InnoKOL | Ken Huang : Decentralized Identity (or DID) and DeFi will fuel the future of Fintech

2020/06/12 Innoverview Read

On June 12th (UTC+8), we had a fascinating 1 hour conversation with Mr.Ken Huang ,who is the Co - founder of Metaverse DNA. As the guest of InnoKOL Season2 Esposide8, he shared his professional background of  blockchain innovation and deep insights on the mark trends of Defi and public chain. 

Jokia: How would you describe yourself in three words? What is your motto?


Optimistic, confident, and positive may be the three words to describe myself although it is hard to just use three words as every person has far more traits than what the three words can describe. 

My motto is: One shall never stop learning. Or in old Chinese saying(活到老,学到老.): You shall never cease to learn as long as you live.

Jokia: Can you please share more about your educational and professional background? And we’d love to hear what brought you to blockchain.


My education background covers learning Math, Computer Science, AI and Financial Theory at undergraduate and graduate levels. These learning experience built the foundation for my professional life. But, there are still a lot we need to learn that were never taught at classroom settings. Especially in the IT field, there were and are going to be new paradigm of thinking, program languages, development process, and computational platforms that enable better productivity and inspire people to learn. 

My interests and professional work in cyber Security and FinTech brought me to blockchain. When working for a global consulting company called CGI Inc., I have worked in applying IT in financial industry and cyber security. Some of sample products I have worked including the whole life cycle of credit risking management solutions for personal and small business loan, including loan origination, loan decision, and collection systems. The system we built at CGI are widely used in banks across north America. I was also the chief security architect for the Obama Care project (also known as Affordable Care Act project) , a health insurance exchange platform. I was the one designed the first draft of defense in depth security architecture for the project.

I initially encountered blockchain via reading the Bitcoin white paper and found its incredible design for the value transfer and deflationary token issuance policy and the approach it used to solve the transaction consistency across many network participants. 

Jokia: From your perspective, what is unique and game-changing about blockchain technology?


I would like to answer this question from three different perspectives:

From pure IT perspective, blockchain is the new computing paradigm which enables the value transfer leveraging cryptography without human intervention. This computing paradigm together with 5G, AI, Cloud Computing, Bigdata, IOT, Cyber Security and Decentralized Storage will fuel the new digital economy.

From Financial perspective, the digital assets powered by blockchain technology enables new asset allocation. In USA, more than 30% of institutional investors are holding digital assets in the asset configuration.

Furthermore, I would like to quote a recent article on the Bloomberg about potential 35% crash of US dollars after Covid-19, and I quote “(Trump’s ) Protectionist trade policies, withdrawal from the architectural pillars of globalization such as the Paris Agreement on Climate, Trans-Pacific Partnership, World Health Organization and traditional Atlantic alliances, gross mismanagement of Covid-19 response, together with wrenching social turmoil not seen since the late 1960s, are all painfully visible manifestations of America’s sharply diminished global leadership. As the economic crisis starts to stabilize, hopefully later this year or in early 2021, that realization should hit home just as domestic saving plunges. The dollar could easily test its July 2011 lows, weakening by as much as 35% in broad trade-weighted, inflation-adjusted terms. “My taken on this article is that most fiat currency including US dollars will be worth much less in the near future after economy recovers from Covid-19. We will see huge asset bubble, including digital asset bubble. Digital asset including Bitcoin is a much safer bet for the future than US dollars or any other fiat currency.

From organization structure perspective, the idea of Decentralized Autonomous Organization (DAO) will fundamentally change the way how corporation and shareholder operate in the new digital economy. We have already seen some of such initial DAO experiments in the Ethereum and Bitcoin communities. The main ingredients of DAO shall include the following: (1) Good incentive structure to enable peer to peer economy (the consumers are also shareholders and producers of the services in the peer to peer economy); (2) Provable fairness encourage the growth of ecosystem and avoid the pump and dump scheme which only profits small part of participants. (3) Mission based and just in time DAO sometime become practical with predefined set of goals and tasks (4) Global nature of DAO powered by public chain is important and will be a good alternative for the current trends in De-Globalization. 

Jokia: As the author of the book entitled “Blockchain Security Technical Guide”, could you disclose the unique opinions on opportunities and challenges for blockchain security technology deployment?


