Decentralized Identity Projects to Watch in 2024: From Concept to Investment Value

Decentralized Identity (DID) track has experienced a transformation from obscurity to the spotlight over the past two years. The launch of Sam Altman’s Worldcoin project in 2023 directly propelled this niche into mainstream visibility and made the market recognize the core role of DID technology in the Web3 ecosystem. As more capital flows in and practical applications land, it is necessary to systematically review the current state and future prospects of this track.

Why is DID the Infrastructure of Web3?

In traditional internet, our identity data is controlled by giants like Facebook and Google. But in the decentralized vision of Web3, identity verification requires a new paradigm: user-controlled, trustless by design.

The essence of DID is simple—based on public-private key cryptography, returning ownership of identity to individuals. Your public key becomes your on-chain identity identifier, while the private key grants full control. This is not just a technological upgrade but a redefinition of power relations.

In the crypto market, DID plays three key roles:

• Anti-fraud foundation: Binding a unique identity allows verification and traceability of each on-chain address, reducing sybil attacks
• DeFi trust bridge: Lending protocols and derivatives platforms require counterparty identity verification to manage risk
• Cross-chain identity passport: A unified identity that can circulate across multiple blockchains, breaking ecosystem silos

Current Ecosystem Landscape: 5 Projects Worth Noting

Worldcoin (WLD): A Radical Experiment in Biometrics

Worldcoin has taken a controversial yet unique path—introducing iris scans as an identity verification method. The goal of World ID is to create a globally universal human identity layer, ensuring “one person, one ID” through biometric data.

Current Data Performance:

• Token Price: $0.50 (24h change +0.60%)
• Circulating Market Cap: $1.28B
• 24h Trading Volume: $1.31M

Recent developments are impressive: the Worldcoin team is advancing the World Chain (an Ethereum-based L2 network), targeting payments and AI applications. Potential collaborations with OpenAI and PayPal are also brewing.

Balance of Advantages and Risks:

• ✅ Innovative biometric mechanism addresses real needs in unbanked regions
• ✅ Ambitious global expansion, covering over 30 countries
• ❌ Privacy concerns persist (regulatory attitudes vary)
• ❌ User adoption requires significant education efforts

Polygon ID: Privacy Solution with Zero-Knowledge Proofs

If Worldcoin emphasizes verifiability, Polygon ID is an advocate for privacy—using zero-knowledge proof (ZKP) technology, users can prove their identity without revealing any personal information.

This approach saw major breakthroughs in 2024: Polygon Labs partnered with Human Institute and Animoca Brands to launch the “Humanity Protocol,” integrating palmprint recognition; simultaneously, Polygon deployed a complete ZK identity verification stack on its L2 network.

Technical Highlights:

• Passwordless login experience
• Optimal balance of privacy and verifiability
• Native support for Ethereum ecosystem

Practical Challenges:

• High computational costs of ZKP, user experience still needs refinement
• Large market education efforts
• Intense competition from other privacy solutions

Lifeform: Visual Layer of Metaverse Identity

Lifeform’s approach is entirely different—it binds DID to hyper-realistic 3D virtual avatars, creating “your visual representation in Web3.” This direction has gained capital recognition:

Funding Trajectory:

• Seed Round: $15 million
• Series A: $100 million
• Series B: Recently completed (led by IDG Capital)
• Latest valuation: $300 million

Lifeform has over 3 million independent user addresses in use, covering scenarios from social to gaming. Its SDK is integrated into mainstream game engines, providing an identity layer for metaverse applications.

Market Positioning:

• Clear B2B2C model (collaborations with game engines and social platforms)
• Visual identities are more acceptable than pure on-chain addresses
• Still in early stages; scaling will take time

ENS and Space ID: The Domain Name Track’s Competitive Landscape

Ethereum Name Service (ENS) and Space ID represent two strategies in the domain-like DID space:

ENS Advantages:

• Native Ethereum lineage, strong first-mover advantage
• Partnered with GoDaddy in 2024, integrating traditional domain systems
• Added ICANN-recognized .box TLD, the first on-chain top-level domain
• Highly endorsed by the community

Space ID Differentiation:

• Cross-chain identity space (supports multiple public chains)
• More aggressive universal namespace concept
• Stronger penetration in L1s like BSC and Avalanche

Both projects are vying for the “Web3 identity gateway” position. The former leverages Ethereum ecosystem advantages, the latter adopts multi-chain strategies. In the long run, coexistence rather than dominance is likely.

Galxe: Credential and Reputation Infrastructure

Galxe collects account data to build a decentralized credential network, forming a reputation system for Web3 natives. Unlike ENS’s “identity addressing,” Galxe creates “identity profiles”—your on-chain behaviors, project participations, and asset holdings can generate verifiable credentials.

This direction has practical applications in DeFi risk management and DAO governance token distribution. Galxe’s Badge system has been integrated into over 500 projects.

Real Challenges in the DID Track

Behind the prosperity, DID still faces three major structural issues:

1. User Experience vs. Security Dilemma

   • Private key management remains a nightmare for ordinary users (loss = permanent loss of identity)
   • Secure wallets have improved, but account recovery mechanisms are still imperfect

2. Cross-Chain Interoperability is Far from Mature

   • Identity standards across chains are inconsistent
   • Cross-chain verification costs and delays remain bottlenecks

3. Regulatory Uncertainty

   • Attitudes toward biometric identity legality vary across countries
   • The conflict between KYC/AML compliance and anonymity is hard to reconcile

Development Directions for 2025-2026

Based on industry trends, we can anticipate:

• Integration of Privacy and Compliance: Future DID solutions must balance privacy protection with regulatory requirements. ZKP technology may become central
• Unified Cross-Chain Standards: Expect foundational projects similar to “DID interoperability protocols” to emerge
• Practical Applications: Extending from crypto to healthcare, supply chain, IoT, and other traditional industries
• Biometric and On-Chain Identity Fusion: Not exclusive to Worldcoin; more projects will explore this path
• AI + DID New Scenarios: Identity management linked with AI agents, creating new trust models

How Should Investors View It?

Decentralized identity is not a short-term hype but a long-term infrastructure need of Web3. However, competition in this track will be fierce:

• Major winners will emerge: It’s unlikely all projects succeed; in 3-5 years, clear top-tier and mid-tier differentiation will form
• Funding capability is crucial: Technical maturity is just a prerequisite; ecosystem building and market expansion require significant investment
• Policy direction sets the ceiling: Projects in regulator-friendly regions will expand rapidly, while those in uncertain jurisdictions face growth limits

From the perspective of Gate.io users, beyond tracking token prices, it’s more important to understand each project’s unique value proposition—Worldcoin bets on biometric + UBI globalization, Polygon ID emphasizes privacy, ENS relies on ecosystem network effects, Galxe focuses on credentials and reputation.

These choices determine their respective ceilings and risks. There is no absolute winner—only experts suited for different application scenarios.