One article to understand the importance of decentralized identity DID in the Web3 world

From an anthropological point of view, identity is shaped by culture, and the most basic identity can be gender. When we say man and woman, we’re not just describing biological differences, but also our expectations about the moral standards, social functions, behavior patterns, etc. that this identity should have.

In real life, society is formed by many specific individual organizations. People actively or passively join different organizations according to their identities, thereby forming attribute labels such as class and culture.

In the era of Internet Web2.0, a network society has emerged, and society is no longer limited to geographical boundaries. People enter the Internet, join different platforms according to their own interests and hobbies, and generate new Internet identities. However, due to the non-interoperability of data on Internet platforms, people need to register and verify their identity constantly, and even identity information data has been uploaded by unauthorized platforms for many times, resulting in problems such as privacy leakage and labeling. People’s Internet identity shows segmentation and imperfection, and their own rights are gradually lost.

The arrival of Web3.0 has given users the opportunity to control their own rights, namely Decentralized Identity (DID).

The role of the DID is in line with the fundamental principles of identity, only the form has changed:

  • On the platform, users join a system that uses encrypted wallets as identity proofs, and through on-chain data and soul binding NFT proofs, users’ data is true and comprehensive;
  • For others, DID brings a new DAO organizational form, and people can easily find DAO partners and organizations that meet their requirements;
  • For oneself, outside of real life, have a new/free/anonymous/autonomous identity.

Wall Street financial tycoon Jim Rogers said: “In the next 10, 20 years, having an identity is dangerous, because there will be many problems in the world that we need to face, financial, political, military… Therefore, there must be an Plan B, because having a second identity gives you a chance to survive.”

In the era of Web3.0, DID will be everyone’s Plan B.

One article to understand the importance of decentralized identity DID in the Web3 world

1. In the Web3 world, what is the decentralized identity you need?

Decentralized Identity (DID) is a trust invention combined with blockchain technology, and it is an identity credential in a decentralized society in the future. Specifically, it is an address on the blockchain, owned and controlled by a single person, that is used to connect DID-related files such as wallet addresses, encrypted accounts, dApp interactions, social, login, etc.

One article to understand the importance of decentralized identity DID in the Web3 world

The most important thing is that decentralized identity verification does not require any centralized third-party participation, the user’s identity is completely controlled by the owner, and at the same time solves other needs of identity – user data confirmation, verification, storage, management and use.

(1) The standard and implementation of DID:

At present, the decentralized identity standards are mainly divided into two types: the W3C standard and the DIF standard.

W3C: Used to designate people, organizations, and things, and to protect security and privacy. It is mainly composed of “base layer DID specification” and “application layer verifiable claim”.

DIF: The main role is to give users full ownership so that an open, decentralized identity ecosystem can be established and interoperability among all participants is ensured.

Here we mainly introduce the DID standard and implementation method of W3C. Its DID system mainly includes two levels of elements, the base layer and the application layer.

1. Basic layer – DID specification, including DID identification and DID document

1) DID identifier (Identifier)

DID is a type of Uniform Resource Identifier URI. It is a permanent and immutable string that globally identifies your identity, just like an ID number.

  • The first part is always a DID, indicating that this is a “decentralized identifier”.
  • The second part is the method, which is used to indicate which set of schemes (methods) this DID mark is used to define and operate. We can customize this DID method and register it in the W3C website.
  • The third part can be any string, which is a specific identifier in the DID method, which is unique in the entire DID method namespace, and can be regarded as an individual unique identifier sequence.

One article to understand the importance of decentralized identity DID in the Web3 world


2) DID document (Document)

Each DID identification corresponds to a DID document. This document is a JSON string containing 6 pieces of information (optional):

  • DID identification to prove global uniqueness
  • Public key: A set of cryptographic material that can be used for authentication or interaction with DID subjects
  • Authentication: A set of cryptographic protocols for interacting with DID subjects
  • Service Endpoint: used to describe where and how to interact with the DID subject
  • Timestamp: document creation time and update time
  • JSON-LD signature

2. Application layer – Verifiable Claims (Verifiable Claims or Verifiable Credentials, VC for short)

This layer is where the value of the entire DID system is established. Verifiable statement is a descriptive statement issued by a DID to endorse some attributes of another DID, and attach its own digital signature to prove the authenticity of these attributes, which can be regarded as a digital certificate.

