Decentralized Identifiers on the Blockchain: Which DID Projects Lead Development in 2024

Why DID Became the Main Trend in the Crypto Industry

Web3 and decentralized identifiers have been on the market for several years, but their mass adoption only began recently. The key moment came in 2023 when Worldcoin, an initiative by Sam Altman (founder of OpenAI), made a breakthrough by launching WLD and World ID. This project not only demonstrated practical applications of DID but also showed the enormous potential of blockchain for identity in a decentralized ecosystem. Since then, the crypto community has rethought the role of digital identifiers in the Web3 economy, giving them a central place in addressing trust and security issues.

What Lies Behind the Concept of Decentralized Identification

Simply put, a decentralized identifier (DID) is a shift from how we managed identity before. Instead of allowing Facebook, banks, or government institutions to control your personal data, DID hands that power directly to you. You become the owner of your digital entity, deciding who has access to your information and how it is used.

This fundamental change creates a new paradigm in the digital world: user autonomy and privacy protection are prioritized. With increasing digitalization of life, data leaks and privacy breaches are becoming more common, making secure identity management not just desirable but essential. DID address this issue by serving as the foundation for a democratic and user-centric digital future.

How Blockchain for Identity Works: A Technical Perspective

Decentralized identifiers are based on cryptography and distributed ledger technology. Instead of a centralized database controlled by a single company, your identification data is recorded on a blockchain — an immutable and secure ledger accessible to all but controlled by no one. This makes it impossible for a single organization to monopolize identity and significantly complicates fraud.

The process of creating a DID begins with generating a cryptographic key pair: a public and a private key. The public key serves as your public identifier in the network, while the private key remains under your full control and is used to confirm ownership. This mechanism guarantees that only you can manage your identity while interacting with any platforms and services online.

The Role of DID in the Cryptocurrency Ecosystem and DeFi

Decentralized identifiers radically change the approach to security in the crypto environment. Thanks to blockchain for identity, each transaction or interaction can be linked to a verifiable identity without revealing personal information — precisely what traditional systems cannot offer.

DID is especially important in the development of DeFi protocols. Since decentralized finance relies on smart contracts and fully digital processes, the need for reliable identification increases many times over. DID allows:

• Reducing fraudulent activities by linking each operation to a verified identity
• Ensuring privacy without disclosing personal data
• Creating transparency without compromising confidentiality
• Expanding access to financial services for the unbanked population

Main Advantages of Decentralized Identification

Decentralized identifiers offer a set of unique benefits that are radically different from centralized systems:

1. Full control over personal data: You are the sole owner of your information. No company or government can use your data without permission, unlike social networks that monetize your personal information.

2. Cryptographic protection and security: The absence of a single point of failure makes it much harder for hackers to compromise the system. Using cryptographic methods creates a high level of protection for your transactions and identity.

3. Universal compatibility: DID works across multiple platforms and blockchains simultaneously. You don’t need to create separate profiles or re-verify on each service — one identifier works everywhere.

4. Cost reduction: Eliminating intermediaries and simplifying verification processes reduce operational expenses. This is especially important for industries requiring large-scale identity checks.

Top DID Projects of 2024: Comparative Analysis

Worldcoin (WLD): biometrics as the basis of identification

Worldcoin took an innovative path — using biometric data (iris scan) to create a unique World ID. This solution guarantees adherence to the “one person — one account” principle and fights fraud at the physical verification level.

Current status: WLD is trading at $0.50 with a 24-hour increase of +0.22% and a market cap of $1.29B. The project has expanded integration to Ethereum, Optimism, and Polygon, increasing its versatility.

Innovative steps: Tools for Humanity (the team behind Worldcoin) introduced World Chain — an Ethereum layer-2 network reimagining the blockchain industry with a focus on human interactions. The company is actively negotiating with PayPal and OpenAI for strategic partnerships.

Strengths:

• Revolutionary biometric approach
• Potential for global inclusivity
• Scalable protocol

Weaknesses:

• Privacy concerns regarding biometric data collection
• Challenges with global regulatory approval

Lifeform: 3D Avatars as Your Digital Identity

Lifeform positions itself as a leader in visual DID solutions, creating hyper-realistic 3D avatars to manage your Web3 identity. The company developed its own visual DID protocol, secure smart contracts, and SDKs for metaverses.

Funding and adoption: The company raised $100M Series A### and recently completed Series B led by IDG Capital. The platform supports over 3 million unique addresses, demonstrating strong market traction.