First, let me give a high level description of this book which is written in Chinese in 2018 and is still very relevant today. The book has 7 chapters. Chapter 1 explains the security attributes of the blockchain in detail, mainly from four aspects: confidentiality, data integrity, availability, and physical security. Chapter 2 selected some mainstream digital currencies (including Bitcoin, Ethereum, and Zcash) to analyze their security attributes. Chapter 3 talks about security control of the application and smart contract layer. This chapter mainly analyzes security issues from mobile client applications, smart contracts, and identity and access control. In terms of the security of smart contracts, it mainly analyzes the concept of smart contracts, secure coding, vulnerabilities, open source tools and other aspects, providing readers with an important reference in the development of related content. At the end of this chapter, the identity management and access control of the blockchain are analyzed from various aspects. Chapter 4 is the design of the security mechanism of the incentive layer. Chapter 5 is about network layer security and control from P2P encryption, client and node communication encryption, and defense against DDoS attacks. Chapter 6 is about data layer and consensus security. This chapter mainly analyzes five aspects of blockchain data encryption technology, data transmission, blockchain transaction signature, consensus attack, and on-chain security.  Chapter 7 is about comprehensive analysis of the security of the private key from the aspects of the importance of the private key, how to use it, and the existing problems. The book is available at Amazon at:

Due to the financial nature of the blockchain technology, the success and failure of a blockchain project will largely depends on the security in implementing and deploying the blockchain application. For this reason, I am also the Chair Person of Blockchain Security Working Group of Cloud Security Alliance’s Great Chinese Region. We are focusing on 9 aspects on blockchain security including Smart Contract, Wallet, Consensus, Crypto Exchanges, DApp, Decentralized Identity, Network layer, Data Layer and AML/KYC security. The deliverable from this work will be open sourced. We have more than 110 experts in the cyber security fields contributing to the working group. 

Jokia: The future of fintech in 10 to 15 years relies on security and improving authentication methods for companies to ensure users’ identity across their online service offerings. What will fuel the future of fintech?


Decentralized Identity (or DID) and DeFi will fuel the future of Fintech. The DID will enable the ownership of personal data, and will be foundation technology for DeFi. I see Defi has the following advantages:


Inclusiveness: There are currently 1.7 billion people worldwide without bank accounts. In the United States, more than 55 million people, or more than 22 percent of households, do not have bank accounts. There are 350 million people in Africa who do not have bank accounts, and 37% of Southeast Asians do not have bank accounts. You can't enjoy most of your financial services without a bank account. DeFi enables anyone in any corner of the world to enjoy financial services by simply downloading wallet software.


Controllability: DeFi users can act as buyers or sellers in financial transactions, i.e. as consumer services or to provide services. and control your assets and privacy. Traditional finance only financial institutions can provide services, the user's assets in the centralized financial institutions on the server, the user control power is limited.


Transparency:  DeFi protocol code is open source, so anyone can verify its security, interaction rules, and actual network usage. All DeFi transactions are recorded in a immutable and public ledger, and users with permission can review the transactions.

Censorship Resistance: All transactions are verified by the blockchain's consensus node (server) without human involvement, and the server only verifies the signature of the issuer of the transaction and the amount of coins, without any other review. This protects and guarantees the overall security and fairness of the network.

Programmability: Different DeFi applications can be developed using smart contracts with complex work flows.


Composability: New applications can be combined with underlying protocols and applications. But the combination application should be aware of security issues, and several previous attack on a combination of DeFi protocols raised warnings.

Interoperability: Good DeFi applications can inter-operate across chains between digital currencies. DeFi application using synthetic asset types can interact with the price of fiat currency and physical assets.

Zero or low fee: Traditional financial accounts may have different monthly fees (or the account exceeds the minimum amount for free). DeFi's wallet is free to download, no account opening fees, no minimum amount requirements, no monthly fees. There is no cost of carry which is typical for physical asset investments.

Jokia: A conducive regulatory environment is vital to protect consumers and foster growth and innovation within the investment industry. Do you favor more of a hands-off approach or clear-cut regulations just like in traditional finance?


