Web3 Identity Track Review: Which Early Projects Are Worth Noting?

Organizer: Linqi, Chain Catcher

The traditional Web2 identity authentication system allows users to access various services using centralized accounts, but it suffers from issues such as vulnerability to theft and cumbersome processes. Additionally, account information across different platforms is isolated, causing many inconveniences for users, with the core issue being data sovereignty.

In contrast, the user data privacy protection solutions proposed in the Web3 context are designed around the control of personal data. Web3 decentralized identity protocols can help users better address issues such as identity aggregation across multiple platforms, multidimensional data, privacy protection, and NFTization.

In Web3, on-chain data inherently guarantees the transparency and immutability of user identities and behaviors, establishing the cornerstone of identity trust. dApp data can be read and called across projects, unlike in Web2 where it is isolated and stored on centralized servers, ensuring the universality and composability of user identities in the on-chain world. Whether it is personal credit, financial lending, certificates, identity documents, licenses, or passports, all can be transformed into unique on-chain information that users have complete control over, accessible through a single identity protocol for all Web3 applications.

There are already several protocols building universal Web3 identity solutions for users, such as ENS, Verite, and Civic. Additionally, some projects focus on specific identity attributes, such as protocols for on-chain skill verification (Project Galaxy, RabbitHole, Noox, etc.) and identity protocols based on on-chain and off-chain credit (Reputation DAO, ARCx, Spectral, etc.). Below is a summary of 14 representative projects in this space by Chain Catcher:
Verite

Verite is a decentralized identity standard launched by Circle, the issuer of USDC, in collaboration with Block, Coinbase, and Centre. It aims to enable any organization to issue and verify digital identity credentials for users and institutions participating in the crypto economy, including KYC verification, accredited investor identity, social reputation, NFT provenance tracking, etc., without requiring participants to disclose personal data, and it is both composable and interoperable.

These credentials are portable, immutable, and can be stored in crypto wallets like digital assets. Moreover, the credentials belong to the users, allowing them to fully control when and how different organizations or protocols access their identity proof. As a set of open-source protocols, Verite is decentralized, with no single entity having the authority to use or develop it.

This identity framework will enable institutions to participate in on-chain lending protocols and ensure that all counterparties have undergone KYC, allowing institutions to safely access DeFi, such as supporting access to permissioned pools or securities trading based on accredited investor identity or any specified attributes, providing opportunities for individuals and entities lacking traditional forms of identity to participate in DeFi, helping to create a more globally inclusive financial system, and enhancing capital efficiency through credit scoring credentials that can more accurately match borrowers' reputations, thereby reducing collateral requirements.

Other ecosystem partners of the project include Algorand, Compound Labs, ConsenSys, Hedera Hashgraph, Phantom Technologies, and Solana Foundation.

Official website: https://www.circle.com/en/verite

Related reading: 《Unlocking Decentralized Identity with Verite》

Spruce

Spruce is a digital identity authentication system that supports the identity verification, credentials, and storage needed for users' portable reputation, providing decentralized access control to data and interoperability between Web2 APIs and Web3.

Spruce has collaborated with the Ethereum Foundation and ENS to build a standardized authentication system called Sign-In with Ethereum (EIP-4361), allowing users to connect directly to Web2 or Web3 applications using their crypto wallets while controlling their identity data. In March of this year, Spruce launched its first open-source authentication plugin for logging into the Discourse forum using Ethereum accounts.

Spruce offers two main products: the decentralized identity toolkit SpruceID and the self-storage product Kepler, which can serve scenarios such as secure sharing of trusted data, DAO-based credentials and reputation, and permissioned access to DeFi through partnerships with the Verite protocol.

Spruce completed a $7.5 million funding round in November 2021, led by Ethereal Ventures and Electric Capital. On April 20, 2022, it completed a $34 million Series A funding round, led by a16z, with participation from Ethereal Ventures, Electric Capital, Y Combinator, Protocol Labs, and others.

Official website: https://www.spruceid.com/

Related reading: 《Decentralized identity startup Spruce wants to help users control their sign-in data》

BrightID

BrightID is a digital identity verification system based on the Ethereum ecosystem, completely independent of traditional and internet identity authentication. It solves the unique identity problem by creating and analyzing social graphs, allowing users to obtain digital identities through real-person verification and enabling users to prove to applications that they are not using multiple accounts. Currently, the project has over 57,000 users, and several projects such as Gitcoin, RabbitHole, and Status have adopted its solutions, receiving multiple endorsements from Vitalik Buterin.

