# Identity in Web3 By [wandzilak](https://paragraph.com/@wandzilak) · 2022-10-20 --- Anonymity is a common theme in Web3 where wallet addresses (and usernames) are concealed with pseudonyms and profile photos are replaced with NFT faces. In many cases, this trend has been part of the Web3 experiment where even anonymous actors can participate in financial systems, communities, and organizations. **Decentralized trust and democratized decision making has led rise for users to engage in society without using their true, physical identity - a core element within this new internet economy.** However, for the next big unlock in Web3, pseudonyms and underlying anonymity are proving to be a bug and not a feature. Non-crypto native institutions are met with resistance in entering the space without proper KYC/AML verifications, user background checks, or standardized risk assessments. This barrier has led to the rise of discussion and innovation around the role of identity in Web3. What does that mean? How do we recognize identity? And how can infrastructure and processes be built to support this definition without jeopardizing those core elements of Web3? There have been many different attempts and current approaches to answering those key questions, but first, as with any paradigm shift in human interaction, we need to take a step back and understand how we define the core subject - in this case, identity. I found my favorite definition in this [article](https://mirror.xyz/dommy.eth/YsZmPZUxs4LsS-sS0APg25LJiFxOBnCibj2gzXFX98c) by dommy.eth: > “\[Identity\] is the set of traits or properties that uniquely define an autonomous agent. Our construction of our more granular definitions will build upon this, and the distinctions will depend heavily on what information we are looking to draw from the system.” Now that we have a high-level understanding of identity, let’s examine what this looks like in Web3. Based on a ton of great resources and countless hours of research, I’ve discovered the six core categories of the Web3 identity market: * Profiles & Social Identity * Reputation & Credentials * Governance & Contribution * Ownership & Transactional Identity * Authentication & Risk Assessment * Data & Infrastructure This is a lengthy post that I hope can be a helpful resource for builders, investors, and the crypto-curious. For each category, I will share a high-level definition, highlight companies/projects building in the space, and even share my current thesis for each section. _I don’t expect this to be an exhaustive list, but have done my best based on personal research and suggestions from my Twitter followers to create a general overview of the Web3 identity market._ Profiles & Social Identity -------------------------- With anonymity across Web3, user profiles (account handles, wallet addresses, etc.) become a core point of identity for users and their respective communities/followings. ![Identity - Profiles & Social](https://storage.googleapis.com/papyrus_images/bd2c0dfc3fe43bd22a365405b4b01fd6c0165e1fe4faa5d60cc32c3d0fb479cc.png) Identity - Profiles & Social ### Summary Humans seek identity and community through social constructs and interaction. Individuals, namely creators, build their personal brand, creating a vibe or reputation around their name or social profile (if anonymous). In Web3, the default is anonymous, with the core mechanism to interact on-chain being a wallet address -- a long series of numbers. The inability to create a personal identifier within social graphs has led to the growth of Web3-based domains and "on-chain handles''. ### Thesis Platforms that allow for personal, composable, and universal identity within digital and social environments will be a strong foundational element of Web3, but the nature of a universal identity will be fragmented, as the most valuable social identity is one that is transferable i.e. a name can move from one social platform to another easily. ### Companies * Prysm * Backdrop * Genesis * Mem Protocol * .bit * Lens Protocol (Aave) * Unstoppable Domains * Showtime * ENS Reputation & Credentials ------------------------ On-chain resumes and credentials are replacing the typical resume as contributions can now be tracked and logged, enhancing a person’s value based on their prior activities and “Proof-of-Work”. ![Identity - Reputation & Credentials](https://storage.googleapis.com/papyrus_images/dd1ac7bde29cab18f060c8a12dfd0fc8ea29cfc2cf36a2fa3e0f30a4ace733c1.png) Identity - Reputation & Credentials ### Summary The ability to participate effectively in web3 systems can be better determined by previous projects in the industry rather than web2-based experiences based on the unique nature of the new internet. ### Thesis Platforms that can provide educational tools and experiences, while also increasing a users set of credentials and overall reputation will lead to an increased inflow of talent into web3. ### Companies * Disco * Rabbithole * Sismo * MintKudos * Galxe * Noox * Quest Protocol * POAP * Buildspace * SpringRole * Superlocal * DeWork * Mazury * Kleoverse * Lighthouse Governance & Contribution ------------------------- Metrics for engagement within an organization are rapidly evolving. With decentralized voting and governance structures, understanding data involving contribution and governance activity will be crucial in the success of web3 organizations. ![Identity - Governance & Contribution](https://storage.googleapis.com/papyrus_images/4b1ee442ccf462118e09f76a9d040317323ecfa1435b890c3fa06b8162b6efd9.png) Identity - Governance & Contribution ### Summary