Detailed explanation of the current status and future direction of DIDs: Web3 enters the next stage of middleware

Ti Capital Insights|DID – Web3 enters the next stage of middleware

In 1807, after the defeat of the Danish Navy in Copenhagen, 90,000 oak trees were planted to rebuild the navy and replenish losses. In 2007, the Danish Department of Nature, the successor to the Royal Forestry Service, informed the Danish Ministry of Defense that 90,000 oaks planted for the reconstruction of the navy were ready. The world is changing faster than we expected.

In the last round of Defi summer, with the speculative boom of liquidity mining, Defi was very hot, and at its peak, some people even asked, “How can the Defi protocol withstand the influx of millions of users?”

In hindsight, the question was overly simplistic and naïve. The fundamental reason is that finance has always belonged to the underlying facilities, and the real care and participation in the world belongs to a minority, perhaps only tens of thousands of people.

The last round of Defi summer has verified this problem, most of the participants are “crypto natives”, although there is a large influx of funds, but mainly from funds and giants, not the general C-end users.

In general, Defi belongs to infrastructure, even considering speculative factors, the majority of people interested in it, which means that expanding the boundaries of blockchain with Defi as the core of the ecosystem will one day reach the limit.

DeFi still has a threshold, and the future will not be directly user-oriented, because we have been completely dependent on “enthusiasts” for on-chain activities since 2018. But the average user is more likely to interact with DeFi through mobile wallets as infrastructure in the future, rather than directly.

Defi will continue to shine, but as a foundation, as the “root” of this big tree, the real germination in the future will depend on applications, social networking and entertainment, expanding Web3 players, and conquering the world.

Under the assumption of this conjecture, DID, as a necessary component of social and entertainment, will also become a middleware for large-scale applications, a bit like Chainlink for Defi.

This article only talks about two things, the current status of DID development and the conjecture of future development.

1. Current DID status (original short ID)

The concept of macro DID is very broad: including explicit labels formed by the collection of all on-chain rows, and even including off-chain authentication on-chain, forming on-chain identities, etc. in the future.

1.1

At present, we shrink the long public key to a human-readable address name, which is also the most superficial thing of DID, but carries the DID entrance; The threshold is low but the ecological card slot is important:

The ETH ecology has ENS, with about 2 million registrations; The Solana ecosystem has Bonfida, with about 200,000 registrations; Avalanche has Avvy Domains, with around 10,000 registrations; Polkadot has the Polkadot Name System (PNS), with about 15,000 registrations; ICPs have ICNS and IC Naming; BSC has SPACE ID; FLOW has flowns; Cosmos has EVNS, and cosmos public chains may use this domain name system.

Cross-chain DID domain name projects also have .bit, in addition to ETH, support polygon, TRON, BSC, etc.; Unipass, the project update is obviously old and still on its way to supporting Terra. This kind of project homogenization is very serious, essentially making a ledger system between short domain names and public keys, there is no technical content but ecological card slots are very important.

1.2 SpruceID

The expansion of auxiliary domain names, such as SpruceID, which helps web3 users directly log in to the web2 website with on-chain identity, this project is led by a16z, when ENS and the ETH Foundation made a tender to unify the ENS address to log in to the web2 website, and set a protocol standard, that is, Spruce won the bid, and ENS has a good relationship and drafted the ETH DID agreement together.

1.3 Ceramic

DID also has a key component called the data layer.

We talked about web3 before, one of the most important characteristics is that the protocol layer does not own data, data is collected and integrated by the user, and DID can even be said to be an information bridge between various protocol layers.

From the defi composability brought about by BTC assets after owning, we can understand “data composability when data is owned”. Compared with traditional finance, Defi does not require permission and has no entry threshold, assets can flow between multiple platforms at the same time, the platform does not touch user assets, user assets can flow between different platforms, such as deposit certificates can be taken and pledged. A fat asset layer and a thin platform layer are formed, and the network effect between the platform layers can be combined with each other.

Then the glue of the network effect formed by the DID here needs to have a bearing place is Ceramic, in Ceramic to standardize the data of each application. So Ceramic can be said to be a data protocol born specifically for DIDs.

At present, many DID and Web3 social platform projects have been developed on Tericatic, such as CyberConnect, Web3.0 Twitter’s Orbis, and the instant messaging platform The Convo Space.

Detailed explanation of the current status and future direction of DIDs: Web3 enters the next stage of middleware

1.4 Tagged DIDs

What Project Galaxy (now renamed GALXE) wants to do is to make the user’s information on the chain an information anchor, such as AAVE borrowing more than a certain amount to issue a “badge”, or tag; When a Uni transaction reaches a certain transaction amount, it is issued a “badge” and labeled.

The advantage of going this way is that the person is covered by a label and it is easy to portray the image, so that other applications will give the user a thick line, and the airdrop is at least more accurate than it is now.

1.5

We can see that different infrastructures are solving the problem of user identity portraits from all directions, crawling (coarsely) the data represented by GRT, and then letting the curator make a data set and then give it to the application, but it is obviously unrealistic for everyone’s data to be presented to the curator.

Ceramic is represented by classifying and modularizing the data of each application, and there is a program automation (because the data mode is unified) to do user data portraits, which is convenient for retrieval between different applications.

Galxe represents the application to tag users with NFTs and draw a thick line, so that users can be simply classified and rough filtered.

