Original author: Nancy, PANews
Recently, after the blockchain identity authentication platform Humanity Protocol announced that it had received $30 million in financing at a valuation of $1 billion, its CEO was revealed to have founded the unicorn company Tink Labs and went bankrupt, causing investors to lose hundreds of millions of dollars. At the same time, Worldcoin, which is also in the DID track, is controversial due to the upcoming massive token unlocking, global regulatory setbacks, and the failure of the OpenAI blessing effect.
The newly-minted unicorn Humanity Protocol had a bad start, Worldcoin was in trouble with its reputation and business development, and the two unicorns with a market value of $1 billion in the DID track are facing a new test.
DID protocol using palm recognition technology, CEO once caused the bankruptcy of the former unicorn company he founded
Humanity Protocol is considered to be a project in the same field as Worldcoin.
As an identity system based on Polygon CDK established in 2023, Humanity Protocol is a collaboration between Human Institute, Animoca Brands and Polygon Labs, aiming to provide an easily accessible and non-intrusive way to establish human proof in Web3 applications. Humanity Protocol plans to launch a testnet in the second quarter of this year, and its waiting list has exceeded 510,000 people.
In terms of biometrics, unlike Worldcoin which uses iris scanning, Humanity Protocol uses palm print recognition, which is considered a less invasive authentication scheme. However, compared with palm prints, iris recognition has the advantages of uniqueness, stability and non-replicability of identity recognition, and has more advantages than other biometrics in terms of comprehensive security performance. In addition, due to the high accuracy and stability requirements of this technology, the development difficulty and R&D cost are also relatively high.
In terms of complete ownership of user data and identity, Humanity Protocol, like Worldcoin, has introduced zero-knowledge proof technology; in terms of financing background, Worldcoin has completed multiple rounds of luxurious financing, but its 1 billion valuation was achieved in the A round of financing, and Humanity Protocol has also completed multiple rounds of financing. At present, Humanity Protocol has officially announced that it has obtained a $30 million seed round of financing led by Kingsway Capital, with participation from more than 20 institutions including Animoca Brands, Blockchain.com and Shima Capital. In addition, it has raised about $1.5 million from a number of KOLs. According to PANews, the valuation of the KOL round is $60 million.
Not only that, Humanity Protocol can also be easily accessed on smartphones, just like Worldcoin. The project will release an application that uses the phone camera to scan the palm print for identity verification, and will later introduce another layer of security measures, using the palm vein network and a small infrared camera for identity confirmation. In the future, this system is expected to be applied to the KYC process of financial platforms, and even to enter physical places such as hotels and office buildings through palm prints. In addition, Humanity Protocol also plans to issue tokens to pay for verification fees.
Regarding the launch of the project, Polygon co-founder Sandeep Nailwal commented that the Humanity Protocol can not only truly resist witch attacks, but also natively integrate verifiable credentials into the decentralized validator node network, laying the foundation for building a wider range of blockchain and real-world applications.
After attracting much market attention due to his high valuation, Humanity Protocol CEO Terence Kwok was later reported by foreign media Protos to have almost bankrupted his smartphone company valued at $1.5 billion and burned $170 million of investors' funds.
It is understood that Terence Kwok founded Tink Labs, a Hong Kong-based company, in 2012. It has 12 million users worldwide and has received joint investments from FIH Mobile (a subsidiary of Foxconn Technology Group), Kai-Fu Lee's Innovation Works, and Meitu Chairman Cai Wensheng. It mainly provides hotels with smartphones for guests to use during their stay, with the goal of providing guests with alternatives to roaming charges to improve their hotel experience and sell the collected customer preference data. Interestingly, Terence Kwok's father, Guo Desheng, is considered to be one of the important reasons behind Tink Labs' acquisition of heavyweight shareholders. He is a former Goldman Sachs star private banker, and his major clients include wealthy people such as Lee Shau-kee and Robert Kuok.