BrightID use cases include identity verification, application user validation, event verification (such as airdrops), trust and reputation building, and more. Currently, BrightID is also developing IDChain.

To ensure the authenticity and uniqueness of user identities, BrightID conducts video calls for user verification, requiring the video to be turned on during the process. The verifier will identify any duplicate verifications, and if a duplicate is found, they will report it to BrightID and revoke the duplicate user's BrightID account.

Additionally, BrightID supports users in recovering their identity information using social recovery features, ensuring individuals maintain control over their digital identities.

Official website: https://www.brightid.org/

Related reading: 《What is BrightID? How to complete BrightID verification?》

Civic

Civic Pass is a Web3 digital identity solution that introduces a blockchain-based identity layer. This layer establishes trust among parties using Identity.com, providing a structured approach to verify credentials that can interoperate across platforms. The Civic product line focuses on two main aspects: protecting private user data using the open-source Identity.com ecosystem and creating solutions that help companies meet AML and KYC requirements.

Civic Pass is Civic's flagship identity management product, allowing dApp providers to use it as input for compliance programs. Civic Pass enables decentralized applications (dApps) to review users in a way that protects user privacy, thereby restricting access to their products while allowing dApp creators and users to freely use the dApp, knowing that all other participants have passed KYC or activity standards.

In March 2021, Civic announced a technical integration with Solana to add identity elements to the Solana ecosystem. Additionally, Civic will establish a mobile application-based DeFi entry point on Solana.

Official website: https://www.civic.com/

Related articles: 《https://docs.litentry.com/》

NFT3

NFT3 is a decentralized identity and credit network for Web3 and the metaverse, designed with a staking incentive model to address identity issues. It creates a direct monetization path for individuals in Web 3.0 and provides infrastructure components for composite-level creation and innovation in Web 3.0 applications, linking the value of user terms with their data across different projects, social networks, companies, and institutions. NFT3 utilizes DID to create a Web3 passport platform and will establish a personal credit scoring system for users.

NFT3 will allow users to create a unified identity, which they can associate with any Web 3.0 application, thus addressing the fundamental issues of virtual identity. This is achieved by creating user-owned NFTs wrapped in DIDs or decentralized identifiers that can propagate across the network while always returning to the owner's NFT3.

In addition to NFT-based DID identities, NFT3 will also build a sophisticated credit scoring system based on user-bound social account information and multi-chain address information, called NCredit. A user's NCredit score reflects their personal credibility—higher scores indicate more reliability. NFT3 users will enjoy the benefits of higher credit scores in many areas, such as:

• Higher voting weight in on-chain governance
• Lower interest rates when borrowing
• Higher mortgage rates when taking out loans
• Priority and more quotas when participating in IDOs, etc.

In February 2022, NFT3 completed a $7.5 million seed round of financing, led by Animoca Brands, with participation from DFG Group, CMS Holdings, LD Capital, and Prometheus Labs Ventures.

Official website: https://nft3.com

Related reading: 《Introducing NFT3: The Passport for Web 3.0》

ENS

ENS is a decentralized domain name project based on Ethereum that allows users to display lengthy Ethereum public addresses in a simplified text-based manner. This makes it easier to share, use, and remember addresses and other data.

Additionally, ENS supports users binding their email, Twitter, NFT avatars, etc., to their domain names, which can be read and displayed by third-party platforms, effectively creating an identity layer for the Web3 world. Currently, the vast majority of Ethereum applications support displaying ENS domains, making it the most widely used identity project.

Official website: https://ens.domains/

Related reading: 《Reunderstanding ENS Valuation: More Than Just Domain Names》

Litentry

Litentry is a decentralized identity aggregator that supports linking user identities across multiple networks. Users can manage their identities using the secure tools provided, and dApps can obtain real-time DID data from identity owners across different blockchains. Litentry has established a three-layer credit computation infrastructure:

1. Source data layer. Data source platforms from which identity analysts obtain data, such as Etherscan, The Graph, Onfinality, and other data providers.

2. Address analysis layer. Primarily serves as an external server providing data analysis, such as Nansen, Chainalysis, and our upcoming Litentry whitelist and other address analysis platforms.

3. Identity aggregation layer. Litentry generates address relationships belonging to the same identity, then retrieves corresponding address analysis data from the address analysis layer and performs weighted calculations.

