Decentralized Identity Management Systems for Web3 Ecosystems

Abstract

Web3 promised to give users control over their digital identity. Five years in, the reality is messier. Most dApp users still authenticate with a bare Ethereum address -- a 42-character hex string with no name, no reputation, no credentials, and no recovery mechanism if the private key is lost. The decentralised identity stack that was supposed to fix this -- DIDs, verifiable credentials, ENS names, soulbound tokens, and zero-knowledge proofs of personhood -- exists in fragments that do not interoperate. We present the Web3 Identity Management Assessment Framework (W3IMAF), a systematic evaluation of six decentralised identity approaches -- ENS-style naming, DID-based self-sovereign identity, soulbound token reputation, zero-knowledge credential proving, social recovery wallets, and cross-chain identity aggregation -- tested on a unified identity testbed that measures resolution latency, credential verification speed, privacy preservation, GDPR compliance, recovery robustness, and cross-platform portability. Our Identity Quality Score (IQS) shows that DID-based SSI with ZK credential proofs achieves the highest overall quality (0.908) but social recovery wallets solve the most urgent practical problem -- key loss, which causes an estimated USD 4-6 billion in permanently inaccessible crypto assets annually.