Introduction

Fundamental Differences of User Identity between Web2 and Web3

In the internet age, consumers used social logins (Google, Facebook) and personal identities (Phone numbers) to engage with applications. As a result, any business could use these identities to do the following:

• Classify users based on social logins, demographics, acquisition channels, etc.
• Understand consumer behavior on the application & relate it to the above classification
• Engage with the consumer via social channels and/or personalize the experience for them

A shift towards the ‘third web’ has led to a wave of decentralization in the last couple of years with 10,000+ DApps being built, DeFi protocols disrupting traditional finance with over $250 Billion of TVL, and a new dimension in gaming with ‘Play-to-Earn’ games like Axie Infinity surpassing billions in market cap in the shortest time ever.

This shift has resulted in the creation of two separate ecosystems for any web3-based project to operate in:

• On-chain: where all the transactions take place between user wallets & protocol smart contracts
• Off-chain: where all the community interaction & project-led marketing takes place

Since the actual business takes place on-chain, wallet behavior (transaction history, assets held, total wallet balance) has replaced social persona as the REAL user identity. As a result, a traditional marketing approach is no longer efficient in discovering and engaging users.

The very definition of “user identity” has changed and thus the science of user engagement has to be re-invented. This calls for a new approach, a new playbook!

Problem Statement

Inability to Discover and Engage with the Relevant Audience