To expand and adapt the system for more realistic scenarios, Litentry aims to build a DID ecosystem that includes different DID service providers, covering on-chain to on-chain data, data indexing, and DID computation algorithm pools. Current decentralized identity projects based on this project include My Crypto Profile, Web3Go, Polkadot Name System, PokaSignIn, and others.

Official website: https://www.litentry.com/

Related reading: 《About Litentry》

Project Galaxy

Project Galaxy aims to build infrastructure to support an open and collaborative credential data network, helping Web3 developers leverage credential data to build better products and communities. As an open credential data network, it labels each address by issuing "credentials," thereby achieving clear and segmented user profile identification.

Once users connect their wallets, they can generate a "Galaxy ID," which will automatically attach "certificates" based on the address's historical behavior, such as "Uniswap Trader," "OpenSea Trader," etc. These credentials function like various professional qualifications in the real world and will hold value in certain specific scenarios.

Project Galaxy allows each developer to create, distribute, and gamify NFTs using customized on-chain data. Developers can establish their own loyalty programs, and individuals can issue and claim NFTs supported by their achievements on-chain.

Statistics show that the current Project Galaxy network has over 500 digital credential sets, covering more than 3 million users in Web3. Over 120 projects and organizations have launched more than 500 events utilizing Galaxy's digital credential data and NFT infrastructure.

Project Galaxy completed a seed round of financing in May last year, with participants including Multicoin Capital, Divergence Ventures, Blockchain.com Ventures, IOSG Ventures, and founders of some crypto projects. In January of this year, the project completed a $10 million funding round led by Multicoin Capital and Dragonfly Capital.

Official website: https://galaxy.eco/

Related reading: 《Multicoin Capital: Detailed Analysis of Project Galaxy's Features and Potential》

RabbitHole

RabbitHole aims to gamify the experience by breaking down each decentralized application into game tasks, guiding users to interact with blockchain protocols and decentralized applications, fostering DeFi user habits, while users' Web3 operations and behaviors will also receive "certification."

By managing a chain-based chart of users' previous achievements, RabbitHole is creating a chain-based resume for future work and becoming the best place to find contributors and discover jobs in Web3, as well as helping crypto projects find the best participants for their protocols and easily guide their communities—from discovery, onboarding, training to scaling.

In March of this year, RabbitHole announced the issuance of adventure badge NFTs as a form of on-chain credential. This NFT allows users to showcase their skills and knowledge within applications and is designed to be non-transferable, ensuring that any wallet with an adventure badge has actually completed the skills represented by the badge.

In June 2021, RabbitHole announced the completion of a $3.6 million seed round of financing, with participation from Electric Capital, ParaFi Capital, Framework Ventures, and others. On February 16, 2022, RabbitHole announced the completion of an $18 million Series A funding round, co-led by Greylock and TCG Crypto.

Official website: https://rabbithole.gg/

Related reading: 《Understanding the On-Chain Operation Incentive Platform RabbitHole in 5 Minutes》

Noox

Noox is a platform for Web3 users to mint badges based on on-chain operations, allowing anyone to program any rules into the badge standards (such as interaction quantity, interaction amount, interaction type) and allowing others to claim them if they meet the criteria. These badges will be non-transferable soulbound NFTs, enabling anyone to mark their on-chain interactions as attributes or achievements. Through a simple badge format, users will be able to easily prove their interactions, participation, and contributions on-chain.

Noox believes that the data in wallet addresses is key to creating a true digital identity for users in Web3. The NFTs owned by users serve as unique identifiers indicating their attributes, interests, and achievements in crypto and Web3, unlocking new opportunities as their on-chain identity. Other applications and protocols can natively integrate badges and drive open innovation.

In April 2022, Noox completed a $2 million seed round of financing, led by Collab+Currency, with participation from Electric Capital, Sfermion, SamsungNext, POAP, and Alphanonce. The project launched a closed beta product with Web3 profile and badge browser features in early May.

Official website: https://noox.world/

Related reading: 《Introducing Noox: Proof of Achievements for Your Web3 Life》

SkillWallet

SkillWallet is building a sovereign, portable Web3 identity layer, which constructs non-transferable NFT IDs belonging to individuals based on the skills and contributions of Web3 community members, allowing users and participants in the Web3 space to have persistence and durability of data representing their experiences, communities, skills, and contributions.

