As the cryptocurrency market continues to grow, so does interest in blockchain technology. This has led to a surge in the number of decentralized applications (dApps) being developed on top of various blockchain platforms. One of the most popular platforms for dApps is Ethereum, which is powered by the Ethereum Virtual Machine (EVM).
One of the most popular Ethereum-based dApps is MetaMask, which allows users to store and use ether and other ERC-20 tokens without having to download the entire Ethereum blockchain. MetaMask also provides an interface for user authentication and interaction with dApps.
Recently, however, ConsenSys—the company that developed MetaMask—has come under fire for collecting users’ wallet addresses and IP addresses. Some people are concerned that this data could be used for malicious purposes, such as tracking users’ activities or stealing their funds.
Infura: Source of Collecting User Data
Infura provides developers with simple, reliable access to Ethereum and IPFS. By offering tools and infrastructure that are easy to use, Infura makes it possible for developers to take their blockchain applications from testing to scaled deployment.
ConsenSys stated that when using Infura, the digital wallet MetaMask’s default remote procedure call (RPC) provider, Infura will gather the user’s IP address and Ethereum wallet address for transactions. RPC is a protocol for requesting data and information from a program running on a computer server hosted by a third party.
Aftermath and Backlash of Community
Following the FTX debacle, users began looking for non-custodial digital asset storage options, prompting updates to its policy. Despite the company’s clarifications through its official web channels, community members were skeptical.
Infura is currently investigating technical updates to “minimize the collection of information, including anonymization techniques and the minimization and elimination of any data collection and retention,” according to Consensys.
Some argue that this provides more and more reasons for users to start moving assets to a cold storage wallet. Others requested alternative wallet recommendations and emphasized the importance of decentralization in Web3.
Data Collection for Effective Risk Monitoring
Regardless of the reaction, ConsenSys isn’t the firm to collect more user data. They are also unlikely to be the last, given the growing demand for better data collection. The IMF published Fintech Notes’ Recommendations for Prudential and Conduct Regulation of the Crypto Ecosystem in September. The research advocated for improved data collection as a strategy for regulators to conduct more effective risk monitoring.
As a result, ConsenSys joins companies like Coinbase in adding IP collection to their data collection. Similarly, Uniswap announced recently that it would begin collecting blockchain data as well as information regarding user devices, browsers, and operating systems. Uniswap, on the other hand, stated that it was not collecting any personally identifying information such as names or IP addresses.