There will be delicate balance of completely hands-off and strong handed approach of regulation. Some level of regulation will be needed to fend off illicit use of the technology and I personally believe that KYC/AML is still needed for Financial Industry. There will be no one size fit all regulation as it will stifle the innovation. Government will need to avoid the regulations similar to the so called The Locomotive Acts (or Red Flag Acts) introduced in United Kingdom regulating the use of mechanically propelled vehicles on British public highways during the latter part of the 19th century. This Red Flag Acts inhibited UK’s innovation in automotive industry. Most regulations in traditional Financial industry are outdated. For example, the Securities Act of 1933 enacted by the United States Congress on May 27, 1933, during the Great Depression and after the stock market crash of 1929 was long overdue for the new realty in the Financial industry. This law if applied directly to the Financial industry powered by blockchain technology will certainly make innovation very cost prohibitive or even impossible. 

Jokia: As the Co-founder of premier public blockchain project Metaverse DNA, how do you foresee the trends of public blockchain development in China?


The reason I joined Metaverse DNA is because of Eric Gu, who is the founder of the Metaverse DNA and believed in his vision of developing a better public chain. My involvement as co-founder is purely on the technical research and technical strategy aspects. There are many competent people in the Metaverse DNA team who are focused on the other aspects of public chain such as token economy, exchanges, and other day to day management. So, my involvement in the Metaverse DNA is more like an Independent thinker who researches the current trends in blockchain security and technology and suggest the areas of improvement to the management team of DNA. Based on my research, I have proposed five main aspects of the blockchain for DNA development. I believe that these five aspects of blockchain technology is important for future trends in China and in global. In DNA, we summarize these five aspects as five pillars of DNA. We used English first letter of each world to describe these five pillars, namely ISOPC.

“I” stands for identity. In DNA, identity is the first-class citizen and on chain technology. DNA has a native decentralized identity called “Avatar”. End user or business organization has the option to build an Avatar on DNA platform. This opens a wide spectrum of opportunities for blockchain applications including KYC, reputation-based applications, data ownership and data exchange, and supply change management.

“S” stands for the security. Although blockchain has some unique features of security in terms of removing single point of failure, increase data integrity and immutability. There are still security issues associated with development and deployment of blockchain technology for real world use. Blockchain technology can not ignore the needs for defense in depth security and devote the significant part of budget to the security.

“O” means Oracle, which is used to provide reliable data for blockchain applications. As you know, the blockchain needs the real-world reliable data to avoid the so called “garbage in and garbage out” situation. The current technology is still inadequate to solve the problem. There are many approaches worth exploring including distributed oracle, Trusted Execution Environment, identity-based data feeder etc.

“P” means performance. For real world wider adoption of blockchain application, the performance is essential. Performance usually measured in term of “Transaction per Second” or “TPS. But the single “TPS” measurement does not tell actual performance of the blockchain system. Additional details such as network topology, number of nodes, size of payloads, hard ware and network configuration of the participating nodes.

“C” means cross chain. There will be many public chains and consortium permission-ed blockchain in the future, the cross-chain capability enables interoperability among various chains. There will be technology to enable us to write DApp once and deploy in any chain. There will also be a cross chain enabled public chain which will facilitate the communications among different chains.

These 5 aspects of blockchain technology are very important and very hard problem to solve and I see these are the trends for public chain development in China as well as globally in other countries. 

Jokia:  We’ve noticed that you are one of the famous speakers in global conferences including Davos WEF, Stanford University, UC Berkeley, Beijing University, CoinDesk Consensus, IEEE, Blockchain Connect, etc. What is your benchmark to select the top-tier industrial conferences?


Blockchain is still in its early stage of development. There are many excitement and misconception of this technology and what it can do to benefits our humanity. I graduated from Zhejiang Normal University and has a formal undergraduate training to be a math teacher. I like to teach and share what I have learned. I believe that the best way to learn is to teach others what you have learned. This was the main reasons I speak at various conferences. I am not sure if I am a famous speaker, but I think that I am a diligent speaker.  In addition to the conference you listed above, I have also spoken in smaller settings in banking, insurance, universities, and community outreaching meetings and conferences. During the Covid-19, I did not stop my efforts to advocate blockchain technology. I have done many wechat and zoom virtual conferences of blockchain technology. I believe that I will continue to focus my efforts on education of blockchain technology.