Innovation: Integrating 3D avatars into Web2 social networks creates a bridge between physical and digital reality, allowing users to manage their identity interactively and securely.

Strengths:

• Advanced encryption methods
• Ease of use from anywhere in the world
• User-friendly UX

Weaknesses:

• Requires specialized knowledge for implementation
• Potential compatibility issues with other identification systems

( Polygon ID: Privacy via Zero-Knowledge Proofs

Polygon ID uses zero-knowledge proofs )ZKP### to create a private identification solution on blockchain for identity. Users store credentials on their devices and can prove their identity without revealing confidential information.

Partnerships and development: In February 2024, Human Institute, Polygon Labs, and Animoca Brands announced collaboration to create the ‘Humanity Protocol,’ utilizing palm recognition. In April 2024, a ZKP-based identification system was launched.

Uniqueness: The balance between privacy and functionality is achieved through cryptographic proof without data disclosure.

Strengths:

• Maximum privacy
• Scalability
• Compatibility with Ethereum ecosystem

Weaknesses:

• Product is relatively new
• Learning curve for integration

( Ethereum Name Service )ENS(: Human-Readable Identifiers

ENS solves a long-standing problem for users: the need to remember long hexadecimal addresses. Instead, you can use “alice.eth” — a simple, memorable name linked to your blockchain address.

Recent developments: In February 2024, ENS partnered with GoDaddy to link ENS names with web domains. Since April 2024, the platform has integrated .box domains )the first on-chain TLD approved by ICANN###.

Advantages:

• Easy for beginners
• Wide acceptance in the Ethereum community
• Universal utility

Limitations:

• Scalability constraints on Ethereum
• Possible network throughput issues

Space ID: Cross-Chain Identification Solution

Space ID offers a universal namespace operating across multiple blockchains. Users can register a single domain and use it on Solana, Polygon, Ethereum, and other networks, enhancing interoperability.

Application: The platform supports various applications — from crypto trading and NFT marketplaces to DAO management, demonstrating the versatility of blockchain for identity.

Strengths:

• Cross-chain compatibility
• Convenience for cross-chain ecosystems
• Broad applicability

Weaknesses:

• Competition from other DNS services
• Limited recognition outside the crypto industry

Galxe: Reputation as an Identity Component

Galxe created a platform where account data transforms into a decentralized network of attestations. This allows users and organizations to build reputation systems, manage access, and verify credentials in Web3 environments.

Model: The platform is designed as an open ecosystem, enabling developers to create their own verification and reputation systems.

Strengths:

• Innovative use of account data
• Powerful tool for DeFi and DAOs

Weaknesses:

• Early stage of development
• Needs better marketing for mass adoption

Challenges and Obstacles on the Path of Decentralized Identifiers

Despite the potential, DID faces serious challenges:

Technological complexities: Transitioning from familiar systems requires retraining users and providers. Ensuring interoperability between different blockchains is extremely complex and requires coordination among many parties.

Key management: Users must store their private keys securely. Losing a key means losing access to their identity. This demands a new level of responsibility from users.

Regulatory uncertainty: Different countries have varying attitudes toward DID. Complying with GDPR, KYC/AML, and other regulations while maintaining the decentralized nature of the system is a delicate balance.

Security in decentralization: While distributed architecture reduces the risk of centralized leaks, it creates new attack vectors during data exchange in P2P networks.

Where the DID Industry Is Heading: Trends on the Horizon

Mass Adoption in the Crypto Sector

As awareness of DID grows, they are integrated into everyday crypto transactions, NFT marketplaces, and DAOs, significantly improving user experience and security.

Privacy and Biometrics Development

Investments in zero-knowledge proofs and biometric solutions will increase, creating more reliable and user-friendly verification mechanisms.

Cross-Chain Standardization

DID projects will focus on creating a unified identification standard that works across all blockchains.

Integration with KYC/AML

DID will become tools for regulatory compliance, balancing user privacy with Know Your Customer requirements.

Beyond Crypto

The application of DID will expand into healthcare, financial services, IoT, and artificial intelligence, creating smart and secure identity management systems.

Conclusion: Decentralized Identification as the Future

Decentralized identifiers open a new chapter in digital history, where users, not corporations, control their identity. Blockchain for identity turns theory into practice, enabling secure, private, and efficient management of digital entities. As ecosystems mature and technological and legal challenges are overcome, DID will become increasingly integrated into our daily lives, creating a fairer and more democratic digital world.