the WLD token supply, which is being used to benefit the foundation by selling it to counterparties.

“Worldcoin’s token economic model was designed to be predatory from the beginning, benefiting the team and early investors. In December last year, the foundation even intentionally terminated market maker contracts (Note: Worldcoin previously announced the termination of agreements with 5 market makers on December 15, 2023), allowing the price to be artificially inflated under low circulation. According to the latest research data from CoinGecko, WLD is one of the four cryptocurrencies with the lowest circulation among the top 300 in terms of market capitalization. @DefiSquared believes that this manipulative design of low circulation and high valuation directly benefits insiders, as they can hedge the overvalued locked shares through contracts and over-the-counter trading before they are unlocked.”

In addition, @DefiSquared also pointed out that most retail investors may not even be aware that Sam Altman (OpenAI CEO) is no longer actively involved in Worldcoin and that the project has no affiliation with OpenAI. According to Bloomberg’s report in April this year, Worldcoin was seeking collaboration with technology giants such as OpenAI.

Worldcoin is worth mentioning because it is currently facing regulatory bans or investigations related to user data privacy issues in multiple countries around the world, including Spain, Portugal, South Korea, and Hong Kong, China. In order to address this, Worldcoin’s main supporters have not only met with relevant government officials to improve government relations, but also open-sourced their iris recognition inference system this year to enhance transparency and implement a new personal data self-hosting strategy. Additionally, they have recently open-sourced a new Secure Multiparty Computation (SMPC) system and securely deleted old iris code to enhance the security of biometric data. Similarly, Humanity Protocol may also face regulatory issues arising from user data collection.

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