Web3 Identity Verification Solutions to Watch in 2024 and an Overview of the DID Ecosystem

Looking at the Rise of Worldcoin: A Turning Point in Web3 Identity Verification History

In 2023, the launch of the Worldcoin project led by Sam Altman injected new vitality into the Web3 identity verification field, which had been dormant for years. Although decentralized identity verification (DID) technology has existed for several years, the introduction and subsequent performance of the Worldcoin token (WLD)—currently priced at $0.50, with a 24-hour increase of +0.22%, and a circulating market cap of $1.29B—mark a true market attention turning point in this area. This not only fueled a funding boom for DID-related projects but also enlightened a broad user base to recognize the core value of Web3 identity verification in digital asset security.

The Essence of Web3 Identity Verification: From Centralization to Decentralization of Power

The Dilemma of Traditional Systems and the Innovation of DID

In the traditional internet era, your digital identity was controlled by centralized institutions like Google, Facebook, banks, etc. These entities decided what services you could access and how your personal information was used. Web3 decentralized identity verification (DID) breaks this pattern—allowing users to regain ownership and control over their digital identities.

DID is no longer a resource managed by a company or government; it is a digital asset fully controlled by the user. This means no one can forcibly freeze your identity, leak your privacy, or block your transactions.

The Underlying Technology of DID: The Fusion of Cryptography and Blockchain

DID operates based on asymmetric encryption. Users generate a pair of cryptographic keys—public and private keys. The public key is openly available on the network and serves as your Web3 identity identifier; the private key is strictly kept by you and is the only proof that you are the true owner of this identity.

Blockchain acts as an immutable distributed ledger. When your DID information is recorded on the blockchain, any tampering or forgery attempts are immediately recognized and rejected by numerous nodes in the network. This ensures that identity verification security reaches levels unmatched by traditional centralized systems.

Strategic Significance of Web3 Identity Verification in the Crypto Ecosystem

The Security Foundation of DeFi Platforms

The DeFi ecosystem has an urgent need for identity verification. Traditional financial risk control relies on intermediaries, but DeFi’s decentralized nature requires technical solutions to fulfill this role. DID precisely fills this gap—it enables smart contracts to verify the real identity of participants without any human intermediary.

More importantly, each transaction can be traced back to a verified identity, greatly reducing fraud and money laundering. Users enjoy complete anonymity while the system maintains traceability—this is the most ingenious aspect of Web3 identity verification.

The Interoperability Needs of Cross-Chain Identities

Today’s crypto world is no longer dominated by a single blockchain. Users need to operate across multiple chains like Ethereum, Polygon, Solana, etc., and re-registering identities each time is inefficient. DID technology meets the demand for cross-chain identity interoperability, allowing users to use the same identity to freely move across different ecosystems.

Key Participants in the DID Ecosystem Analysis

Worldcoin: Pioneer of Biometric Entry

Project Positioning and Innovation

Worldcoin creates World ID through iris scanning technology, introducing biometric recognition as a new dimension in DID. The advantage of this approach is— it physically ensures “one person, one account,” fundamentally preventing sybil attacks and identity copying fraud.

Technical Architecture

World ID has integrated with mainstream L2 networks like Ethereum, Optimism, and Polygon. This means users can use the same biometric identity within these ecosystems. The Tools for Humanity team also launched World Chain—a Layer 2 solution based on Ethereum, with a core focus on verifying real human identities rather than bot transactions.

Market Outlook

Worldcoin is exploring cooperation opportunities with PayPal and OpenAI. Although details of the OpenAI protocol are still under negotiation, discussions with PayPal have already demonstrated the possibility of integrating DID into traditional financial payment systems.

Trade-offs Analysis

Advantages: Innovative biometric technology, commitment to financial inclusion, global coverage potential

Disadvantages: Privacy concerns over biometric data, global compliance challenges, user acceptance hurdles

Lifeform: Immersive 3D Identity Solution

Innovative Breakthrough

Lifeform focuses on combining hyper-realistic 3D avatar technology with Web3 identity, creating a new form of digital presence. Users not only have an account address but also a visualized 3D self-expression.

Funding and Recognition

Recently completed Series B funding led by IDG Capital, with a valuation of $300 million post-funding. Previous Series A raised $100 million, with an initial raise of about $15 million. Over 3 million independent wallet addresses support the project, indicating steady market acceptance.

Cross-Ecosystem Integration

Lifeform can integrate 3D avatars into Web2 social networks (like Twitter, Discord, etc.), building a virtual-physical combined identity ecosystem. This strategy cleverly uses familiar Web2 interfaces to transition users into Web3 identity verification.

Evaluation Dimensions

Advantages: Visual identity innovation, cross-ecosystem interoperability, user-friendly experience

Disadvantages: High technical complexity, large promotion costs, strong dependence on network effects

Polygon ID: Privacy-First Proof System

Technical Core: Zero-Knowledge Proofs

Polygon ID adopts zero-knowledge proof (ZKP) technology, allowing users to prove their identity attributes without revealing specific information. For example, you can prove “I am over 18” without disclosing your birth date.

Latest Developments

In April 2024, Polygon officially launched a ZKP-based identity verification protocol. Additionally, in February, Human Institute partnered with Polygon Labs and Animoca Brands to launch the “Humanity Protocol,” utilizing palm print recognition to further strengthen Polygon’s position in Web3 identity verification.

Application Scenarios

This solution is especially suitable for privacy-sensitive scenarios—such as KYC verification, age-restricted services, credit assessment, etc. Passwordless login also becomes possible.