According to the Financial Times, Terence Kwok began to suffer losses due to multiple reasons, including aggressive expansion policies, cheaper and more popular roaming charges, and hotels not wanting to pay for the mobile phones he gave away. In 2017 and 2018 alone, he suffered losses of nearly $200 million, and later encountered a liquidity crisis. According to a former employee, Tink Labs' investor SoftBank was worried that the company would "transfer funds from Japanese joint ventures to other regions to maintain operations", so it forced the company to suddenly stop a major project. Kwok allegedly had difficulty paying employees and contractors, and eventually carried out large-scale layoffs before closing Tink Labs on August 1 of that year. In January 2020, Tink Labs' European division began liquidation and then entered bankruptcy proceedings.
The former head of HR operations at Tink Labs said, "I never thought it would last, but I didn't expect it to close so soon. Kwok only cared about 'making money.'" According to Fortune Insight, Terence Kwok also said during the start-up period of Tink Labs, "If the business fails, you can return to school with the lowest opportunity cost. Starting a business for three months is like studying for an MBA."
Worldcoin is about to start unlocking large amounts of tokens, and is facing regulatory investigations in many countries
While Humanity Protocol is gaining market attention, Worldcoin is in dire straits due to issues such as token unlocking, regulation, and insiders cashing out at high prices.
According to the analysis recently released by DeFi researcher @DefiSquared on the X platform, Worldcoin may become the largest wealth transfer event in this cycle. Worldcoin has serious inflation problems. The fully diluted market value of the token WLD is as high as 60 billion US dollars. The issuance of tokens due to issuance and operator claims has led to a daily depreciation of 0.6%. In addition, the unlocking volume of WLD will increase significantly in the next few months, which may lead to large-scale selling.
According to @DefiSquared analysis, on the one hand, once Worldcoin's VC and team tokens begin to unlock, 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 on July 24 (calculated based on the price on May 16).
Meanwhile, not long ago, Worldcoin revealed in a blog that World Assets, a subsidiary of the project foundation responsible for token issuance, will sell 500,000 to 1.5 million WLDs per week for private placement over the next 6 months, with a maximum value of $179 million at current value. @DefiSquared pointed out that this portion of tokens is equivalent to 16.7% of the current circulating supply (based on the 210 million circulating supply on May 16) and is sold at a discount. This portion of funds comes from the portion of the WLD token supply called "community", but is sold to counterparties to benefit the foundation.
"Worldcoin's token economic model was designed to be predatory from the beginning to benefit the team and early investors. Last December, the foundation even deliberately terminated the market maker contract (Note: Worldcoin previously announced that it had terminated the agreement with 5 market makers on December 15, 2023), allowing prices to be squeezed up with low circulation." According to the latest research data from CoinGecko, WLD is one of the four crypto projects with the lowest circulation among the top 300 in market capitalization. In this regard, @DefiSquared believes that this manipulative design of low circulation and high valuation directly benefits insiders because they can hedge the highly valued locked shares through contracts and over-the-counter transactions before unlocking.
In addition, @DefiSquared also pointed out that most retail investors may not even know that Sam Altman (OpenAI CEO) is no longer actively involved in Worldcoin, and the project has nothing to do with OpenAI. According to a Bloomberg report in April this year, Worldcoin was seeking cooperation with technology giants such as OpenAI at that time.
It is worth mentioning that Worldcoin is also facing regulatory bans or investigations in many places around the world, such as Spain, Portugal, South Korea and Hong Kong, China, due to user data privacy issues. For this reason, the main supporters of Worldcoin not only met with the governments of relevant countries to improve government relations, but also open-sourced the iris recognition reasoning system this year to enhance transparency and implement a new personal data self-custody strategy. In addition, the new SMPC system was recently open-sourced and the old iris code was safely deleted to help improve the security of biometric data. Similarly, for Humanity Protocol, it may also face regulatory issues caused by the collection of user data.
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