On-chain identity landscape
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February 28th, 2022

In this article, we provide a meta-review of innovation focused on putting work, professional identity, and reputation on-chain. For the purposes of this article, we will not be including services that focus on cataloging our non-professional affinities and identities. On-chain identity is a digital representation of an individual, with the data being housed on blockchain services.

Why does on-chain identity matter?

By proving unique identity on-chain, we move towards a one-person one-vote model within DAOs that increases a protocol's resistance towards Sybil attacks.

Current professional identities are uninformative. The inability to verify public professional information presented via resumes, personal websites, and LinkedIn forces recruiting teams to spend on average 49 days and cost on average $25k for a technical hire. This investment into recruitment is largely spent on filtering competence to ensure the candidate is who they say they are.

By putting identity on-chain, hiring teams can rely on verification instead of trust in hiring. As an example, “Stripe Engineer on X team” is less informative to a hiring manager than having the tasks completed and peer reviews on-chain and available to query.

As DAOs continue to scale, the ability to be a meaningful individual contributor becomes harder, thus increasing the importance of delegation. On-chain identity can complement decision making in who to delegate tokens to within a DAO without knowing the delegate personally.

Other unexplored use cases of on-chain identity include optimized DTC marketing and using on-chain identity to reduce thresholds or complement KYC compliance.

On-chain identity landscape

Image 1. On-chain identity landscape.
Image 1. On-chain identity landscape.

Ownership

Objective data is the easiest information to capture on-chain and associated with an individual's identity (ex. transactions, NFTs owned, and other crypto assets) via a wallets history.

Example projects: Showtime; Gallery; Cyber, Etherscan, Context.

Aggregators

Individual assets, transactions, and participation in Web3 communities are done across multiple wallets and chains. This fragmentation of wallet identity will continue to increase with creation of networked products that are not exclusively built on bluechip infrastructure. An individual's Web3 professional identity is misrepresented by using a single wallet as a data source or limiting identity to on-chain transactions. Projects working on aggregation of identity across multiple wallets aim to solve this problem.

Example Projects: UniPass; DAS Systems; Sismo

Governance Participation

The metrics for engagement within an organization are changing as we enable individual actors to have more say via governance power. With tools like Snapshot, we are very quickly able to associate governance participation in DAOs with an individual's wallet address. When we think about who we may want to delegate our tokens to, or who to hire for community growth and engagement, this data can be useful to guide decision making in these contexts.

Example Projects: DeepDAO; Karma; Boardroom; Tally

Bounties

Bounties in their current form require a significant amount of upfront planning, making it challenging for technical teams to use. The most useful case for bounties is onboarding. Bounties can give a flavour of what work at a specific team would look like and enable core teams to analyze early stage competence without hiring.

Bounties are currently used for non-technical tasks like making twitter posts or blogs. The rewards that can be unlocked from bounties are closely interlinked with on-chain identity as DAOs have started unlock the highest paying bounties to the most competent individuals. It is in the best interest of individuals who are looking to unlock these rewards to have their on-chain reputation be as strong as possible.

Example projects: Layer3.xyz: Proof of Competence; Kleoverse, DeWork; Gitcoin DAO; Buildpace; Rabbithole; Figment Learn.

Data Rails

The data layers for Web3 that map on-chain keys to off-chain data stores via DIDs change the way we think about storage of personal identity data. The core changes are that the individuals has control over the discovery, sharing, and permissions of their data. Individuals can choose how their data is stored (on traditional DB or blockchain datastores). Individuals can can link multiple personal accounts and data sources together to the same unique identity.

Example projects: Ceramic (and IDX); Lit Protocol;

Proof of Humanity

With a protocol that is sybil resistant, we unlock: the ability to democratically vote; trust quadratic votes; build trustworthy reputation systems; and fund public goods at a larger scale. The ability to prove unique identity, while maintaining privacy is a huge unlock for DAOs.

Example projects:  BrightID; Worldcoin; Jumio; Proof of Humanity DAO; Gitcoin DAO

Endorsement

The more human focused a DAO is, the more off-chain activity there is. The ability to connect the off-chain and on-chain data in a verified way to present one's professional identity is missing in current Web3 tooling infrastructure.

Example projects: Mem; SourceCred; CoordinApe; MintKudos; Station; Disco; Govrn; Lens Protocol.

Profiles

The ability to showcase competency, worth, or status is not new to Web3, but doing so with blockchain technology, enables the network to view profiles from the lens of verification instead of the lens of trust.

Whether it be bounties, or unlocking job opportunities, being able to showcase your Web3 professional or social identity is going to be a key element to the future of work. This includes showcasing the objective data along with the subjective to build a holistic picture of who you are. You can think of this as being a step towards the “LinkedIn” of Web3.

Example projects: MyMeta Profiles; POAP; ENS; Unstoppable Web; LVL Protocol; SpringRoleInc; Station; Mazury; Violet; Badge; Metagame; FWB NFT; DAOHaus; Yup, Prysm; Backdrop; CyberConnect.

Fears with on-chain identity

Privacy and Transparency

Our identities in Web3 can be as private or as public as we want to make them. Due to the lack of centralization and the ability to have all data viewable on the blockchain, individuals can be extremely public or extremely private as compared to their Web2 self. People will be able to construct uniquely verified identities for themselves that can be completely disjoint from one another while still on-chain.

The more work we do to put identity on-chain, the closer we are getting to quantifying a humans worth.

Lack of alignment

In a world where the work we do always has some type of reward or economic incentive associated with it, we lose the ability to just do work because we believe it should be put out into the world.

The “day ones” (people who are there from the beginning regardless of outcome) vanish in a world where everything from inception has a bounty or reward. We advertise that crypto yields optimal alignment when we are designing for optimal mis-alignment currently. Retroactive funding is a potential solution to this problem to reward “day ones”.

Cost of actions

The amount of data points that can comprise one's on chain identity are boundless, thereby posing a design challenge fro an agreed upon method to collect, organize and display for others to comprehend. By keeping specific identity data siloed from one another, we protect ourselves from negative repercussions financially (i.e, keeping health data and insurance data separate). The repercussions of having your identity on-chain verified across many axes of life (social, professional, financial) could lead to repercussions we have yet to define yet that are more severe due to permanence, immutability, and openness.

Support and Connect

This article was published in February of 2022 but is frequently updated with new projects working on putting identity on-chain.

Here is a reading list we have curated around on-chain identity:

Written by Shrey Jain. Special thanks to Lauren Feld, Jad Esber, David Phelps, Brenner Spear, Alex Masmej, Jackson Dahl, Rob Sorrow.

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