On Web3 Digital Identity(ies)

DigitalOil.nftr
7 min readSep 7, 2022

Should we identify with wallets or NFTs?

By definition, identity portrays oneness, uniqueness, and a sense of self. While a single identity per person is required for applications like Proof of Humanity’s UBI (universal basic income), most web3 applications will be driven by users with multiple identities.

Universal Basic Income as rendered by Midjourney

When we forecast a new technology, we consider its fit alongside current societal, economic, and technological structures. Thus, consensus on digital identity seems to prefer 1-to-1 structures. However, the trustless nature of smart contracts doesn’t require mapping a digital identity to a physical counterpart, or even to a single on-chain entity such as a wallet.

Humanity as Identity

In the absence of trustless decentralized virtual machines, rules could only be enforced in nation-state and jurisdictional domains, and in favor of or against physical individuals. In contrast, via smart contracts we’ve seen the birth of mechanisms such as lending which don’t require physical or IRL collateral nor the use of jurisdictional liberty as collateral or use of violence to function properly. Furthermore, essential economic growth accelerators such as leverage have come about via on-chain options contracts and synthetics.

Let’s clarify this setup with an example regarding credit. IRL credit is established by personal reputation with a credit agency or bank. In this context, it’s essential that your identity is 1-to-1 with your physical self, as your creditworthiness is a function of your economic output, habits, and morale. More importantly, if you don’t follow through with your obligations, they need to know who to look for. On the other hand, on-chain loans (think AAVE or MAKER) is trustless — it doesn’t matter who the creditee is) are over-collateralized causing default risk to tend to zero.

Wallet as Identity

Current consensus is that on-chain identity is defined by ENS domains, which inherently point to wallets. This is evidenced on Crypto Twitter and Discord, as multiple profile names have .eth suffixes. This presents a cognitive dissonance, identifying as our wallets but presenting NFT profile pictures, switching them in and out depending on context or mood. NFTs are used for discord server verification and users set discord profile pictures set to match the server we’re in. Whenever possible, people are already identifying as their NFTs. NFT Names are how we complete the transition, allowing multiple cohesive web3 identities per user.

Wallet as Identity as rendered by Midjourney

NFTs as Multiple Identities

The future of web3 is NFTs as identities, not wallets.

NFTs natively encapsulate characteristics that make it a great identity primitive. These are:

  1. A visual representation
  2. A history
  3. A native community and culture

But, in order for NFTs to have utility as identities, they must also have a unique name (see nftr.name). A unique NFT name facilitates:

  1. Reachability
  2. Ability to communicate
  3. Ability to store, send, and receive value

And, in the context of web3, an interesting new property: Transferability

Unique Names

The current means of referring to an NFT by collection contract address and token id is inconvenient. Unique NFT names make NFTs easily addressable, reachable, and customizable. An NFT can be named to match its visual representation (image) or to make a statement. Unique names within a universal namespace adds a new value layer (the name layer) on top of NFTs.

Reachability

NFTs as identities are more useful if there is an easy way for owners and third-parties to reach them for interactions. NFT domains allow for each NFT to have a unique web address. Since an NFT’s name is unique, its domain is too, which make it uniquely addressable and reachable. Associated to the address is a landing page (URL), organizational structure, tags, and subdomains.

To go deeper, I’ll lay out the structures and functionalities we are building into NFTR.

Domains

NFTs are named uniquely on Nifter. When an NFT is named, a domain of the following form is born: [name].nftr

Landing Page

NFT domains are extended by adding a suffix (.name) to obtain an accessible URL of the following form: [name].nftr.name

Therefore, visit [name].nftr.name to reach any named NFT. We are continuously building out native features into Nifter landing pages to allow owners and third-parties to interact with NFTs. Also, other dApps will be able to plug in to NFT landing pages, enabling composable interactions.

Organizational Structure

There are two native organizational structures for NFTs:

  1. NFTs that belong to the same collection
  2. NFTs that belong to the same wallet

However, NFTs become more powerful if we can organize them on-chain in more sophisticated ways, such as:

Grouping NFTs among different collections

Given an on-chain mechanism to group NFTs from different collections (think: a group of 3 NFTs — one Punk, one BAYC, one Doodle), we open the door for NFT-based DAOs to be more heterogeneous. Imagine on-chain businesses managed by these heterogenous DAOs that generate cash-flows which are streamed straight to the NFTs that are in the group.