In VC’s system, there are four types of participants:

  1. Issuer: An entity that owns user data and can issue VC, such as government, bank, university and other institutions and organizations;
  2. Verifier: Accept the VC certificate and verify it, such as checking our ID card at the front desk when checking in in a hotel;
  3. Holder: The entity (the user himself) that finally holds the VC by requesting and receiving from the issuer;
  4. DID identification registry (Verifiable Data Registry): where we store DID identification and DID documents, maintain a DID database, such as a blockchain, distributed ledger, through the DID identification can query the corresponding DID documents.


One article to understand the importance of decentralized identity DID in the Web3 world

Specific relationship diagram

When a user obtains a VC certificate, it will contain three kinds of information:

  1. VC metadata: issuer, release date, type of claim, etc.;
  2. Claims: One or more statements about the subject. For example, as a VC issued to me by the public security organ, the ID card will include: name, gender, date of birth, ethnicity, address and other information in the statement;
  3. Proof: The digital signature of the issuer to ensure the certifiability of the VC.

After understanding the working principle of DID, we can easily know the working process of DID:

  1. Xiao Ming generates his own DID address, has the public key and private key, and becomes the holder
  2. Xiao Ming’s address received the certificate VC issued by the issuer organization (with its own DID),
  3. It contains all the information of the certificate and Xiaoming’s DID
  4. Xiao Ming showed the VC to the verifier to prove that he really got the certificate
  5. The verifier determines the authenticity of the issuer by verifying the issuer’s DID at the DID identification registry,
  6. Then confirm the authenticity of Xiao Ming’s VC certificate, and finally complete the certification

Verifiable Expression (VP)

VC also has a Verifiable Presentation, which can verify the expression. Verifiable expressions are data that the VC holder identifies to the verifier. Under normal circumstances, we can directly show the full text of the VC, but in some cases, due to the need for privacy protection, we do not need to show the complete VC content, selectively disclose some attributes, or not disclose any attributes, only A certain assertion needs to be proved.

This is how the DID holder implements the display of some of its own data.

To sum up, it is a complete DID framework.

One article to understand the importance of decentralized identity DID in the Web3 world

The relationship between the DID schema and related components

(2) What are the characteristics of your decentralized identity (DID):

Decentralized identities have three qualities: security, controllability, and portability.

Feature 1: Security

  • User Protection – User rights must be adequately protected. When the identity network requirements conflict with the rights of individual users, the network should give priority to protecting the freedom and rights of individual users. You can do it with DID.
  • Identity permanence – Identity must be persistent, preferably perpetual, at least as long as the user desires, so as to avoid a “right to be forgotten”, during which the user decides to delete and log out of the ID.
  • Minimized exposure – users only need to provide minimum identifiable data, no additional private information is required.

Trait 2: Controllability

  • Independent existence – The user is completely independent of the identity provider and the network.
  • User Control – User has control over all operations of DID registration, use, update, disclosure, deletion and logout.
  • User Permissions – Any network participant using a user’s identity and its associated data must obtain the user’s permission.

Feature 3: Portability

  • Interoperability – DID needs to be widely used. Identity has no value if it is limited to a limited market segment.
  • Portability – Users can port and move identities according to their needs.
  • Data Access Rights – Users must be able to access their own data and be able to easily withdraw all claims and other data from their identities at any time.

2. Why is Decentralized Identity (DID) needed in Web3?

As mentioned above, decentralized identity is a very critical puzzle in the Web3 world – creating a unique “ID card” for users on the chain, rather than the numerous APP accounts in Web2 that can be repeatedly applied for.

Robust identity management and identity applications based on the system will enable new use cases and scenarios.

(1) Real identity identification to reduce costs

1. The authenticity of NFT can be verified, reducing fraud and false behavior

Whether in Web2 or Web3, there are many organizations that commit fraud through websites, links, etc. Among them, the minting and sale of fake NFTs is the hardest hit. Through the DID infrastructure, creators can prove that NFTs representing digital or physical assets were created by them, and buyers and sellers will also be able to verify the origin of digital artwork.

