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How Does Kinto Solve it?
Kinto eliminates this trade-off by giving every user their own KYC credentials at the network level, and empowering them with complete sovereignty over those credentials. The difference between Kinto and other crypto networks from a user perspective is the difference between owning your identity and having no identity.
To create a wallet on the Kinto network, every user must pass a KYC check, which does not reveal to the KYC provider the connection between the identity information and the address of the wallet.
This allows them to selectively reveal the minimum possible identity information to access certain financial services, while retaining complete sovereignty over their identity.
On Kinto, traditional financial institutions can interact with DeFi protocols while knowing all network users have passed a minimum KYC check. They can also provide services that require more KYC information because the user can seamlessly opt-in to share the required information with individual counterparties. With self-sovereign KYC, Kinto retains decentralized finance's openness and self-sovereignty while eliminating the barriers to integration and usage between traditional financial institutions and decentralized protocols.
The Kinto network allows previously difficult or even impossible services on-chain, like tokenized real-world assets being used in DeFi protocols, uncollateralized lending, and more.
By living on the same network and enabling self-sovereign KYC, the kind of composability currently enjoyed within the DeFi ecosystem will be possible between DeFi services and traditional financial services.