Empowering the World’s First KYC-Enabled Layer-2 Blockchain

Introduction:

Kinto is a layer-2 Ethereum blockchain, aiming to accelerate the transition to an on-chain financial system. While many layer-2 blockchains have emerged over the last few years, Kinto is unique in that it is the first layer-2 network to have user-owned KYC. This allows the network to protect against sybils and bad actors such as hackers, while remaining decentralized and credibly neutral. It also positions it well to onboard existing financial institutions, which have to abide by strict regulatory and compliance requirements. Furthermore, Kinto has recently launched smart-contract wallet insurance for all users.

Kinto also puts an emphasis on user experience, being the first layer-2 blockchain to implement enforced Account Abstraction at the chain level. Through a partnership with Socket, Kinto has incorporated chain abstraction capabilities that connect its network directly to Ethereum mainnet, Arbitrum, and Base. Not only does this help to prevent liquidity fragmentation, but it also gives developers the ability to integrate any dApp, user or asset across rollups and chains.

By requiring KYC to use the chain and focusing on cross-chain interoperability, Kinto is positioning itself uniquely within the blockchain ecosystem. The combination of security, compliance, and seamless user experience sets Kinto apart from other chains and makes it an attractive option for developers and financial institutions alike.

The Challenge:

To meet their goals and excel as a layer-2 blockchain, Kinto needed to work through four main challenges:

1. Supporting a large number of users in a multi-chain world: With a strong focus on interoperability, Kinto needed a solution to accommodate a large number of active users across Ethereum, Optimism, Base, Arbitrum, and their growing list of connected chains.
   
   
2. Providing users with a seamless UI/UX experience: In addition to enhancing user flows with the integration of native account abstraction at the chain level, Kinto wanted to make it as easy as possible for KYC’d users to get started with and utilize its network.
3. Maintaining the highest level of security for its users: While mandatory KYC reduces the risk of smart contract exploits and scams, Kinto wanted to take this a step further and implement advanced security measures for its users.

4. Preserving a decentralized ecosystem for users: Kinto needed to ensure that its chosen solution aligned with its values and promoted decentralization.
   

The Solution:

To match the needs of Kinto, Dynamic has implemented the following:

1. Multi-Chain Wallet Adapter: Dynamic strongly believes that the future is multi-chain. As a result, Dynamic’s wallet adapter supports hundreds of wallets across all of the most popular blockchains. By implementing Dynamic’s wallets, Kinto has set itself up to expand to new chains and take on a large influx of users.
2. Flexible Login Options: To enhance user experience beyond enforced Account Abstraction, Dynamic enabled Kinto users to onboard and sign in using traditional Web2 login methods, such as email addresses.
3. Additional Security Measures: To add to the security of a KYC-enabled network, Dynamic provided Kinto users with the ability to add multiple signers to each Kinto wallet, including hardware wallets and biometric options powered by passkeys, which are much more secure than passwords.
4. Non-Custodial Embedded Wallets: All of Dynamic’s embedded wallets are fully non-custodial, ensuring that only the user has access. Neither Dynamic, Kinto, nor any third party is able to access them at any time.

Reflecting on the collaboration, here’s what the Kinto team had to say about their experience with implementing Dynamic:

“It is clear that Ethereum is going to be the settlement network of the on-chain financial system. Ethereum is winning due to the sheer multitude of teams that are building infrastructure and applications including dozens of wallet providers across hundreds of chains. There is no easier way to integrate all these ecosystems at once than through Dynamic. It only takes a few lines of code to be plugged to this multi-chain future.” - Ramon Recuero (Co-Founder)