By: Ishika Mukerji
On-chain identity is a widely discussed topic in Web3. We encounter various new primitives like ENS, Lens, and wallet addresses. However, the ownership of these primitives is confined within their respective ecosystems, and the lack of identity interoperability and privacy frameworks hampers the effectiveness of Web3 while limiting user comfortability
With these new primitives and identities, users are managing multiple identities simultaneously. This reveals a pressing issue within the Web3 landscape – the lack of identity interoperability and privacy frameworks. Identity interoperability refers to the ability of different Web3 applications to recognize and verify each other's users' identities.
This limitation hinders the full potential of Web3, impeding seamless interactions and hindering users from leveraging their identities across different applications. Consequently, addressing the problem of identity interoperability becomes crucial, as it pertains to the ability of diverse Web3 platforms to recognize and verify users' identities within a decentralized ecosystem. Lets look into the problems that arise a bit deeper:
Fragmentation and Multiplicity of Identities
The Web3 landscape suffers from a fragmented identity ecosystem where each identity is confined within its respective platform or application. This fragmentation restricts the ability of identities to communicate with one another, causing significant user experience friction and impeding seamless interaction across multiple dApps and platforms.
Identities cannot communicate with each other, and users are required to manage them separately. For instance, if I am User X and own Wallet A and Wallet B, a dApp that I usually use with Wallet A won't recognize Wallet B as "mine" (User X) when I connect to it. My identity on the dApp is limited to Wallet A.
Additionally, Web3 users are constrained to using identities compatible with specific dApps. If a dApp is only compatible with MetaMask, users are compelled to use their MetaMask wallet or create a new one. This can result in a poor user experience as users navigate the complexities of connecting the right assets, determining wallet compatibility, and switching networks.
The lack of communication among identities creates challenges in tracking digital identities, managing assets, and preserving privacy. This issue is especially daunting for new Web3 users who may find the process overwhelming.
Privacy and Security Risks:
The current lack of privacy standards in Web3 exposes users to potential risks, as their transactions and associated identity primitives are publicly visible on the blockchain. This compromises user privacy and hinders the seamless integration of Web3 with real-world identities. Users are left with limited control over their personal information and often resort to creating entirely new wallets to dissociate certain transactions from their public identities.
Addressing these challenges requires the establishment of a single standard for identity interoperability and privacy in Web3. Such a standard would enhance the user experience by enabling users to sign in to applications from different providers using a unified identity. It would also alleviate the need for multiple wallets, streamline asset management, and provide greater privacy control to Web3 users, fostering wider adoption and improved user confidence.
A single standard for identity interoperability will create a seamless user experience by allowing users to sign in to applications from different providers using the same identity. Web2 has mastered this space, in almost any application you can now log in with existing IDs such as google, facebook, AppleID, etc. In the web3 world the closest to this would be logging in with ENS.
A proposed solution would be to create a standardized protocol that allows users to manage multiple wallets under a single ID. This protocol, let's call it the "Unified Wallet Protocol," would simplify the user experience and provide a seamless sign-in process for decentralized applications. This standard is something ENS could ideally build out, given their current direction.