Why LITENTRY Needs to Partner With COVALENT

In this article, I’ll give an in-depth detail about Litentry — their vision and mission, progress and challenges (as stated on their blog) and why they need to partner with covalent(the hub for blockchain data). Enjoy!!

Litentry is a technology-driven project in Germany, the Founder and an early contributor are from Parity, it has a strong engineering team with Ethereum project background.

Litentry is a Decentralized Identity Aggregator that enables linking user identities among multiple decentralized networks. Litentry provides a trustable way for dApps to obtain real-time DID data of an identity owner across multiple blockchains and dApps. Litentry is currently built on substrate and planning to join the Polkadot as parchain as the next thing on their roadmap.

Featuring a DID indexing protocol and a Substrate built distributed DID validation blockchain, Litentry provides a decentralized, verifiable identity aggregation service that removes the redundancy of code and the hassle involved in resolving agnostic DID mechanisms.

DID aggregation is the process of integrating a wide range of digital identities from multiple networks. The DID Aggregator allows anyone to upload their identity-verification algorithms and share them on the network. It also provides a one-stop service for DID data indexing, DID authentication and linking, as well as DID data aggregation. Decentralized identity is a globally unique persistent identifier that does not require a centralized registration authority because it is generated and/or registered cryptographically. (This conforms to WC3 standard as defined on the Litentry blog). Because different decentralized systems have different DID standards, it’s critical to well integrate these standards when linking digital identities.

DID Data And the Demand for It

In a decentralized system, DID data is considered ownership of identity. These data are likely strongly associated with identities in nature, but also could be data that get associated with identity after computational analysis. Alternatively, some data become identity-related after certain calculations, which include one’s code contribution to a decentralized collaboration system, and voting activity in a decentralized autonomous organization (DAO).

As decentralized applications rapidly emerge, the demand for DID data continues to grow. In the early stage, it was expected that there would be strong demand for DID services from decentralized credit lending, decentralized autonomous organizations, and decentralized personalized recommendation systems. In order to stay decentralized and avoid a single point of failure, dApps ought to decentralize their sources when acquiring DID data, However, there is no ready-made decentralized identity data source in the current network.

The Problems Litentry is Trying to Solve

One of the main problems Litentry is trying to solve is that data from different networks are highly fragmented. For example, if we participate in on-chain governance on Polkadot, or use Filecoin’s services, we generate data in these systems respectively. These data, like many others, lie on different networks due to its highly fragmented nature, and thus presenting a difficulty from a data management standpoint. Also in on-chain governance, voter turnout is relatively low. Even for essential ballots such as the Kusama denomination, only around 10% of stakeholders voted. This is because voters don’t have enough information to validate or examine a council member candidate. If votes have DID credits which demonstrate their historical participation and contributions, and voters with higher credits hold more voting power, we believe this approach would encourage people to actively participate in on-chain governance.

Other problems includes:

  • A common problem for new blockchain projects is how to attract real users. Blockchain projects always use air-drop, but projects cannot prevent a user creating multiple accounts to get the rewards. For example, Uniswap’s generous token gifting to all the historical liquidity providers does not have any differentiation of the users.
  • A missing point in the DeFi world is credit loan. Without credit or financial history of users, financial institutes need to charge a collateralized deposit for issuing a micro loan or flash loan.
  • In on-chain governance of a Proof of Stake(PoS) network, the voting power is mainly decided by the distribution of tokens, the network will need sophisticated algorithms to make sure the voting power is not controlled by individual major stakeholders.

Litentry aims to address the above problems by developing a cross-chain identity aggregation protocol on Web 3.0, including an identity-based network and related tools. It is responded to provide an aggregated identity that combines accounts from different blockchains, DeFi activities and off-chain applications/services. The aggregated identity represents the owners behind the accounts, and further presents the owner’s credibility and reputation in various aspects.

With such a cross-chain identity, blockchain projects could offer dedicated graded services/functions according to the identity’s quantified data. For example, if a new project knows that an account is a Polkadot validator, and it spends hundreds of DOTs on another Parachain for half a year, then the project could directly gift this specific user some token to start to play with, or send him/her an attractive offer of the new DeFi product, or accredit him to be a validated voter. For more information about Litentry, go to the official website

Litentry Use cases

1) DeFi Credit Lending. With Litentry, users are able to view their personal information including credit and on-chain reputation. This information can be applied to mortgage rates and credit borrowing in DeFi lending.

