On-Chain Identity Revolution: How DID Reshapes Web3 Social and Trust Systems

In the digital world, identity issues are undergoing a profound paradigm shift. In the traditional Web2 era, our identities were controlled by social platforms—applications like Facebook, LINE, and others held all user data ownership, making privacy leaks commonplace. The emergence of decentralized identity (DID) has rewritten this landscape. It fully returns ownership, control, and management of identity to users, becoming the core infrastructure for building a Web3 decentralized society.

Paradigm Shift in Identity Definition: From Centralization to Decentralization

In traditional society, identity verification relies on government-issued official documents such as ID cards and passports. The authenticity of these documents is endorsed by collective government consensus, from which social behavioral norms derive. However, this system gradually becomes ineffective in the online world.

In Web3, identity is no longer a static ID number but a dynamic accumulation of behaviors. As scholar David Phelps elaborates in “You Are What You Own”—your identity is the sum of your current behavior patterns. In other words, human behavioral patterns determine individual identity.

The Web2 ecosystem is fragmented; social data across platforms cannot interoperate. But Web3 offers a new solution through DID. It links every traceable on-chain behavior to a unique identifier stored on the blockchain. Users’ preferences, assets, experiences, reputation, and other information gradually enrich this identifier and can seamlessly interact with any DApp.

The Three Core Features and Application Potential of DID

DID brings about qualitative change in Web3 due to its three unique features:

Low Consensus Cost: No need to establish a global unified identity verification agency; verification can be completed through consensus among on-chain participants.

Composability: Different applications can develop secondary features based on the same DID, forming information flow and value exchange within the ecosystem.

Native Globalization: Without regional restrictions, in theory, anyone can participate in the global economy with just a wallet address.

The combination of these features makes DID a “plugin” for Web3 social structures—it acts as a universal interface, packaging human behaviors across various scenarios for fluidity, providing unprecedented possibilities for upper-layer applications. According to “Decentralized Society: Finding Web3’s Soul,” this vision is called “DeSoc”—a decentralized society, with its foundation built around on-chain relationship proofs centered on DID.

Multi-Chain Aggregation: From Off-Chain Certification to On-Chain Identity

The implementation paths for DID projects roughly fall into two categories: one relies on off-chain identity verification followed by building social networks on-chain; the other focuses on on-chain behavioral data, using wallet services as a basis, enriching individual identities through “credentials.”

Attempts at Off-Chain Identity Verification

BrightID adopts a social verification model, confirming users’ real identities through offline verification parties, without submitting identity documents. This process is similar to a simplified off-chain KYC process. Face-to-face social interactions serve as the “initial identity proof,” which is then gradually enhanced through social engagement.

Similar projects include Gitcoin, linked to GitHub accounts. These projects protect user privacy (bypassing physical identity documents) while increasing the authenticity of identity uniqueness, building trust-based social systems.

Practices in On-Chain Identity Aggregation

More projects choose to directly aggregate on-chain behaviors. From an application perspective, the easiest data source is financial transaction behavior—this has the lowest threshold and the most convenient utility. Wallets like MetaMask and explorers like Etherscan exemplify this mode, linking user identities with financial activities through publicly recorded wallet data.

Domain name systems like ENS (Ethereum Name Service) and .bit (DAS) also play similar roles. In mid-2024, .bit announced Series A funding of $13 million, with 38,000 independent addresses registering over 110,000 .bit accounts, and about 100 wallets and DApps integrated.

DID Ecosystem Practice: From Wallets to Social Squares

Although wallet addresses can be shared across DApps as accounts, users find it difficult to leverage them for higher-level social services like chatting, reputation scoring, or showcasing personal achievements. This gap is filled by on-chain social square projects.

Project Galaxy is a representative of such projects. After linking a wallet address, users receive a “Galaxy ID” as an initial identity marker. They can then participate in partner activities to earn “Galaxy Credentials” (such as NFTs). The project also supports binding with Twitter accounts, allowing influential Web2 users to showcase richer resumes.

Currently, Project Galaxy supports six mainstream blockchains: Ethereum, BNB, Polygon, Arbitrum, Fantom, Avalanche, and Solana. Besides retrieving transparent on-chain data, it can also access off-chain public data from Twitter, Github, and other channels. For project teams, this provides a mature user profiling system, facilitating marketing optimization.

Similar applications include Mirror (on-chain writing platform), Uniswap (trading records), Hop (cross-chain transfers), where each action can become a “credential.” These “credentials” form a user’s on-chain resume, enabling users to present a more complete image within the Web3 ecosystem.

The Three Major Challenges Facing DID Today

Despite promising prospects, DID faces significant obstacles in implementation.

Information Silos

DID aims to unify on-chain and off-chain identities, but in reality, there are inherent barriers between them. More problematic is the fragmentation across multiple blockchains, preventing the formation of a global view of on-chain information. Ethereum, due to its absolute lead in funds and users, attracts many applications, making it difficult to integrate and label user behaviors on other chains.

For example, UniPass integrates multiple chain addresses, email, Twitter, and other identity elements, but because it chooses Nervos as the underlying layer, its popularity and user acceptance remain limited.

Privacy vs. Transparency Dilemma

Web2 identities are criticized for centralization and lack of privacy security, but can Web3 identities fully solve this? The answer seems negative. On one hand, Web3 identity ownership and management are user-controlled; on the other hand, all data is transparent, public, and traceable. Users find it hard to “conceal” their behavioral paths unless they completely disappear from the network. These behaviors will ultimately be quantified into “credentials,” becoming indicators of individual value, which appears to be another form of privacy exploitation.

Hollow Incentives for Identity Value

Wallets are merely financial tools; user transaction behaviors do not inherently generate value. Although DID projects recognize user actions through “credentials,” these credentials only gain recognized value when backed by strong community consensus. Otherwise, the “identity” associated with the credential is just a display of on-chain behavior, with minimal incentives for users.

In reality, “credentials” from high-consensus public chains with high traffic are far more valuable than those from low-consensus, low-traffic chains. In a fragmented multi-chain environment, many on-chain behaviors may not be aggregatable into “credentials,” and ultimately, “identity” may just be another face of wallet identification.

The Future of DID: From Identity Tool to Credit Infrastructure

Despite challenges, DID still opens broad application space for on-chain behavioral scenarios. From the user perspective, it offers a simpler, faster mode—no need to repeatedly showcase personal history and achievements across platforms.

As on-chain data and reputation accumulate, DID identities gradually acquire rights and value, transforming non-financial behaviors into “credibility,” and quantifying financial behaviors into “credit” scores. Its inherent borderless nature theoretically facilitates cross-border transfer of credit value, opening doors for on-chain recruitment, on-chain payroll, and other new scenarios.

DID is a driver on the path toward a decentralized society and an indispensable part of Web3. But ultimately, it is the underlying framework that broadens the definition of “identity.” The true value of DID depends on how upper-layer applications utilize this technology to address fundamental human needs—trust, reputation, and value recognition.

Disclaimer: This article reflects only the author’s personal opinions and does not represent BlockBeats’ viewpoints or positions. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions; the author and BlockBeats are not responsible for any direct or indirect losses resulting from investor transactions.