The protocol deploys a DAO with a role-based governance module, tracking members' contributions, commitments, and reputations. Community members will have voting rights based on their participation and contributions to the community, sharing a collective, decentralized verification system.

On February 15 of this year, SkillWallet announced the completion of a $1.65 million funding round, led by Third Kind Venture Capital (3kvc), with participation from Fenbushi Capital, HashKey, and Pareto Holdings.

Official website: https://skillwallet.id/

Related reading: 《SkillWallet - in a Nutshell》

Reputation DAO

Reputation DAO is a verifiable, decentralized, and programmable DeFi credit scoring system that can map off-chain data such as AML/KYC, traditional credit scores, and social media data, providing trusted neutral credit services for Chainlink oracles, DAOs, smart contract protocols, and their users. It enables individuals to leverage their real-world financial data and identities when interacting with smart contracts, enhancing the assessment of specific account risk indicators and reducing the mortgage process. Reputation DAO collects and analyzes credit data in the following ways:

First, scanning and connecting. Reputation DAO focuses on scanning data from individual DeFi accounts, oracles, and DAOs. It then uses a decentralized oracle network powered by Chainlink to connect to the necessary relevant off-chain credit services, such as identity services, related AML/KYC checks, FICO/Vantage scores, and related social media data.

Second, analyzing and calculating. After obtaining the data, Reputation DAO analyzes and ranks the scanned data related to individual accounts, oracles, and DAOs.

Third, visualization. The analyzed data will be visualized so that users can utilize and understand their or others' on-chain interaction information. Accounts, oracles, and DAOs will be able to view and examine their transaction history on-chain while assessing relevant credit indicators.

On April 14, 2022, Reputation DAO announced it had raised $4.75 million, with participation from DACM, AirTree Ventures, Koji Capital, and Framework Ventures. Chainlink co-founder Sergey Nazarov joined Reputation DAO as an advisor.

Official website: https://reputation.link/

Related reading: 《Reputation DAO: Building an On-Chain Credit System, Exploring Broad Use Cases in DeFi》

Spectral

Spectral has created a programmable credit ecosystem that promotes on-chain capital efficiency through credit risk analysis. As a fully programmable and composable financial foundation, Spectral's credit scoring allows permissionless execution of existing financial applications, such as credit delegation and securitization of debt, and lays the groundwork for innovative implementations that establish user credit based on on-chain transaction history.

Spectral's first product represents on-chain credit with the MACRO (Multi-Asset Credit Risk Oracle) score, which provides lenders with an improved mechanism for assessing borrower risk based on on-chain lending history, liquidation history, amounts owed and repaid, credit composition, and length of credit history.

At the same time, Spectral introduces the concept of Non-Fungible Credit (NFC), representing users' on-chain transaction history. NFC allows users to bundle wallets and synchronize their on-chain transaction history to a single composable asset (erc-721). Pairing the MACRO score with NFC creates a new framework for programmable credit asset classes, introducing a new primitive that transcends financial applications through the on-chain transaction history of composable assets across the Web3 ecosystem.

In November 2021, Spectral announced it had raised $6.75 million, led by Polychain Capital, with participation from Galaxy Digital, Social Capital, ParaFi Capital, Edge & Node Ventures (The Graph), and MetaPurse Ventures.

Official website: https://www.spectral.finance/

Related reading: 《A Protocol For Programmable Creditworthiness》

ARCx

ARCx is a decentralized reputation protocol that allows users to unlock benefits in the decentralized finance world through their on-chain behavior. ARCx achieves this by processing and scoring large amounts of data, which is then uploaded to the user's Passport (a non-transferable NFT).

ARCx quantifies the reputation of each DeFi Passport holder based on their credit score. The credit score is determined by analyzing the historical activity of the holder's Ethereum address, ranging from 0 to 999 points, which determines the collateral rate offered to the user by the protocol. After claiming a Passport, users are incentivized to improve their on-chain reputation by maximizing their scores through participation in various "games," allowing them to gain various benefits, such as borrowing at lower collateral rates.

ARCx establishes a reputation system by providing participants with a trustless way to build their reputation and offering other protocols and platforms a mechanism to identify, reward, and further incentivize good reputations, thereby serving Web3.

In June 2021, ARCx completed a $1.3 million funding round, led by Dragonfly Capital, Scalar Capital, and Ledger Prime.

Official website: https://arcx.money

*Related reading: 《Understanding ARCx DeFi Passport: The Sesame Credit Source Language of the DeFi World》