Some Thoughts on the Web3 Field

Recently, the cryptocurrency market has experienced a series of liquidations, exposing some issues and also bringing new opportunities. I believe there may be a growing demand in areas such as privacy, credit, decentralized identity, and reputation systems. This article explores several aspects.

1. The Importance of Privacy Needs

On-chain privacy is very important for both institutional and individual users. Although current blockchains use complex addresses, user identities can still be tracked through analysis, and true privacy cannot be effectively protected.

Privacy requires a complete framework and ecosystem, providing customized services based on different needs. Technologies such as zero-knowledge proofs can play a role in this.

Projects like Aleo not only achieve anonymity in asset transfers but also include privacy protection for functions such as payments, liquidity provision, and voting. It offers a full-stack solution that enables programmability of zero-knowledge proofs at all layers.

2. Challenges of On-Chain Lending Services

On-chain lending is still in its early stages and faces many challenges:

• Lack of comprehensive middleware and infrastructure
• Incomplete credit assessment system on-chain and off-chain
• Difficulty in assessing the borrower's payment ability and qualifications
• The interest rates differ greatly from traditional finance.

Although the mainstream over-collateralization model can control risks, it also has some issues, such as draining liquidity from public chains and being prone to bank runs.

On-chain lending services are still searching for product-market fit and require a more完善的信用体系 and risk control mechanisms.

3. The Importance of Decentralized Identity and Reputation Systems

The flaws in the on-chain credit assessment system highlight the importance of the native certification system of DeFi and the decentralized reputation scoring system.

Projects like ARCx are attempting to establish a DeFi credit scoring system, but its actual effectiveness and adoption rate still need to be observed.

4. Building a Minimal DID Protocol

We need a flexible, reliable, and easily accessible decentralized identity system:

• Trustless: Can operate on any public network
• Flexible: Suitable for developer-customized data structures
• Easy Access: Supports any open network and unique identifiers

It should also have features such as priority for kana, combinability, and separability.

Projects like NFT3 are attempting to build such minimal DID protocols that allow users to conveniently establish identity systems while protecting privacy.

Overall, fields such as privacy, credit, and DID may welcome new development opportunities in the current market environment. However, these areas are still in their early stages and require time for improvement and validation. We need to continuously pay attention to the innovations and progress in these fields.