2. The difficulty of airdrops is reduced, and the benefits are accurately delivered

After the establishment of DID, the project can be airdropped to real users more accurately, and real users can also enjoy more benefits and rights.

(2) Establish a credit system where contributions can be quantified

1. Open the next chapter of DeFi:

Because the current DeFi does not have a credit system, over-collateralization is a behavior that most projects will carry out, but this behavior actually violates the underlying financial rules. With the application of DID identity authentication, various operations related to lending will accumulate into the user’s “positive” or “negative” behavior, and finally form a credit score system. Various protocols can analyze the loan amount according to the user’s credit score, encouraging Users form a good on-chain lending behavior.

2. Expand more possibilities for DAO organization:

The current system model that relies on governance tokens to obtain voting rights is easily manipulated by capital, and those members who really bring value and contribute to the organization will be ignored.Therefore, the contribution of a DAO member can be measured through the proof of reputation such as badges and certificates, presenting a more complete community user portrait, and giving voting rights to members who are really contributing.

3. What are the decentralized identity subdivision tracks and high-quality projects?

At present, the classification of the decentralized identity track varies. 7 O’Clock Capital, from the perspective of venture capital institutions, according to the research and understanding of the market, here they are classified into three categories: identity authentication and management, identity application , underlying support and data marking.

(1) Identity authentication and management

This type of project focuses on the authentication and management of decentralized identity, guarantees the user’s DID through certain technical means, and makes the management more systematic, which is convenient for users to use DID for various on-chain behaviors.

1. Authentication:

BrightID is a decentralized anonymous social identity network that does not collect personal privacy information, but confirms the uniqueness of user identities through biometric identification. Users need to authenticate their identities by video conference with managers online. At present, BrightID Beta version App has been launched on Android and iOS platforms. It has 65,000 users and is compatible with 15 apps.

After downloading the app, users can register directly without any identity information, just their avatar and name. When connecting with friends, they can be securely shared through P2P (peer-to-peer) transmission.And BrightID verified applications can also be displayed on the page.

One article to understand the importance of decentralized identity DID in the Web3 world

Current BrightID usage scenarios include identity recognition, application user verification, activity verification (airdrops, etc.), trust and reputation building, and others, and IDChain is still under development.Due to the outstanding performance of the project, it was praised by Butler in the seventh round of Gitcoin donations.

2. Identity management tools:


Founded in 2017, ENS is an Ethereum-based decentralized domain name project supported by the Ethereum Foundation that allows users to display lengthy Ethereum public addresses in a simplified text-based way, allowing users to share, use and remember addresses and other Data just got easier.

One article to understand the importance of decentralized identity DID in the Web3 world

At the same time, ENS also supports users to bind their emails, Twitter, NFT avatars, etc. to their domain names, which can be read and displayed by third-party platforms. At present, the vast majority of Ethereum applications already support the display of ENS domain names, and it is also the most widely used identity project. There are already 1.12 million unique domains, 504 supporting projects.


Spruce is a cross-chain digital identity authentication system that provides signature, sharing and verification of trusted information. On April 20, 2022, it completed a $34 million Series A financing, led by a16z, with participation from Ethereal Ventures, Electric Capital, Y Combinator, and Protocol Labs.

Spruce has partnered with the Ethereum Foundation and ENS to build Sign-In with Ethereum (EIP-4361), an authentication standardization system that allows users to connect directly to Web2 or Web3 applications using their crypto wallets and control their identity data.

The Spruce ID ecosystem consists of four parts: DIDKit, Rebase, Keylink, and Credible: DIDKit is used to sign and verify W3C verifiable credentials; Rebase is user data credentials; Keylink can link existing system accounts to encryption key pairs; Credible is a certificate wallet.

One article to understand the importance of decentralized identity DID in the Web3 world

3. Identity Aggregation Tool:


Litentry is a decentralized identity aggregator of the Polkadot ecosystem that supports linking user identities across multiple networks. Users can manage their identities through the security tools it provides, and Dapps can obtain real-time DID data of identity owners across different blockchains. This is also one of 7 O’Clock Capital’s Portfolios. The current decentralized identity projects based on this project include My Crypto Profile, Web3Go, Polkadot Name System, PokaSignIn, etc.

