Decentralized Identity on the Blockchain: Which Projects Are Making Noise in 2024

The crypto community has been talking about decentralized identifiers for several years, but the real buzz was sparked by Worldcoin (WLD). Sam Altman’s project from OpenAI demonstrated that decentralized identity on the blockchain is not just theory but a practical solution that can change how people manage their data in Web3.

Why Decentralized Identity is the Main Trend

In the traditional internet, everything is simple: Facebook, Google, the government—they hold your data and decide who can access it. You are in a dependent user position.

Decentralized identity (DID) changes the game. Instead of trusting big corporations, you become the owner of your digital “self.” Your personal data is stored not on someone else’s servers but managed through a blockchain, where you have full control.

This is especially important for the cryptocurrency market and DeFi. When each transaction is linked to a verified identity (but without revealing private data), risks of fraud are reduced, and trust in platforms increases. At the same time, privacy remains intact.

How Blockchain Identity Works

The mechanics are simple but powerful. You generate a pair of cryptographic keys:

• Public key — your open identifier, like a nickname on the internet
• Private key — your access key, which no one should see

The blockchain serves as an immutable database where all DIDs are recorded, but centralized institutions cannot control or forge them. Only you can manage your identity because only you have the private key.

This gives you:

• Full control over who sees your data
• Protection against leaks — no single point of failure where hackers can steal everything at once
• Cross-platform compatibility — one ID works across different blockchains and services
• Cost savings — no intermediaries or expensive identity checks

Top Decentralized Identity Projects in 2024

Worldcoin: Biometrics Meet Web3

Worldcoin uses the most unusual approach — biometrics (iris scan) to create a World ID. The idea: one person = one account, no botnets.

Current WLD stats:

• Price: $0.50 (as of 2025-12-26)
• 24h change: +1.09%
• Trading volume: $1.54M
• Market cap: $1.29B

World ID integrates with Ethereum, Optimism, and Polygon, providing global coverage. Tools for Humanity (the company behind Worldcoin) is building World Chain — its own Ethereum layer-2, prioritizing interaction with real people, not bots.

Worldcoin is discussing partnerships with PayPal and OpenAI to expand into fintech and AI sectors.

Main advantage: biometric fraud protection. Disadvantages: privacy concerns (eye scan) and regulatory challenges in different countries.

Lifeform: 3D Avatars as Identity

Lifeform is a leader in creating hyper-realistic 3D avatars for Web3 identity. The company raised $100M Series A, recently closed Series B with a valuation of $300M. Over 3 million unique addresses are subscribed to the platform.

The feature of Lifeform — integration of visual DID solutions with NFTs, smart contracts, and metaverse platforms. Users create their unique 3D avatar, which becomes their identifier in Web3 and can interact with Web2 social networks.

Pros: modern encryption, user-friendly interface, low administrative overhead. Cons: vulnerability to cyberattacks, requires specialized knowledge for integration, issues with system compatibility.

Polygon ID: Privacy via Zero-Knowledge Proofs

Polygon ID uses zero-knowledge proofs (ZKP) — you can prove who you are without revealing any details.

In February 2024, Human Institute launched the ‘Humanity Protocol’ with Polygon Labs and Animoca Brands, using palm recognition as a biometric marker. In April 2024, Polygon launched an identification protocol based on ZKP.

Strengths: maximum privacy and compatibility with the Ethereum ecosystem. Weaknesses: the product is still young, integration can be complex.

Ethereum Name Service (ENS): Human Names Instead of Addresses

ENS turns complex addresses like 0x742d35Cc6634C0532925a3b844Bc9e7595f42172 into simple names like alice.eth.

In February 2024, ENS partnered with GoDaddy to connect ENS names with traditional web domains. Since April 2024, ENS has integrated .box domains (the first on-chain TLD approved by ICANN) alongside .eth.

Pros: simplicity, recognition in the Ethereum community, universal utility. Cons: scalability within Ethereum, potential fees as load increases.

Space ID: Universal Namespace for All Blockchains

Space ID allows registering domain names that work across multiple blockchains simultaneously. It solves fragmentation issues — one ID for DeFi, NFTs, DAOs.

Pros: cross-chain functionality, convenience, coverage of different segments. Cons: competition from other naming services, still not very well known outside the crypto community.

Galxe: Credentials Based on Account Data

Galxe builds a decentralized credential network based on user activity and reputation in Web3. It’s like a social credit system but decentralized and censorship-free.

The platform is open to any applications — from DeFi to DAOs — and focuses on access management and reputation systems.

Pros: innovative approach to data usage. Cons: early stage, hard to explain to regular users.

Main Challenges of Decentralized Identity

Despite its potential, DID faces serious obstacles:

1. Transition difficulty — people are used to centralized systems. Re-education takes time and effort.

2. Technological barriers — cryptography and blockchain are complex. Losing your private key = losing your identity forever. Interoperability between different blockchains is still tense.

3. Regulatory chaos — different countries require different KYC and AML standards. Finding a balance between decentralization and legal compliance is non-trivial.

4. Data security — although DIDs reduce leak risks, new vulnerabilities arise during data exchange via decentralized networks.

Where DID is Headed in the Next Few Years

1. Mass adoption: As awareness grows, DIDs will be integrated into DeFi, NFT marketplaces, DAOs, and everyday crypto operations.

2. Stronger privacy: Projects will develop zero-knowledge proofs, biometric systems, and other privacy-preserving technologies.

3. Interoperability: DIDs will work across Ethereum, Solana, Polygon, and other blockchains simultaneously.

4. Regulatory integration: DIDs will become tools for KYC/AML, but designed to preserve user privacy.

5. Beyond crypto: DIDs will appear in healthcare, finance, IoT, and AI systems. Imagine: your smartphone, your health record, and your crypto wallet — all managed through a single decentralized identity.

Conclusion

Decentralized identity on the blockchain is not just an innovation; it’s a rethinking of who owns your data. DIDs give you control that was previously unavailable. As this technology develops, Web3 will become safer, more private, and user-centric.

Projects like Worldcoin, Lifeform, Polygon ID, and ENS already show what it could look like. Now, it’s just a matter of mass adoption.