2. DID Future Development Imagination – Development History

2.1

The author looks at the situation of various DID projects or self-proclaimed DID track projects, DID is still in the exploration stage, still in the early stage of development, and even in the form of web3 whether DID is the surface entrance or the underlying infrastructure, each company has different construction logic.

But one thing has become clearer in the research, DID is very likely to be the entrance component of Web3, referring to the history of Internet development, is a bubble occurrence and then squeezed and then survived the game, after each cycle can survive, must be the last survivor, the market will naturally let the traffic concentrate.

Just like search engines in the Web2 era, DIDs will become Web3 entry-level applications.

Detailed explanation of the current status and future direction of DIDs: Web3 enters the next stage of middleware

In the future, everyone will have a DID, which can pass through the entire Web3, and even with the development of DID, there will be regional DID, such as game DID for games and social DID for social.

In the future, the DID track will have a much more powerful application than the current wallet to manage their on-chain identity, on-chain activities, and even on-chain assets. The application will be connected to all the infrastructure on the chain, and even become a bridge from web2 to Web3, a bit like Chainlink is to Defi.

2.2

Let’s first look at Chainlink, which is only an oracle, but based on the continuous extension of basic services, touching multiple sectors of current blockchain applications. Up to now, Chainlink has served a total of 1213 projects, including 578 DeFi projects, 143 game projects and 91 public chain projects.

Detailed explanation of the current status and future direction of DIDs: Web3 enters the next stage of middleware

Although smart contracts allow trusted transactions without a third party to achieve traceability and irreversible transactions, they cannot be directly linked to data outside the blockchain (such as external data acquisition and calling, etc.), so an external Turing machine is required to write data to the blockchain or distributed ledger.

It plays the role of a bridge between data source API interfaces, so as to realize the docking of blockchain interfaces and external data API interfaces, and this Turing machine is the oracle.

With the expansion of this blockchain application boom, Chainlink has evolved from an initial oracle service to multiple services, such as generating random numbers for games and NFT applications; Offer for NFT floor prices; Off-chain computing, fair sorting, and even cross-chain services.

With a large number of smart contract use cases requiring access to oracles, deploying Chainlink to a new blockchain environment will provide on-chain developers with the critical infrastructure they need to develop applications.

In 2021, the blockchain also experienced the spillover effect of ETH, multiple public chains began to develop their own ecology, at this time an infrastructure is needed to provide on-chain secure data sources, thereby attracting mature Defi protocols, such as AavexDollar, etc. deployed on it, Chainlink is more sought after in this period with its own oracle leader’s status, the requirements for oracle security and reliability, so that Chainlink’s “Matthew effect” Constantly expanding.

Chainlink is connected to many of the top L1 blockchain and L2 scaling solutions, including Arbitrum, Avalanche, BNB Chain, Ethereum, Fantom, Harmony, Heco, Moonriver, Optimism, Polygon, Starkware, and xDai.

2.3

Will DIDs, which are closely related to data, replicate Chainlink’s old ways? It seems that the two are very similar, they are simple but basic on-chain data services, with high requirements for security and reliability, and traffic tends to gather in the head.

Although DID is also a data service, but the path it solves is completely different from Chainlink, the current blockchain on-chain data, based on the non-tamperable properties of the blockchain, the on-chain data is “no credential” trust, for example, to prove that the wallet address A does transfer money to the wallet address B, just check the corresponding on-chain information, no need for a certain application or institution to issue a certificate.

However, this kind of trust data without credentials is limited to identity information, and the establishment of identity information depends on the institution that issues the identity, such as the trust of “academic qualifications” relying on the institution that issues academic certificates.

Based on the management and transmission of user identity information, DID is a necessary component for users to handle their own chain activities, which can be roughly divided into DID user information collection and DID user identity distribution.

Detailed explanation of the current status and future direction of DIDs: Web3 enters the next stage of middleware

Since DID controls the key of users to enter various sectors, it is easy to form a super application of ecological hub, and the popularity of AA technology and L2 technology means that the evolution direction of blockchain has shifted from focusing on “infrastructure” to slowly entering the search for “super applications”.

Because the “super application” bundled by previous technical limitations is likely to break out in the next stage, the application will inherit multiple identity management protocols, as well as Defi basic protocols, etc., users can achieve high-frequency on-chain operations within this application, trading tokens, trading NFTs, publishing message dynamics, displaying relationship graphs and user portraits, and so on.

DID is very likely to become the entrance of web 3 in the form of “smart contract account”, and at present, we use Metamask as a web3 entrance in terms of demand is completely insufficient, after the influx of low-threshold public, we need a “portal” as comprehensive as possible, which is similar to Google in the web2 era.

However, DID still has many problems that need to be solved urgently, for example, if DID gathers all the information of a person, then data privacy and security are particularly important, and there will be large-scale data leakage and threats; At present, there is no uniformity in the identity issued by each protocol, and there is no uniformity in on-chain behavior, and it is difficult to achieve large-scale identity management; The speculation of applications such as social entertainment on the current chain is weakening and personnel loss represents the disappearance of the soil of continuous trial and error of DIDs.

Although DID is in the early stage of development, after Defi, the demand for blockchain applications out of the circle is strong, social entertainment has become a breakthrough, and DID is on the eve of the outbreak.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/detailed-explanation-of-the-current-status-and-future-direction-of-dids-web3-enters-the-next-stage-of-middleware/
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