Litentry has established a three-tier credit computing infrastructure to support DID management:

  1. source data layer. Source platforms from which identity analysts obtain data, such as Etherscan, The Graph, Onfinality and other data providers.
  2. Address analysis layer. Mainly as an external server that provides data analysis, such as Nansen, Chainalysis, and address analysis platforms such as the upcoming Litentry whitelist.
  3. Identity aggregation layer. Litentry generates address relationships belonging to the same identity, and then obtains the corresponding address analysis data from the address analysis layer, and performs weighting calculations.


Unipass is a multi-chain unified encrypted identity, namely the universal passport of the Metaverse. Users can aggregate multiple social (Web2) accounts through one Unpass ID, give users ratings, tags, display users’ NFTs, and support email-based social identity recovery. And support Token-based communities, zoom meetings, and forum access. Support for sending messages to specific token holders.

One article to understand the importance of decentralized identity DID in the Web3 world

.bit (formerly DAS)

.bit is an open source, decentralized cross-chain account system based on the Nervos CKB blockchain, providing the world’s only naming system with a suffix of .bit, which can be used in different scenarios, such as encrypted asset transfer, domain name resolution, identity certification, etc.

Any application can read the data in it, but only the user can decide what data to write to it. Users have absolute ownership and control. Currently registering an account requires a fee of $5 per year and a storage fee of $0.77.

One article to understand the importance of decentralized identity DID in the Web3 world

(2) Identity application

1. Decentralized social networking


CyberConnect is a multi-chain decentralized social graph protocol that builds a scalable and standardized social graph module. Through a search engine, followers, POAPs and Galaxy credentials of specific addresses can be found. Its data is stored on IPFS through Ceramic, providing a common data layer for DApps.

While social graph data is open to everyone, only users have full control over their social graph, i.e. adding, removing, and updating related dapp links.

One article to understand the importance of decentralized identity DID in the Web3 world

Lens Protocol

Lens Protocol is a composable decentralized social graph developed by the Aave team on Polygon with general social media features such as profile editing, commenting, retweeting posts, and more. The difference is that Lens Protocol supports NFTs, where users own and control everything they create.

Users can view their historical footprints and published artistic content through Profile NFTs, and obtain Follow NFTs (Follower NFTs) by following others on the platform.

The protocol also allows developers to use modular components to build their own social applications on Lens, and encourages developers to develop new components that improve product experience. Other external applications can also access Lens and share the advantages of the Lens ecosystem.

One article to understand the importance of decentralized identity DID in the Web3 world

2. Bounty tasks:


Dework is Web3’s native project management platform. It has the functions of Token payment, authentication and bounty. Currently used by several DAOs, including OpenDAO, AragonDAO, CityDAO, and ShapeshiftDAO.

Contributors can create personal Web3 profiles, find suitable bounty tasks from the DeWork side, and get paid for completing tasks.

One article to understand the importance of decentralized identity DID in the Web3 world

The project party can share the project dynamics on it, and set up some tasks and bounties to attract more participants.

One article to understand the importance of decentralized identity DID in the Web3 world

3. Credibility/Reputation Credentials:


Proof of Attendance is a digital memento that aims to create a reliable new way of recording life experiences, providing NFT badges for participants of various activities and events to prove their participation in the activity, event, whatever Whether the event happened virtually or in the real world. It is the prototype of Web3’s credit/reputation certificate.

One article to understand the importance of decentralized identity DID in the Web3 world currently issues DeFi Passports to users for free, and builds credit points for holders by processing and referencing large amounts of data. The credit score will be determined by analyzing the holder’s Ethereum address historical activity, set in a range of 0 to 999 points, and this credit score determines the staking rate the protocol offers users. After claiming a Passport, users are incentivized to improve their on-chain reputation by maximizing their scores across multiple “games”, so they can gain various benefits, such as lending at a lower collateral rate .

