Decentralized Identity on Blockchain: Which Projects Are Leading in 2024

The cryptocurrency market is experiencing an interesting period of development, with digital identity management technology taking center stage. After the launch of Worldcoin (WLD) in 2023, the topic of decentralized identifiers (DID) began attracting serious attention from both investors and developers. At the time of writing, WLD is trading at $0.50 with a daily increase of +0.30%, and the project’s market capitalization has reached $1.28B, with a daily trading volume of $1.55M.

Why Decentralized Identity Is So Important for Web3

Unlike traditional systems where your personal data is stored and controlled by companies, decentralized identity allows you to remain the full owner of your digital identity. Instead of relying on Facebook, Google, or government agencies to verify your identity, you decide who and how to share information.

This fundamentally changes the trust dynamics in the digital world. Instead of a central authority that can be hacked or compromised, the system becomes distributed and cryptographically secured. Each transaction is linked to a verified identity, reducing the risk of fraud without the need to disclose personal data.

In the DeFi ecosystem, this becomes critically important. Lending, trading, and asset management applications can verify that you are a real user without collecting your passport data.

How Exactly Does Decentralized Identity Work

The technology is based on cryptographic key pairs. You generate two keys: a public (that everyone can see) and a private (kept only by you). The public key becomes your identifier on the blockchain, while the private key allows you to manage all access rights to your data.

In this case, the blockchain acts as an incorruptible notary. All your credentials and access permissions are recorded in an immutable ledger protected against forgery. No one can secretly alter data or forge your signature because it will be detectable by the entire network.

The main advantage of this approach is that you have full control over your data. Lost your private key? That’s a problem. But no company can send your data to third parties without your consent.

Advantages of Decentralized Identification

Full autonomy over data. You decide who can see your information and for how long. No unexpected data sales to marketers.

Cross-platform mobility. One identifier works everywhere. Registered on one DEX? Your reputation and credentials are automatically transferred to other platforms.

Cost reduction. No intermediaries mean lower verification fees. This is especially important for financial services that traditionally spend a lot on customer verification.

Enhanced security. No single point of failure. Even if one platform is hacked, your identity remains safe elsewhere.

Privacy. You can verify facts about yourself (for example, that you are over 18 or that you are not a sanctioned individual) without revealing your name, address, or passport number.

Practical Decentralized Identity Projects in 2024

Worldcoin: Biometrics as a Foundation

Worldcoin uses an innovative approach — scanning the iris to create a unique digital profile. This addresses the classic problem: how to guarantee that one person is one account and no more?

The project created World ID, integrated with Ethereum, Optimism, and Polygon. This allows users to use their biometric identifier across multiple blockchain ecosystems.

Tools for Humanity, the company behind Worldcoin, introduced World Chain — a layer 2 on Ethereum designed specifically to prioritize human interaction. Negotiations are underway with PayPal and OpenAI to expand integration.

Advantages:

• Innovative approach to universal basic income
• Inclusivity for people without access to traditional banking
• Potential for global scaling

Disadvantages:

• Privacy concerns regarding biometric data collection
• Challenges with implementation across different countries

Polygon ID: Privacy Without Compromise

Polygon ID uses zero-knowledge proofs (ZKPs) — meaning you can prove something about yourself without revealing details. For example, verify your age without showing your birth date.

In February 2024, Human Institute announced a partnership with Polygon Labs and Animoca Brands to create Humanity Protocol, which uses palm recognition for secure verification.

The platform integrates with the Polygon ecosystem, making it scalable and cost-effective.

Advantages:

• Maximum privacy thanks to ZKP
• Scalability on Polygon
• Compatibility with Ethereum ecosystem

Disadvantages:

• Relatively new product on the market
• Requires time for adoption and integration

Ethereum Name Service: Human Face of Blockchain

ENS solves a simple but important problem: instead of sending funds to an address like 0x742d35Cc6634C0532925a3b844Bc9e7595f42e1, you send to alice.eth.

In February 2024, ENS signed an agreement with GoDaddy to integrate ENS domains with traditional web domains. In April, .box domains were added as the first on-chain TLD domains approved by ICANN.

This simplifies access for people unfamiliar with blockchain.

Advantages:

• Ease of use
• Wide recognition in the Ethereum community
• Universal utility

Disadvantages:

• Ethereum performance limitations
• Potential scalability issues

Lifeform: 3D Avatars as Identifiers

Lifeform creates hyper-realistic 3D avatars and visual decentralized identity protocols. The project recently completed Series B funding valued at $300 millions$100 with support from IDG Capital.

Previously, the company raised $15 millions### in Series A and ###millions in seed funding. The platform has over 3 million unique addresses registered.

Lifeform integrates digital avatars into Web2 social networks, creating a bridge between digital and physical reality.

Advantages:

• Innovative use of 3D graphics
• User-friendly and engaging
• Integration with Web2 and Web3

Disadvantages:

• Requires specialized knowledge for implementation
• Possible compatibility issues between systems

Space ID: Domains on All Blockchains

Space ID allows registering and managing domain names across multiple blockchains. Instead of having separate identifiers on Ethereum, Solana, and other chains, you can use one for all.

This universal namespace supports DeFi applications, NFT marketplaces, lending platforms, and DAOs.

Advantages:

• Cross-chain functionality
• Convenience and simplicity
• Broad applicability

Disadvantages:

• Competition from other domain services
• Limited adoption outside the crypto community

Galxe: Reputation as a Commodity

Galxe creates a decentralized credential network, using account information to build a reputation system in Web3. This enables users and organizations to manage attestations in a fully distributed environment.

This approach makes sense for access control systems, DAO governance, and financial applications.

Advantages:

• Innovative use of account data
• Potential for various use cases

Disadvantages:

• Early stage of development
• Complexity for mass understanding

Problems to Solve

Implementation complexity. Transitioning from traditional systems requires large-scale changes in technology and legislation. Users need to learn to manage cryptographic keys, which is not easy for everyone.

Key management. Losing a private key means losing access to your identity forever. This is excellent for security but terrible for user experience.

Cross-chain compatibility. Different networks use different standards. Creating a single identifier that works everywhere remains a challenging task.

Legal recognition. Legislators are still undecided on how to regulate decentralized identity. Some countries oppose biometrics, others require KYC even in Web3.

Industry Trends

Mass adoption in DeFi. As understanding of the technology grows, DID will become a standard part of financial applications.

Advanced privacy features. Projects will develop more reliable protection methods, including advances in ZKP and biometrics.

Beyond crypto integration. DID will expand into healthcare, e-governance, logistics, and other industries.

KYC/AML on blockchain. Decentralized identity will become a tool for regulatory compliance without sacrificing privacy.

Integration with AI and IoT. One day, your IoT device could autonomously interact with the blockchain using your DID.

Conclusion

Decentralized identity is not just a technological trend but a necessity in a world where data becomes the most valuable asset. Projects like Worldcoin, Polygon ID, ENS, and Galxe demonstrate that developers are already responding to this challenge.

The path to mass adoption is still long, but the direction is clear: you will regain control over your digital identity. And this could happen much faster than you think.