The problem in web3.0 ID

An identity represents a collection of data of a natural person. An actively generated cross-platform identity provides credit for accessing dedicated services, for example, a good Alipay credit could get a microloan or free borrowing services. A cross-platform identity could also make the accounts management easier like Twitter login enables single sign-on for different applications.

But the data is not only collected actively by user inputs, it is sometimes passively collected by the scripts monitoring user behaviors, and it is always leveraged by data brokers without notifying users.

Pseudo-anonymous blockchain networks come in and prevent the identity profile from being monitored, but it also eliminates the benefits of having a cross-platform identity. Without a cross-platform identity, the user experience of identity management on DApps would not be as competent as Web2.0 Apps, and most importantly, it is hard to validate and accredit identities, which will lead to the following problems:

A common problem for new blockchain projects is how to attract real users. Blockchain projects always use air-drop, but projects cannot prevent a user from creating multiple accounts to get the rewards. For example, Uniswap’s generous token gifting to all the historical liquidity providers does not have any differentiation of the users.

A missing point in the DeFi world is credit loan. Without the credit or financial history of users, financial institutes need to charge a collateralized deposit for issuing a microloan or flash loan.

In the on-chain governance of a Proof of Stake(PoS) network, the voting power is mainly decided by the distribution of tokens, the network will need sophisticated algorithms to make sure the voting power is not controlled by individual major stakeholders.

The activities of an on-chain identity nowadays are more than token transfers and it could reflect the characteristics of the identity. For example, to know if a user is a long-term liquidity provider on Uniswap we could check the liquidity deposit and withdrawal actions, or know if a user is active as an on-chain governance participant on Polkadot by checking its data of nominating and voting for democracy. In addition, the blockchain runtime tends to have more complex states, like tweeting in a decentralized blog system that has its record on-chain. A transaction should more properly be called an “extrinsic”, which indicates any message from the outside world that would change the state of the blockchain. Once combined with different accounts across different chains, we may derive more information about the identity behind these accounts and solve all the above problems.

Decentralized Identity differentiates from conventional identity by its generation methods, which don't involve centralized control and scrutinization. As web3 continues to grow, more DID data will be generated on chain. These data lies on different networks due to its highly fragmented nature, but the current web 3 infrastructures, which in this sense is very similar to the internet, does not convenient data merging and integration across different networks, and thus presenting a difficulty from a data management standpoint. By indexing data across blockchains, data fragments are subtracted from the isolated data islands, making it possible for data owners to arbitrarily manage and leverage.