Project Galaxy

Project Galaxy is a Web3 credential. After connecting to the wallet, the user can generate a “Galaxy ID card”, which is labeled with various labels according to the historical behavior of the address. “Galaxy ID” is a user’s digital identity record of activity, reputation and achievement. Builders can target audiences, reward communities, calculate credit scores, build voting systems, and incentivize participation based on Galaxy credentials. Supports on-chain and off-chain credentials.

Currently Project Galaxy has more than 3000 credential tags and has completed more than 3000 credit-based activities.

(3) Bottom support and data identification

Data and public chain:


Ceramic is a decentralized, cross-chain database service built on IPFS that can manage dynamic content data.It makes up for some of the shortcomings of IPFS at the level of variability, version control, access control, and programmable logic.

The DID is used to log into the Ceramic application. Each transaction or update to the data stream is authenticated by the DID of the user (account). On top of DID, Ceramic developed the IDX standard to aggregate multiple cross-chain data types associated with DID-related user data.

One article to understand the importance of decentralized identity DID in the Web3 world

At present, there are many DID and Web3.0 social platform projects developed on Ceramic, such as CyberConnect, Web3.0 Twitter’s Orbis, instant messaging platform The Convo Space and so on.


Idena is the first Proof-of-Person blockchain based on democratic principles. To join Idena, you need to obtain an invitation code from an existing member and verify your identity through the Turing test. After that, you can become a node and participate in verification mining. Everyone in each mining node has the same voting rights and mining income to ensure fairness.

One article to understand the importance of decentralized identity DID in the Web3 world

Idena employs periodic checkpointing rituals—synchronized verification sessions—to prove the authenticity of participants. Validation requires solving flip puzzles that are easy for humans and difficult for robots.Validating nodes and new users who need to be authenticated need to solve puzzles at the same time, which ensures that new users do not authenticate themselves multiple times.

After the time to solve the puzzle, the network will confirm the users who have passed and decide the time of the next collective verification. The more people there are, the longer the time interval will be. Nodes need to continuously participate in verifying new users to ensure that their node identity does not expire.

Currently, Idean has 12,892 verified identities, 11,586 miners, and 1,129 nodes. Partners include Gitcoin, COSMOS, Amasa, Hackernoon, etc.

4. Challenges and thinking about decentralized identity

(1) Can the impossible triangle problem be solved?

After understanding DID, it is not difficult to find that there is also a triangular problem in decentralized identity: privacy, decentralization, and resistance to Sybil. Today’s crypto projects still need to choose between the three.

One article to understand the importance of decentralized identity DID in the Web3 world

Today’s blockchain ecosystems almost universally sacrifice resistance to Sybil for decentralization and privacy, such as Bitcoin, Ethereum, etc. They do not rely on a central authority to record identities, and users do not have to disclose any personal information when creating wallet addresses, but as a result, projects that use these addresses as unique identifiers are vulnerable to Sybil attacks.

Yet when one tries to address Sybil resistance (like KYC), it comes at the expense of privacy and increases reliance on other forms of identification that neither protect privacy nor decentralization.

(2) Product form of DID

At present, the product functions of the DID track are relatively scattered. The future is to develop towards the entrance of Web3 like Unipass and integrate with the wallet? Or as a link between the previous and the next, providing services such as user authentication and credit scoring to facilitate the operation of upper-layer applications? Or by integrating with the Web2 platform in the short term, coexisting with Web2 to enhance reliability and effectiveness?

Although there is no clear answer, there is no doubt that it will become an important player in the Web3 world. We also look forward to more innovative forms of presentation.

(3) Balance between digital and real people

Should the service provider of Web3 applications be real people off-chain, or digital people created by real people off-chain in the digital world? The latter seems to be more in line with the original intention of Web3, but from the perspective of global regulatory compliance and popularization of Web3, the verification of real people may be unavoidable, and there may be some restrictions on unauthenticated accounts in the future. Verified accounts will have more rights.


The DID field is still in a state of chaos. This is not only an era for heroes, but also a stage for adventurers from all walks of life to show their talents.

Twitter CEO Jack Dorsey discussed in the concept of Web5 proposed: “Will data and identity management power really return to users?” Maybe we can’t give an answer now, but users around the world will continue to strive for this power. Efforts, especially the practitioners of the blockchain.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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