Digitally-native institutions and communities in Web3 rely on distributed ownership, decision-making, and independent (or small group) productivity. Individuals are given ownership (tokens) in return for their expected output and/or contributions to the institution. The nature of this relationship increases the importance of effective evaluation of organizational candidates and potential community members, as misalignment and/or failed outcomes can have an impact on the value of the entire network. ### Thesis Identity requires previous governance and contribution behavior data that is mutually verifiable, standardized in format comparison, and presented in an effective way for organizational leaders/decision-makers. ### Companies * Station * Boardroom * Layer3 * Sybil (Uniswap) * Gitcoin * DeWork * Tally * CharmVerse * Kleoverse * Coordinape * Lighthouse * Karma * Proved Ownership / Transactional ------------------------- Ownership of assets and transaction history can be associated with a specific person or wallet, providing valuable insights on habits, trends, and even a person’s status. ![Identity - Ownership & Transactional](https://storage.googleapis.com/papyrus_images/0a1b36635169b5555f72cdc51880ca0ed6cc76fa0d51372291a7e164d01d535c.png) Identity - Ownership & Transactional ### Summary One of blockchain's core tenants is the transparency of the distributed network, as transactions are all recorded on-chain and publicly viewable and verifiable. Selected wallet addresses can be tracked and indexed, as well as scored based on a number of criteria -- credit risk, transaction volume, financial activity -- that add to a user's "identity". Owned assets and transactions can prove community membership, mitigate against risk, and provide insights on network benefits. ### Thesis Products or platforms that can effectively aggregate on-chain ownership and transaction data on a per wallet basis, and then proactively analyze this data to determine a user's status, habits, and/or trends will become foundational tools in the future of on-chain advertising and the greater blockchain-based marketing engine. ### Companies * Context * Showtime * The Graph * RociFi * Etherscan * Gallery * Bird Authentication & Risk Assessment -------------------------------- From KYC/AML concerns to accreditation status, a large part of the Web3 identity market will consist of composable and universal authentication and verification, unlocking increased trust and compliance. ![Identity - Authentication & Risk Assessment](https://storage.googleapis.com/papyrus_images/eb67923e1faa7600271690d9446fb72f7bb9b911d8c453ca62fc9f90f7a51fe6.png) Identity - Authentication & Risk Assessment ### Summary With a new web of anonymity and pseudonyms, the authentication and risk assessment tools of Web2 can not function properly and provide little visibility into a users' status (accredidation, credit risk, etc.). New identity models in Web3 allow for insitutions to authenticate users within a customizable and secure network, without revealing financial or biometric data. ### Thesis Systems that can provide proper authentication tools (KYC/AML, Credit Risk Assessment, Proof-of-Person) will create a massive unlock in value from traditional insititutions - and their dollars - that were previously restricted from Web3 participation due to legal and/or compliance concerns. ### Companies * Persona * Magic * Spectral * Violet * Dynamic * Badge * Masa * Parallel Markets * CivicKey * zkPass * Quadrata * Cred Protocol * Web3auth * Helix ID * IdentDefi * Identity * KYC DAO * Noxx Data & Infrastructure --------------------- A trusted and scalable identity layer requires adequate infrastructure, from oracles and data storage to proper analytics tools and intelligence. ![Identity - Data & Infrastructure](https://storage.googleapis.com/papyrus_images/81cc1f22b1153bf38bf47ef06ff8e9032aa147e253f74431fe7a4e2f7eac3805.png) Identity - Data & Infrastructure ### Summary The foundational elements of identity require data aggregation, collection, storage, and analysis. With sensitive and personal information from financial to biological, the security and privacy of that data is not only wanted, but required for any form of composable and/or universal form of digitial identity, especially in a comprehensive and widely usable format. In the growing web3 internet environment, individuals now have control over the discovery, sharing, and permissions of their information, adding additional complexity to the infrastructure required to manage identity and data. ### Thesis In order for the mass adoption and standardization of digital identity to occur, underlying infrastructure -- storage, cross-chain mechanisms, on/off-ramps, analysis -- must allow for universal sharing, composability, customizable privacy, and have a strong focus on security (whether internally or through a equally vetted third party). ### Companies * Ceramic Network (3Box Labs) * Spruce * Privy * Qui Identity * Lens Protocol (Aave) * Mem Protocol * Masa * Lit Protocol * Hopr * Spring Labs * Cheqd * Flux * Genomes * zkPass * Quest Protocol * Hypersign * Next ID ### Conclusion There is still a lot to determine about identity and Web3, but its exciting to see so many incredible founders and teams tackling this space - which has the potential to be the next big unlock of users, liquidity, and growth in Web3. If you enjoyed this or found it to be a good resource, be sure to follow me on Twitter at @wandzilak\_drew for more deep dives and market maps! --- *Originally published on [wandzilak](https://paragraph.com/@wandzilak/identity-in-web3)*