Per-ID Accounting

Per-ID Accounting is a blockchain accounting framework that aggregates and manages financial positions—such as assets, debts, and collateral—at the level of a user's unique identity, which can span multiple blockchain addresses or smart contracts. Unlike traditional address-based models that treat each wallet as a separate entity, this model provides a consolidated, holistic view of a user's on-chain financial state. It is fundamental for enabling sophisticated DeFi primitives like undercollateralized lending, cross-margin trading, and unified credit scoring by understanding a user's total exposure and creditworthiness across their entire portfolio.

The model operates by linking disparate addresses and smart contract positions to a cryptographically verifiable user identifier, such as a decentralized identifier (DID). This allows protocols to perform global risk calculations across all of a user's interconnected positions. For instance, a lending protocol using Per-ID Accounting can assess the combined value of a user's collateral spread across ten wallets against their total borrowed assets from multiple pools, enabling features like portfolio margining and preventing users from over-leveraging by opening isolated positions on different addresses.

Key technical implementations often involve stateful smart contracts or specialized oracle networks that maintain and attest to a user's aggregated balance sheet. When a user interacts with a protocol, it can query this attested state to make permissioned decisions, such as granting a loan based on total net worth rather than single-asset collateral. This shifts the paradigm from collateral-centric to identity-centric finance, reducing capital inefficiency and enabling trust-based transactions that mirror traditional finance, but on a transparent, programmable blockchain substrate.

The primary use cases for Per-ID Accounting are found in advanced DeFi lending, prime brokerage services, and on-chain credit markets. It allows for undercollateralized loans, where credit is extended based on a user's verified reputation and overall asset footprint. Furthermore, it is crucial for cross-protocol composability, as a user's risk profile can be portable across different applications, creating a seamless and integrated financial experience without the silos of address-based isolation.

Adopting Per-ID Accounting introduces complex challenges around privacy, identity proofing, and state management. Solutions must balance transparency with data minimization, often leveraging zero-knowledge proofs to attest to financial health without revealing underlying transaction details. Its development represents a significant evolution in blockchain economic design, moving the ecosystem closer to replicating the nuanced financial relationships of the traditional world while retaining the core benefits of decentralization and auditability.

Per-ID accounting is a blockchain-native accounting model that tracks assets, liabilities, and transaction history for distinct, non-custodial entities (IDs) within a single shared ledger state. Unlike traditional aggregate models that pool funds, this system maintains isolated financial statements for each participant, enabling precise attribution of on-chain activity—such as yields, fees, and debt positions—to specific wallets, smart contracts, or sub-entities. This granularity is fundamental for protocols managing complex financial relationships, like those in decentralized finance (DeFi) and real-world asset (RWA) tokenization.

The mechanism operates by mapping all on-chain events—deposits, withdrawals, interest accruals, fee assessments—to a unique identifier, often a cryptographic public key or a smart contract address. Each ID's state is updated atomically with every transaction, ensuring its balance sheet reflects real-time solvency and performance. This is analogous to a bank maintaining separate ledgers for each customer, but executed transparently and programmatically on a blockchain. Key technical components include state trees for efficient proof-of-inclusion and event-sourcing patterns that reconstruct any entity's historical position from an immutable log.

A primary application is in decentralized lending protocols. When a user deposits collateral, the system does not merely add to a global pool; it credits a liability to the protocol's balance sheet and an asset to the user's Per-ID account. Interest accrues specifically to that account, and liquidation triggers are evaluated against its isolated collateral ratio. This prevents the misallocation of risk and ensures precise settlement. Similarly, in decentralized autonomous organizations (DAOs) with sub-treasuries or venture arms, Per-ID accounting allows each department to have its own transparent, auditable capital account while sharing the underlying treasury smart contract.

Implementing this model requires careful smart contract architecture to avoid state bloat and ensure gas efficiency. Common patterns involve using nested mappings (e.g., mapping(address => mapping(address => uint256))) to track assets per user per token, or employing synthetic asset systems where balances are represented as shares of a global pool, with the accounting logic ensuring correct entitlement. The choice between an explicit balance model and an implicit share model depends on the trade-offs between computational cost and accounting clarity for the specific use case.

For analysts and auditors, Per-ID accounting provides the foundational data structure for generating compliant financial reports, calculating protocol revenue, and assessing entity-specific risk. It transforms raw blockchain transaction data into organized, attributable financial statements. This capability is critical for institutional adoption, as it enables the transparency of public blockchains to be harnessed for traditional financial scrutiny, moving beyond simple balance queries to holistic financial analysis of on-chain entities.

Per-ID Accounting is a blockchain-native accounting paradigm that maintains separate, auditable ledgers for each unique user identifier (ID), such as an address or smart contract, rather than aggregating data into monolithic global states. This model treats each ID as an independent accounting entity with its own balance sheet, tracking assets, liabilities, and transaction history in isolation. The approach provides a foundational layer for on-chain financial primitives, enabling precise attribution of value flows and capital efficiency metrics directly from the protocol layer, which is essential for decentralized finance (DeFi) and institutional-grade analytics.

The technical efficiency of this model stems from its deterministic state resolution. By isolating financial states per ID, systems can compute an entity's net position without needing to process the entire global ledger, drastically reducing computational overhead for common queries like balance checks or profit/loss calculations. This isolation also enhances data sharding and parallel processing capabilities, as the state for non-interacting IDs can be managed independently. Furthermore, it enables selective state pruning and history compaction for inactive accounts, optimizing long-term blockchain storage requirements without compromising auditability for active participants.

For developers and protocols, Per-ID Accounting unlocks powerful primitives such as real-time risk engines, automated margin calls, and cross-margin collateral management that operate with atomic precision. A practical example is a lending protocol that can instantly calculate the loan-to-value ratio for a single borrower by querying only that user's isolated state, rather than scanning all collateral and debt positions. This granularity also facilitates composable financial statements, where the aggregated activity of a DAO treasury or a fund's portfolio can be derived by summing the per-ID states of its constituent addresses, providing transparency and operational efficiency unmatched by traditional batch-processing methods.