Please describe your proposed solution.
Prologue
We choose sport as the sector to introduce a disruptive, society-changing proposition and solution: Ownership over Digital Identity, and all its derivatives and manifestations. We aim to enable the world to reclaim data rights through principles of property ownership, which are well-established in law and enforceable.
Why sport? If celebrity athletes or a sport icon extolled the importance and benefits of owning all their data, particularly all vestiges of their NIL artifacts, much of the world would pay attention and adopt the approach. Moreover, the current college sport environment is calling for a better approach to the nascent college NIL market.
Vision
Universal digital identity is a game changer. A sports-related use case for a digital identity protection solution is a highly attractive opportunity because image rights/NIL are essential to the athlete, club, broadcasters, fans, league, and advertisers. Our solution will deliver a first-ever mechanism to establish digital identity, protect against abuses, and enable monetization through an immutable tracking architecture to facilitate ease of legal enforcement. More than a new technical and architectural innovation enabled by Blockchain technology, smart contracts will be used to marry legal provisions derived from privacy, property, human rights and identity law to empower the individual (and business entity) to own one’s data (i.e., “smart clauses” for smart contracts).
The particulars: Decentralized Identifiers (DIDs) put data owners in charge of their data, and offer improved capabilities to create, store and monitor NFTs and other NIL assets, and strengthen enforcement of legal actions for the asset holder. However, coupling two distinct business and technological challenges into one solution - NIL and NFT - still carries risks and obstacles. While NFTs give assurance of ownership in the sense of a verifiable “deed” or “certificate of ownership”, at least three uncertainties exist around legal enforcement: (1) the NFT alone does not define the asset’s authenticity other than the ability to trace the NFT to an anonymous address on a blockchain and to explanatory metadata located elsewhere; and (2) the ‘pointer’ to the data, by itself, may not establish contractual rights that are enforceable simply through technological association between the NFT and the object; and (3) counterfeiting will continue to proliferate and engender distrust of the NFT marketplace until trusted authenticity is delivered.
The planned approach overcomes these challenges by (a) developing smart contracts that incorporate digital-identity-smart-clauses<s>;</s> (a) designing smart contracts and a “DID Method” to link an NFT with a DID for each asset, implemented on Cardano; (b) designing the integration of professional and data-tracking services to enable monitoring and enforcement; and (c) designing data trust instruments to enable advisors to coach users about savvy business use cases for the technological solution.
A further mention of smart clauses for context: the notion of owning one’s digital identity is a legal concept that generally only resonates when a petitioner goes to court and asserts certain rights. See, e.g., Lanier v. President & Fellows of Harvard College, Mass. Sup. Jud. Ct., Case Number: 1:2019cv10978, June 27, 2022 (claimant awarded certain rights to pursue redress for the publication of daguerreotypes of her descendants while depicted as slaves in 1850). Like the petitioner in Lanier, one must usually claim one’s rights through legal proceedings. Whereas, staking a claim to certain ownership rights, with the full embodiment of those claims specified in smart clauses, sets out one’s claims for all time. Thereafter, the smart contract, embedded into a token, enables efficient enforcement by the very nature of the distributed ledger and smart contracts.
The solution consists of:
- The Cardano blockchain.
- The NIL assets associated with, and authorized by, participating athletes.
- A Decentralized Identifier (DID) for each NIL asset.
- A Non-Fungible Token associated with each NIL Asset.
- A DID Method that links the NFT to the DID for the corresponding asset.
- An overall design that adheres to the W3C proposed recommendation Decentralized Identifiers v1.0.
The general architectural approach is shown in Exhibit 1.
Creating a digital identity solution in the manner proposed, along with smart contracts, smart clauses, and enforcement governance, creates a technological mechanism heretofore nonexistent while incorporating established principles in the law around privacy and identity. The Dapps will address the identity ownership challenge by providing a Decentralized Identifier (DID) to each NIL asset (the Subject of the DID), with validation through the owner of the NIL (i.e., the individual athlete) who would serve as the Controller of the DID, and Verifiable Credentials tied from a sponsoring organization (e.g, university, league, team, etc.), and/or other potential credentialing entities. The NFT itself will also be part of the DID Document.
This combination of NFT and DID ensures the identity and authenticity of the NIL, and asserts property and contract or license rights that are recognized in law. In this manner, the proposed solution would fashion a technological architecture to legally enforce the coupling of code with transactional and tracking mechanisms. The DID-based technical solution creates an architecture for protecting digital identity and enhancing monetization opportunities.
The Distributed Ledger provides the system for tracking; however, design of savvy NIL products and ensuring their resilience from counterfeiting is a necessary component to an effective data rights system. Accordingly, the incorporation of smart clauses embedded in tailored smart contracts, monitoring and enforcement services, and data trust instruments and advisors will further enable adoption, as well as helping users appropriately navigate the complex and shifting area of NIL promotion, privacy protection, and anti-counterfeit strategies.
Functionality
A smartphone app will put athletes in control of their NIL assets (and other digital assets) in ways that are currently unavailable. It will provide the interface with the DApp and will perform the following functions:
- Provide access to an online marketplace for the subject’s NIL assets, including visual media, endorsements, and physical collectibles (available as NFT’s, Utility Tokens, Security Tokens, etc.).
