What are the decentralized identity (DID) projects? Redefining the foundation of Web3 digital sovereignty and compliance

Imagine all your identification credentials—from educational certificates to bank credit records—safely stored in a digital wallet only you control. When needed, you can selectively present encrypted proof without revealing the original data.

This is becoming a reality. For example, the decentralized information asset platform built by the DIA project already allows users to provide and use financial data in a trustworthy manner.

01 Industry Driving Force: The Inevitable Choice Under Compliance Requirements

The rise of decentralized identities (DID) is no accident; it is driven by a triple force of compliance, application needs, and user awareness. Major jurisdictions worldwide are regulating the crypto market with unprecedented intensity.

The EU’s Markets in Crypto-Assets Regulation (MiCA) and the US’s GENIUS Act stablecoin legislation both explicitly require service providers to identify and verify user identities. This means the previous “one wallet address equals one user” anonymous model no longer meets compliance standards.

Advanced applications like DeFi and RWA also urgently need a trustworthy identity layer to prevent sybil attacks and establish credit systems. Traditional centralized data storage methods pose single points of failure and privacy leak risks.

A typical example is a leading DeFi protocol that had to restrict access to US users entirely because it couldn’t effectively identify user locations, highlighting how lack of identity hampers business development.

02 Technical Path Analysis: A Blooming Garden of DID Solutions

Faced with the fundamental question of “how to prove you are you,” different projects have chosen vastly different technical paths, roughly categorized as follows.

Biometric-based approaches represented by Worldcoin and Solo pursue strong verification. Worldcoin uses a dedicated device, Orb, to scan users’ irises, ensuring a “one person, one ID” globally.

Meanwhile, Solo innovatively adopts zkHE solutions, allowing users to perform homomorphic encryption and zero-knowledge proofs of biometric features locally, ensuring identity uniqueness while maximizing privacy protection.

Social graph-based approaches like BrightID and Real ID take a different route. They do not rely on biometric data but instead build verifiable social relationship networks to prove individual uniqueness. Real ID goes further, designing a “passport chip with strong verification + social trust extension” dual mechanism to balance authenticity and scalability.

Aggregation and application-focused solutions like Civic and LUKSO emphasize practical use cases. Civic allows users to verify their identity once and reuse encrypted credentials across multiple platforms, reducing data exposure.

LUKSO introduces the concept of “Universal Profile,” a smart contract-based digital identity account enabling seamless management of all on-chain assets and social interactions.

03 Key Projects Comparison: Ecosystem, Technology, and Market Performance

To better understand the positioning of different DID projects, the table below compares several representative projects across multiple dimensions:

04 Challenges and Future: Evolving Between Ideals and Reality

Despite broad prospects, large-scale implementation of DID still faces significant challenges. The primary issues are “lack of standardization” and “high usage barriers.” Currently, credentials generated by different projects are often incompatible, and ordinary users find managing private keys and complex credentials unfriendly.

Another core dilemma is balancing privacy and compliance. How to meet regulatory requirements for anti-money laundering while maintaining user anonymity and privacy rights remains a long-term issue. Some projects adopt pragmatic paths like “front-end KYC” or “off-chain verification with on-chain credentials” as transitional solutions.

Looking ahead, two major trends deserve attention.

First, the deep integration of zero-knowledge proof technology. This allows users to prove the truth of a statement without revealing any original information, becoming a key tool for balancing privacy and compliance.

Second, the rise of AI Agents may unexpectedly boost DID adoption. Future autonomous AI agents may require verifiable, traceable DIDs to complete transactions or sign agreements, creating a rigid demand for DID from the “machine side.”

) From Identity to Credit: The Long-term Value of Infrastructure

Ultimately, decentralized identity projects are building one of the most fundamental and critical infrastructures of Web3 and the future digital society. Its value extends far beyond login and verification.

A trustworthy, user-controlled digital identity is the cornerstone for building on-chain credit systems, enabling reputation-based financial services, and conducting complex social governance.

When everyone can truly own and control their “digital soul,” a more open, fair, and creative decentralized social landscape will have begun to take shape.