Enhancing Digital Identity and Financial Security in Decentralized Finance (Defi) through Zero-Knowledge Proofs (ZKPs) and Blockchain Solutions for Regulatory Compliance and Privacy

• Author(s): Adeshina Akin Ajayi ; Igba Emmanuel ; Adesola Dorcas Soyele ; Joy Onma Enyejo
• Paper ID: 1706417
• Page: 373-394
• Published Date: 23-10-2024
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 8 Issue 4 October-2024

Abstract

This paper explores the integration of Zero-Knowledge Proofs (ZKPs) and blockchain technology to address critical challenges in digital identity management and financial security within decentralized finance (DeFi). As decentralized systems gain prominence, managing digital identity while ensuring, security, and regulatory compliance becomes increasingly complex. ZKPs offer a cutting-edge solution by allowing verification of data without revealing sensitive information, thereby preserving privacy and enhancing trust. When combined with blockchain’s decentralized infrastructure, ZKPs create a secure framework for verifying transactions and managing digital identities, particularly in Central Bank Digital Currencies (CBDCs) and other financial applications. This dual approach mitigates risks related to data breaches, identity theft, and fraud, while ensuring compliance with regulatory frameworks such as GDPR and emerging digital identity regulations. The paper also examines the potential of ZKPs and blockchain to reduce financial fraud, safeguard personal data, and streamline regulatory processes in DeFi. By integrating these technologies, this research highlights a path toward a more secure, privacy-conscious, and compliant digital ecosystem, capable of supporting the evolving demands of decentralized finance.

Keywords

Decentralized Finance (DeFi); Zero-Knowledge Proofs (ZKPs); Digital Identity; Financial Security; Regulatory Compliance; Blockchain Technology

Citations

IRE Journals:
Adeshina Akin Ajayi , Igba Emmanuel , Adesola Dorcas Soyele , Joy Onma Enyejo "Enhancing Digital Identity and Financial Security in Decentralized Finance (Defi) through Zero-Knowledge Proofs (ZKPs) and Blockchain Solutions for Regulatory Compliance and Privacy" Iconic Research And Engineering Journals Volume 8 Issue 4 2024 Page 373-394

IEEE:
Adeshina Akin Ajayi , Igba Emmanuel , Adesola Dorcas Soyele , Joy Onma Enyejo "Enhancing Digital Identity and Financial Security in Decentralized Finance (Defi) through Zero-Knowledge Proofs (ZKPs) and Blockchain Solutions for Regulatory Compliance and Privacy" Iconic Research And Engineering Journals, 8(4)