- Provide each individual asset with a DID and an NFT that are linked to each other (technically and by smart contract with smart clauses), offering verifiable proof of both ownership and authenticity of the asset of the asset, as well as enhanced enforcement of rights.
- Support the ubiquitous sale of NIL assets on existing and emerging markets.
- Track and manage inventory, sales, fulfillment, receipts, expenses, and customers; as well as enable identification of unauthorized usage and more efficient enforcement whenever a suspect asset does not carry a transaction entry
- Integrate with Cardano-compatible crypto wallets to enable transactions.
Note that this Proposal is for establishing the legal and technical framework and a proof-of-concept. A follow-up Proposal in a subsequent Fund will be submitted for building the smartphone DApp discussed above.
Value Proposition
The solution has the potential to revolutionize data rights management and protection, as well as generate new revenue streams such as in the sports memorabilia market by linking the NIL to a proof that it was authorized by the subject person, and it allows the subject person to establish the claim that the NIL is property from a legal standpoint.
Design Characteristics
The project and DApp solution and associated infrastructure and services will have the following features:
- Treating the NIL asset as a "DID Subject" – i.e., the entity being identified through the DID will be achieved through the existing W3C Proposed Recommendation Decentralized Identifiers (DIDs) v1.0. The concept of digital assets as DID Subjects was expressly envisioned when the DID idea was established, although real-world applications have been limited to date.
- Explore the alternative designs combining the concepts of DIDs and Token IDs through, for example, identifying the NFT as a Service Endpoint, Verifiable Credential, or Interchain Identifier (IID) in the DID Document.
- Explore the application of "Verifiable Presentations" to the NIL use cases problem set.
- Develop a preliminary DID "Method" to implement the NIL use case on the Cardano blockchain.
Exhibit 2: Potential Future Applications
Creating a DID Method to
- Verify DID Subject Identities
- Strengthen Legal Claims and Enforcement Against Infringement
- Authenticate DID Subject Tokens
- Ease DID Subject Token Monitoring
For multiple Token types.
Related work has been done previously by teams in other blockchain ecosystems. To cite just one example, an experimental DID Method has been published that converts an NFT into a DID where the owner of the NFT is the controller of the DID (see DID:nft at <https://www.w3.org/TR/did-spec-registries/> ) Our solution, though different and for a different use case (DIDs in our solution are assigned to the NIL assets themselves, not to NFTs), can build on the output of this and other similar projects.
Design Characteristics of Enforcement
The project team envisions the creation of a professional network of cyber intelligence analysts, legal advisors, sports agents, and other professional advisors to perform the services of anti-counterfeit monitoring, compliant and savvy NIL/NFT design, misuse detection and evidence collection, and enforcement actions. Compliance and enforcement will be aided by:
- Smart clauses that not only link the asset and the NFT but specify a claim of right around digital identity which incorporates appropriate legal principles.
- Smart contracts that ensure the linkage code is a legally enforceable technical association.
- Data trust governance whereby collective interests of athletes (e.g., college teams, league agreements, club signings, agent endorsement arrangements, etc.) can complement the individual athlete’s monetization strategy.
The Design of the Project
The project will be executed in four clearly-defined phases as described below.
- Phase 1 (Design Solution);
- Phase 2 (Build Legal Basis);
- Phase 3 (Proof of Concept); and
- Phase 4 (Use Case Tests).
Please describe how your proposed solution will address the Challenge that you have submitted it in.
Defining and deploying a standardized W3C-compliant DID Method to manage NIL assets using Cardano will:
- Drive a high volume of transactions on Cardano.
- Verify NIL subject’s identity.
- Verify subject and ownership of NIL assets.
- Improve monitoring by consolidating NIL transactions on Cardano.
- Strengthen legal claims of NIL asset ownership, and expand legal recourse.
The proposed solution solves a real-world problem that will grow dramatically in future years, most noticeably in college sports. After the Supreme Court decision in NCAA v. Alston in June 2021, the NCAA revised its rules to allow student athletes to monetize their sports success and celebrity in a number of ways, such as through NFT sales and auctions, endorsements, and branded memorabilia. However, the athletes and their fans are poorly served by current Ethereum-based NFT solutions. Theft, counterfeiting, and fraud are common, and there is a lack of good solutions on Ethereum. This is a “greenfield” opportunity for Cardano – create a better sports NIL experience on Cardano and move the market here.
Not all the needed tooling is in place on Cardano (e.g., NFT integration, Verifiable Data Registry), but it is within reach. A new capability deployed on Cardano can restart the sports NIL market on a sound footing, and it has huge growth potential. Estimates are that the sports NIL market is about $500 million today, with a mature size of some $1 billion. (Source: <https://time.com/6094842/college-sports-nil-operndorse/>)
What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?
The primary risks are:
(1) insufficient developer resources for the Plutus DApp and the smartphone app;
(2) failure to establish an early position in the market resulting in competitors capturing market share;
(3) lack of adoption by users.
The project team has begun networking with the Cardano community and seeks to involve more experienced Cardano developers and other evangelists if awarded.