Solving the Identity “Crisis”:
How AlchemyNFT leverages Web2 IDs in Web3
NFTs have boomed in a short space of time, at $28.2 billion market cap when I checked today. But in parallel decentralized finance, or DeFi, is 10x the size with Total Value Locked (TVL) in DeFi protocols nearing $200 billion. From a handful of applications, DeFi use cases now touch everything from decentralized insurance providers to autonomous asset management. But the full potential of DeFi — and digital assets in web3 — is still limited by the absence of a critical component: identity.
The team behind AlchemyNFT has spent a collective 20+ years thinking about identity across our careers in different contexts. Not just sovereign identifiers, which is core friction point in regulated and financial transactions. Identity can also take other forms: biological identifiers, legal identifiers, behavioural identifiers or increasingly social identifiers. Identity can be adaptive over time. And identity, in a digital context, can be fluid between personas and platforms.
The way to solve the “identity crisis” in Web3 by leveraging the personas that already exist on the traditional internet, primarily those built up on social media. By linking identities through blockchain attestation, we’ve created the infrastructure to support a form of “lightweight credit” or ability to vouch for someone as the first layer of social reputation in the decentralized world.
And we want to show what a new model of identity attestation could look like, but we wanted to make it low stakes, lightweight and playful away from DeFi.
So our first product AutographNFT is simply what is says on the tin — it allows people to use their Twitter handles to digitally sign non-fungible tokens (NFTs) with the click of a button. But this is just the beginning: proof that the identities we use on Web2 platforms can be carried across the threshold into Web3’s decentralized, smart contract-based apps and systems.
So what does this mean for DeFi ? To understand how this technology works — as well as its potential to expand use cases to NFTs, DAOs and beyond in Web3 — it’s important to understand how the absence of consistent identity restricts what people can do in DeFi.
Why Does DeFi Need Identity?
To the extent that identity has existed in DeFi previously, it has lacked context and consistency. This is because the majority of Web3 identifiers are the randomly generated strings of characters known as wallet addresses.
Because wallet addresses do not have any inherent connection with a personal identity, each wallet is essentially a distinct “person” in and of itself. Wallet addresses can be easily created or abandoned, meaning that a single user can operate with multiple seeming identities.
This has provided a level of anonymity that can be highly attractive. But there are critical downsides: the disconnect between wallet addresses and personal identity makes it virtually impossible for users to establish credit — or indeed, any other kind of functional reputation — in the decentralized economy.
Loans issued by decentralized platforms, for example, are infamously over-collateralized. Even if one lending platform creates a sort of “credit score” based on repeated interactions with the owner of a wallet address, there is no way for the owner of that address to carry that score to any other decentralized platform.
What is “Lightweight Credit”?
Some have suggested that the lack of identity in decentralized spaces could eventually be met with a decentralized solution: tokenized IDs that can securely authenticate who people are in a fully decentralized “Web3” environment. However, the necessary technical and legal infrastructure to support this type of decentralized identity does not yet exist. There are also important questions about the standardization of this kind of identity and how it would need to be securely stored and altered.
Web2 profiles provide a more lightweight, portable, and immediate solution to the lack of identity in the decentralized world. By integrating them into decentralized platforms or assets such as NFTs, it is possible to create a layer of identity people can use across any number of crypto platforms.
Users of this technology have the option to prove that they own certain assets and perform specific actions in the decentralized world. This verifiability can act as a vehicle for developing reputation: users can prove that they are consistently able to make payments on time, or that they possess sufficient collateral for a loan, for example.
Crucially, the identities that we build and use on social media do not need to directly reflect the identities that we carry in “real life.” Even if social media profiles are anonymous or pseudonymous — or if they don’t reflect the full story of a corresponding human individual — they still carry a form of reputation with them. Twitter is full of examples of analysts who have not revealed their true identities, but who nevertheless maintain reputations as reliable sources of information — sometimes, for years. These personalities’ real-world identities are almost beside the point; what’s important are the demonstrated track records of their digital avatars.
Web2 identity attestations therefore act as a form of “lightweight credit” for the decentralized world. Users do not have to provide any personal information that is directly related to their legal identity, but they can still benefit from maintaining a consistent identity within DeFi.
AutographNFT: Web 2 Identity Attestations in Action
AutographNFT is real and built and here. It’s no longer a web3 concept; the technology has moved to implementation phase. It shows the potential of Web2 identities to enhance the capabilities of smart contract-based systems. People can use its intuitive interface to sign NFTs with their Twitter identities, or request signatures from others on Twitter.
By connecting Web2 identities with NFTs, AutographNFT empowers users with the ability to tokenize relationships. Some of the outcomes we’ve demonstrated is that that Artists and creators can use their Twitter accounts to attest that these are the tokens they mint and not fake NFTs; public figures can sign digital autographs on NFTs minted by their fans. There’s no limit to the number of users who can sign any digital object if you wanted to collect signatures on an NFT. Signed NFTs can be sold and traded in secondary markets, accumulating value and history with each added signature.
Identity is first interpreted, before it forms the basis of an interaction — or a transaction — as proof of a relationship. What we do is take this fuzzy idea, and turn it into a digital attestation certificate that can be used in many different contexts. Some call it reputation, others call it social proof, in Asia it’s deeply entrenched in culture as “guanxi” over thousands of years. It’s how trust — and informal banking — was able to scale.
With AutographNFT, it’s just the beginning to realise a much larger vision that AlchemyNFT is working to build missing components to solve natively for a web3 decentralized economy. Let’s take this into the digital native era.
About AlchemyNFT
AlchemyNFT is a platform that enables new utilities for non-fungible tokens through EVM-based smart contracts and TokenScript framework. Its proprietary TokenScript technology adds utility to NFTs by bringing context, security, and cross-platform functionality (iOS, Android and Web). The first application of AlchemyNFT is AutographNFT, a platform that allows users to add digital signatures to non-fungible tokens. People can also use it to ask for digital autographs from others, such as celebrities and artists, who can get paid for their autographs, as well as potentially donate the proceeds to charities. AlchemyNFT is a project of the team behind crypto wallet AlphaWallet, including CEO Victor Zhang and CTO Weiwu Zhang, and has raised $6 million from investors including Mark Cuban, Crypto.com Capital, Framework Ventures and Mechanism. Learn more here.
AutographNFT product | AlchemyNFT project | Twitter | Discord
