Humanity Protocol, a newly emerged unicorn, is facing a tough start, while Worldcoin is deeply mired in reputation and business development difficulties. The two 1-billion-dollar unicorns in the DID track are facing a new test.
By Nancy, PANews
Recently, the blockchain identity authentication platform Humanity Protocol announced a $1 billion valuation and raised $30 million in financing. The CEO was exposed to have previously founded the unicorn company Tink Labs, which went bankrupt, causing investors to lose hundreds of millions of dollars. Meanwhile, Worldcoin, also in the DID track, is facing controversy due to the upcoming massive token unlock, global regulatory setbacks, and the waning effect of OpenAI's support.
Humanity Protocol, a newly emerged unicorn, is facing a tough start, while Worldcoin is deeply mired in reputation and business development difficulties. The two 1-billion-dollar unicorns in the DID track are facing a new test.
Humanity Protocol is considered to be a project in the same track as Worldcoin.
Established in 2023, Humanity Protocol is an identity recognition system based on Polygon CDK. It is developed by Human Institute, Animoca Brands, and Polygon Labs, aiming to provide an easily accessible and non-intrusive method for establishing human proof in Web3 applications. Humanity Protocol plans to launch a test network 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 palm print recognition, which is considered to be a less invasive identity verification solution. However, compared to palm print recognition, iris recognition has advantages in uniqueness, stability, and non-replicability, and has better overall security performance compared to other biometric technologies. Due to the high requirements for the accuracy and stability of this technology, as well as the high development difficulty and research costs, iris recognition has an advantage. In terms of user data and identity ownership, Humanity Protocol, like Worldcoin, has introduced zero-knowledge proof technology. In terms of financing background, Worldcoin has completed multiple rounds of luxury financing, but its $1 billion valuation was achieved in the A round of financing, while Humanity Protocol has also completed multiple rounds of financing. Currently, Humanity Protocol has officially announced a $30 million seed round of financing led by Kingsway Capital, with participation from over 20 institutions including Animoca Brands, Blockchain.com, and Shima Capital. In addition, it has raised approximately $1.5 million in a round of financing from a group of KOLs, with the KOL round being valued at $60 million, according to PANews.
Moreover, like Worldcoin, Humanity Protocol can be easily accessed on smartphones. The project will release an application that uses a smartphone camera to scan palm prints for identity verification, and will 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 used in the KYC process of financial platforms, and even to allow access to physical places such as hotels and office buildings through palm print recognition. Additionally, Humanity Protocol also plans to issue tokens for payment verification fees.
Regarding the launch of this project, Sandeep Nailwal, co-founder of Polygon, commented that Humanity Protocol not only can truly resist witch attacks, but also can integrate verifiable credentials locally into decentralized validator node networks, laying the foundation for building a broader range of blockchain and real-world applications.
After attracting market attention due to its high valuation, Terence Kwok, CEO of Humanity Protocol, was subsequently reported by the media outlet Protos to have almost caused the bankruptcy of his smartphone company, which was valued at $1.5 billion, burning $170 million of investors' funds.
It is understood that Terence Kwok founded Tink Labs in 2012, headquartered in Hong Kong, with a global user base of 12 million. It received investments from heavyweight shareholders such as Foxconn Group, Innovation Works led by Kai-Fu Lee, and Cai Wensheng, chairman of Meitu. Its main business was to provide smartphones to hotels for guests to use during their stay, with the goal of providing an alternative to roaming charges to improve their hotel experience and to sell customer preference data collected. Interestingly, behind Tink Labs' receipt of investments from heavyweight shareholders, Terence Kwok's father, Kwok Tak-seng, was also considered to be an important reason. He was a former star private banker at Goldman Sachs, with major clients including Li Ka-shing and Guo Henian, among other tycoons.
According to the Financial Times, Terence Kwok began to incur losses due to aggressive expansion policies, cheaper and more widespread roaming charges, and hotels not wanting to pay for the phones he provided, resulting in nearly $200 million in losses in 2017 and 2018, and subsequently facing a liquidity crisis. According to a former employee, SoftBank, an investor in Tink Labs, was concerned that the company "would transfer funds from the joint venture in Japan to other regions to maintain operations," forcing the company to abruptly halt a major project. Kwok was reportedly unable to pay salaries to employees and contractors, and ultimately carried out large-scale layoffs before closing Tink Labs on August 1 of that year. In January 2020, Tink Labs' European division began liquidation, followed by bankruptcy proceedings.
The former head of human resources operations at Tink Labs commented, "I never thought it would continue, but I didn't expect it to close so quickly. Kwok only cared about 'making money'." According to a previous report by Fortune Insight, Terence Kwok had also stated during the entrepreneurial period of Tink Labs, "Once the entrepreneurship fails, I can return to campus. The opportunity cost is the lowest, and three months of entrepreneurship is like studying for an MBA."
Worldcoin is about to unlock a large amount of tokens and is facing investigations by multiple countries' regulators
While Humanity Protocol is being widely discussed in the market, Worldcoin is in the midst of a heated debate due to issues such as token unlocking, regulatory scrutiny, and high-level insider cash-outs.
According to a recent analysis published by DeFi researcher @DefiSquared on X platform, Worldcoin may become the largest wealth transfer event in this cycle. Worldcoin has serious inflation issues, with the fully diluted market value of the token WLD reaching as high as $600 billion. The issuance of tokens claimed by operators and the team has led to a daily devaluation of WLD by 0.6%, and the unlock volume of WLD will increase significantly in the coming months, potentially leading to large-scale sell-offs.
According to @DefiSquared's analysis, on the one hand, once the tokens of Worldcoin's VCs and team start to unlock, the supply of WLD will increase by 4% per day. According to Token Unlocks data, WLD will face selling pressure of $31.5 million per day starting on July 24 (calculated at the price on May 16).
At the same time, not long ago, Worldcoin revealed in a blog post that its foundation's subsidiary, World Assets, responsible for token issuance, will conduct private sales of 500,000 to 1.5 million WLD tokens per week over the next 6 months, with a maximum value of $179 million at current prices. @DefiSquared pointed out that this portion of tokens accounts for 16.7% of the existing circulating supply (calculated based on the circulation of 210 million tokens on May 16), and they are being sold at a discounted price. This portion of funds comes from the "community" portion of the WLD token supply but is being sold to counterparties for the benefit of the foundation.
"The token economic model of Worldcoin was designed to be predatory from the beginning, to benefit the team and early investors. Last December, the foundation even deliberately 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 in 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 market capitalization. @DefiSquared believes that this manipulative design of low circulation and high valuation directly benefits insiders, as they can hedge their locked shares at an inflated value through contracts and over-the-counter trading before the unlock.
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 with Worldcoin, and the project has no affiliation with OpenAI. According to a Bloomberg report in April this year, Worldcoin was seeking to collaborate with tech giants such as OpenAI at the time.
It is worth mentioning that Worldcoin is also facing global regulatory bans or investigations in multiple locations such as Spain, Portugal, South Korea, and Hong Kong, China, due to privacy issues with user data. In response, Worldcoin's main supporters have not only met with relevant national governments to improve government relations but have also open-sourced an iris recognition inference system this year to enhance transparency and implement a new personal data self-custody strategy. Additionally, they have recently open-sourced a new SMPC system and securely deleted old iris code to help improve the security of biometric data. Similarly, Humanity Protocol may also face regulatory issues arising from the collection of user data.
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