2) On-chain Governance. Litentry’s real-time credit calculation system provides a transparent, interoperable credit for users to participate in on-chain governance efficiently.

3) Decentralized KYC. Litentry’s identity verification system enables crypto projects to identify target users and filter out zombies in an airdrop.

Litentry is currently developing a front end App to implement the above mentioned use cases and plan to integrate the entry of on-chain governance first. This is the only use case currently in development. Check it out on github

Challenges Faced

Despite the success With decentralized identifiers and privacy-preserving storage, and protecting data sovereignty in a decentralized system, Litentry however, have faced serious challenges in data identification. Identity data are scarce and scattered, making the corresponding application scenarios too narrow. It’s a huge challenge in a decentralized system; they’ve attempted to introduce broader scenarios, such as credit lending in DeFi, personal reputation in chain governance, and decentralized customized recommendation algorithms in social media. Currently, Litentry don’t have an adequate amount of data to support such broad scenarios. As for collecting data from other networks, reading these data involves complex work of DID verification and code parsing, which is beyond inconvenience especially if there are multiple data sources.

Specifically, as regard reliable DID data, Litentry is facing problems listed below as stated on their blog:

  • Lack of data source
  • Lack of relative APIs to interact with data registries
  • Need to resolve every DID methods and validate credentials
  • Need to learn and comply with new data format
  • Need to bear single point of failure from centralized service endpoints.


Covalent is built by a smart team of financial analysts, data scientists, blockchain and database engineers passionate about improving and scaling blockchain technologies.

It is a technology company that solves data infrastructure problems that prevent the blockchain industry from growing and becoming widely adopted. There are so many different protocols, chains, projects, and products, each producing data in various formats, rarely following any standard, causing unnecessary complexities that prevent the industry’s growth. Internally, Covalent implement various solutions to develop an index of blockchain data, standardize it, and make it externally available to developers in the industry through the Covalent API.

They have a vision to empower the pioneers of tomorrow by providing the richest and most robust data infrastructure for the entire blockchain ecosystem. And ultimately, bring data transparency and visibility to digital assets.

Covalent has built a unified API meant to enhance the transparency and visibility of blockchain to tackle the challenges of dealing with messy blockchain data. Adoption bottlenecks are therefore removed, and smooth transitions are assured; it’s the absolute richest blockchain data on the Internet.

Its API is a zero-config and no-code solution that can be utilized by anyone with a basic understanding of blockchain technology.

The API has been specifically designed to support a series of enterprise-grade use case scenarios. These include, but are not limited to cryptocurrency wallets, exchanges, custodian services, and taxation systems. More specifically it does the following:

  • Calculate tax liabilities as a cryptocurrency-based company.
  • Aggregate data across DeFi protocols as a crypto wallet provider.
  • Carry out complex network analyses of hardly-accessible data structures.
  • Obtain token balances and historical values for all digital assets.
  • Gain access to decoded event logs.

Covalent has queried and crawled multiple blockchain networks, thereby gathering vast amounts of data. The index currently includes details on over 25 billion transactions, 30K+ price feeds, and 200K+ smart contracts with internal data structures. With a refresh rate of just 30 seconds, the information is always fresh.

Thanks to its next generation services, Covalent has partnered up with multiple state-of-the-art companies. These include ConsenSys, CoinGecko, Skale, Matic, CryptoSheets, Frontier, Reef, Zeroswap, Authereum, Shyft, Chaingaurdians, AAVE(to launch the AAVE Protocol v2) and many others.

Covalent exists to fulfill the demand for crypto and blockchain data by providing its clients with enterprise-grade data querying services. In doing so, the company is directly accelerating the mainstream adoption of digital assets and blockchain technology. For more about Covalent, check out there website


This is exactly what litentry needs now, a data querying API that can access and generate data from the genesis of the blockchain. Most (if not all) of the challenges face by Litentry currently can be solved by the Covalent API.

Crypto enthusisat