Grouping NFTs among different wallets

Another interesting application that comes from being able to group NFTs on-chain is associating NFTs that lie in your different wallets. Imagine being able to group together and categorize your NFTs for (say) display purposes, even if they’re not in the same wallet.

Tags

Attaching tags to your NFT allows for interesting use cases such as on-chain endorsements. Imagine that my Punk, Satoshi Nakamoto, is such a well-known NFT that Nike would like his endorsement for a certain period of time for marketing purposes. Analogous to how Nike signs a contract with Tiger Woods, I could tag Satoshi Nakamoto with the Nike tag, publicly indicating the Nike endorsement on-chain along with an expiry date.

Satoshi Nakamoto’s Landing Page on NFTR

Subdomains

As NFT-based identities don’t necessarily need to be owned by a single person (think: fractionalized NFTs or NFTs owned by DAOs or IRL companies), it makes sense for the identity to be able to have children. If, for example, one of Nike Corporation’s on-chain identities is the NFT deemed Nike, they might want to “subdivide” the identity or functionalities into subdomains, such as ceo.Nike.nftr, coo.Nike.nftr, for example.

Communication

It is essential for identities to be able to communicate with each other. As wallets have been the centerpiece of the identity story, we’ve seen inter-wallet messaging, but no NFT to NFT communication yet. We’re developing NFT to NFT messaging at NFTR. Via NFT messaging you’ll be able to:

  1. Direct your browser to any named NFT’s landing page: [name].nftr.name
  2. Choose (among yours) the NFT you’d like to send the message from
  3. Send the message, which is encrypted and stored on IPFS
  4. Associate an email to your NFT, and choose if you’d like to be notified via email when your NFT receives a message.

Storing, Sending, and Receiving Value

Another primordial property of an identity is the ability to send value. Currently, there isn’t a simple way for an NFT to send value to another NFT. This is why we are launching NFT Banking, a smart contract that will serve as a 100% decentralized primitive that allows for transmission of value among NFTs in Ether and ERC20 form. Via NFT Banking you’ll be able to:

  1. Direct your browser to any named NFT’s landing page: [name].nftr.name
  2. Deposit value
  3. Send value from your NFT to another NFT
  4. Withdraw value from your NFT

A bank transfer is to a wallet-to-wallet transfer as sending money over Whatsapp is to an NFT-to-NFT transfer.

NFT Banking also enhances gaming. NFTs used in games accumulate experience, special accesses and prizes. By leveraging NFT banking, games will be able to send points in the form of ERC20 tokens directly to your NFT.

Transferability

And finally, the killer property of NFTs as web3 identities — transferability.

Imagine choosing a beautiful pfp NFT to be one of your identities. You name it, use it for messaging, deposit funds in it and use it as the identity’s bank account, it participates in multiple DAOs as a shareholder in cash-flow generating businesses, it participates in games and accumulates experience points and funds, and you’ve tagged it to signal endorsements. This NFT has accrued not only value, but also a history.

When your NFT is your identity, all this history and value is transferrable.

Liquid Identity

With the exception of NFTs that should be soulbound — such as university degrees — , it makes sense for identities to be liquid, especially due to these properties of web3:

  1. Composability: the next person (think: next of kin) should be able to build upon an identity previously managed by a love one that has passed.
  2. Trustlessness: it doesn’t matter if the identity changed hands as long as trust isn’t a requirement in its use-cases

Transferring an NFT is much simpler than transferring control of a wallet.

NFT-centered Gnosis Safes

It’s common for DAO participation to be NFT-gated. Simultaneously, DAO treasuries and actions are managed within Gnosis Safes, which are wallet-gated. This dissonance can be solved by creating NFT-centered Gnosis Safes, that depend on the DAO’s participating identities (the NFTs themselves) to multi-sign transactions. This lego will be essential for the management of heterogenous NFT-grouped based DAOs.

Finally

We regularly hear questions and promises of the utility in NFTs. However, we’re used to thinking of this utility as what we can get out of the NFT. Here, I offered a new perspective and a vision of a more NFT-centric web3 that starts with naming. In it, NFTs serve as our primary building blocks upon which we create our different personas. These personas aren’t as soulbound as we are used to thinking of them.

An NFT-centered Web3 as rendered by Midjourney

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DigitalOil.nftr

Early. Ethereum dev and founder @nft_registry . Podcast host @0xCryptoLatinos . Business director. Former ios dev & satcom engineer. @GeorgiaTech ee & @mit