Advantages and Disadvantages Evaluation

Advantages: Industry-leading privacy protection, high compatibility with Ethereum ecosystem, mature technology

Disadvantages: Market awareness still in early stages, integration difficulty relatively high, regulatory adaptation requires time

Ethereum Name Service: From Domain Names to Identity

Core Functionality

ENS converts complex Ethereum addresses (like 0x742d35Cc6634C0532925a3b844Bc91e4c4b1b385) into human-readable names (like alice.eth). Though seemingly simple, this change profoundly impacts user experience.

Ecosystem Expansion

In February 2024, ENS partnered with GoDaddy to enable seamless conversion from traditional domain names to Web3 identities. In April, ENS integrated with .box domains (ICANN-certified top-level domains), becoming the first on-chain TLD, operating alongside .eth domains.

Practical Value

ENS has become the standard for identity within the Ethereum ecosystem. Many DeFi projects and NFT communities adopt ENS names as identity markers, creating a significant ecosystem aggregation effect.

Advantages and Disadvantages Analysis

Advantages: Extremely convenient to use, broad community acceptance, strong multi-chain compatibility

Disadvantages: Mainly limited to Ethereum ecosystem, performance bottlenecks, cross-chain adaptation challenges

Space ID: Universal Cross-Chain Naming Solution

Differentiation Positioning

If ENS is Ethereum-specific, Space ID aims to become a universal naming system across multiple blockchains. Users can register the same Space ID identity across BNB Chain, Solana, Polygon, and more.

Application Breadth

Space ID supports a wide range of scenarios—from crypto transactions, lending protocols to NFT minting. The concept of “one identity across all chains” is gradually becoming a reality.

Market Outlook

As cross-chain protocols mature and multi-chain ecosystems develop, the value of universal cross-chain identity solutions like Space ID will be reassessed.

Trade-offs Analysis

Advantages: Cross-chain universality, ease of use, broad application scenarios

Disadvantages: Competition from projects like ENS, difficulty in integrating independent standards across chains, relatively low brand recognition

Galxe: Reputation and Credential Protocol

Innovative Model

Galxe aggregates on-chain user behavior data to build a decentralized credential system. Your transaction history, project participations, asset holdings—all become part of your identity—this is on-chain reputation.

Ecosystem Role

Galxe provides infrastructure for DeFi risk management, access control, and reputation systems. For example, a DeFi protocol might set rules like “only addresses with a Galxe score above X can perform flash loans.”

Development Stage

The project is still in a relatively early stage, but its potential to build a Web3 credit system is widely recognized in the industry.

Advantages and Disadvantages

Advantages: Innovative data aggregation approach, practical value for DeFi risk control, relatively smooth user experience

Disadvantages: Early-stage product refinement, insufficient user awareness, large-scale application still requires time

Real Obstacles in Adopting DID

1. Steep Learning Curve for Technology

Managing private keys, wallet operations, cross-chain interactions—these are all new concepts for traditional internet users. Even seasoned crypto users often lose assets due to a single misoperation.

2. Standardization and Compatibility Challenges

Currently, DID projects adopt different standards. Polygon ID uses ZKP, Worldcoin uses biometric recognition, ENS relies on traditional domain logic—they each have advantages, but interoperability still requires substantial engineering work.

3. Privacy and Compliance Dilemmas

DID offers privacy protection, but regulators need to track identities for AML and KYC purposes. Balancing these aspects tests the wisdom of the entire ecosystem.

4. Lagging Legal Frameworks

Legal recognition of DID varies across countries. Some see it as a monetary asset, others lack clear definitions. This regulatory uncertainty directly constrains large-scale DID adoption.

Future Trajectory of the Web3 Identity Verification Ecosystem

Critical Point for Large-Scale Adoption

As DeFi protocols mature, NFT markets expand, and DAO governance deepens, Web3 identity verification is no longer an “option” but a “necessity.” In the next 12-24 months, we may see exponential growth in DID usage.

Breakthroughs in Privacy and Security Technologies

Advances in zero-knowledge proofs, multi-signature wallets, distributed identity management will provide more diverse solutions. Users can choose the most suitable privacy level based on specific scenarios.

Accelerated Cross-Chain Ecosystem Integration

Development of cross-chain bridges, atomic swaps, multi-chain wallets will gradually eliminate identity silos across different blockchains. A unified Web3 identity ecosystem is taking shape.

Inclusion of Mainstream Finance

Discussions around PayPal and Worldcoin cooperation are not isolated. Traditional financial institutions are exploring how to integrate DID into existing systems, potentially leading to a “CeFi + DeFi hybrid identity” model.

Extension Beyond Crypto

DID applications will not be limited to the crypto world. Healthcare (electronic medical records), supply chain tracking (product authentication), IoT device management—these fields may also adopt DID technology.

Summary: The Era of Web3 Identity Verification Has Arrived

Web3 decentralized identity verification is not only a technological innovation but also a profound shift in power structures. It returns data ownership from big tech companies to users, enabling everyone to securely and autonomously manage their digital lives.

From Worldcoin’s market performance to the emergence of diverse solutions like Lifeform and Polygon ID, we see a vibrant ecosystem evolving rapidly. Despite ongoing challenges in technology, regulation, and user education, the trend of Web3 identity verification is unstoppable. In the future digital world, mastering your identity data and possessing a verifiable Web3 identity will become a fundamental right for every network participant.