The Cost of Fragmented User Identities Across dApps

Each dApp forces users to manage a new identity silo, creating a ~90% drop-off rate at the wallet connection stage. This isn't just a UX issue; it's a direct ~$1B+ annual opportunity cost in unrealized user acquisition.

• Gas-guzzling approvals: Users pay for token approvals on every new app, wasting millions in aggregate fees.
• Cognitive overhead: Managing dozens of keys and connections is a non-starter for mainstream users.
• Liquidity silos: User reputation and collateral are trapped within single applications.

Fragmentation turns every dApp into a separate attack surface. A single compromised frontend can drain assets, but the real cost is systemic: security models don't compose.

• Approval sprawl: Users grant infinite approvals to untrusted contracts, creating a web of persistent vulnerabilities.
• No portable reputation: A user's verified identity or credit score on Aave means nothing on Compound, forcing redundant, costly checks.
• Fragmented audit surface: The security of the ecosystem is only as strong as its weakest, least-audited identity provider.

The fix is a base-layer identity primitive that separates proof-of-personhood, reputation, and credentials from application logic. Think Ethereum Attestation Service (EAS) or Verifiable Credentials, not another social login.

• Composable security: A single, user-controlled attestation can serve as KYC for DeFi, reputation for lending, and access control for DAOs.
• Gasless onboarding: Use session keys or account abstraction (ERC-4337) for seamless, batched interactions across dApps.
• Capital efficiency: Unlock cross-margin by allowing protocols like Aave and Compound to share a unified user risk profile.

Every new user onboarding is a fresh, expensive on-chain identity creation. This fragments reputation and burns capital on redundant operations.

• ~$50-150 in gas per new wallet creation and funding across chains.
• Zero composability of on-chain history, forcing re-verification for every dApp.
• Lost DeFi yield from capital locked in gas reserves across dozens of isolated wallets.

Wallet-as-a-Service providers like Privy, Dynamic, and Capsule abstract smart account deployment, creating a persistent, chain-agnostic identity layer.

• Single identity with social login (Google, Discord) maps to a programmable smart contract wallet.
• Batch transactions & gas sponsorship cut user-side costs to near-zero.
• Portable reputation via EIP-1271 signature validation, enabling trust across dApps.

Fragmentation forces users to manage dozens of seed phrases or insecure EOAs, creating massive attack surfaces and recovery nightmares.

• Single point of failure: Lose one seed phrase, lose all assets in that wallet.
• No unified security policy: Social recovery, 2FA, and spending limits must be re-configured per wallet.
• Phishing paradise: Users are conditioned to approve malicious transactions repeatedly across interfaces.

WaaS providers integrate with MPC/TSS and policy engines to centralize security management across all user interactions.

• Threshold signatures (MPC) eliminate single seed phrases; keys are never fully assembled.
• Centralized policy hub: Set transaction limits, whitelists, and recovery guardians once, apply everywhere.
• Session keys via Lit Protocol enable temporary, scoped permissions for dApp interactions.

DApp-hopping feels like changing countries: new wallets, new balances, new approvals. This destroys user retention and makes cross-dApp journeys impossible to analyze.

• ~40% drop-off at initial connection/ funding steps for each new dApp.
• No unified analytics: Cannot track a user's journey from Uniswap to Aave to Friend.tech.
• Friction kills composability: The promise of DeFi legos is broken by identity walls.

Leading WaaS providers bake the wallet directly into the dApp UX and provide a unified graph of user activity across their integrated ecosystem.

• Invisible onboarding: User signs in with social, wallet is created in the background.
• Shared state: Balance and session persist seamlessly across integrated dApps.
• Cross-dApp analytics: Builders get a complete view of user flow, enabling better product decisions and improved retention.

The average user abandons a dApp after ~2 minutes of onboarding friction. Each new wallet creation, seed phrase backup, and gas top-up is a point of failure. This kills retention before the core product is even seen.\n- ~90% drop-off from landing page to first transaction\n- $0.5B+ in annual user acquisition costs wasted on churn\n- Zero identity portability between DeFi, gaming, and social apps

Decouple identity from a single wallet key. Use ERC-4337 Account Abstraction for gasless, batched onboarding and Sign-In with Ethereum (EIP-4361) for portable social profiles. Let users bring their reputation and assets everywhere.\n- One-click onboarding via Google/Twitter with Privy or Dynamic\n- Session keys enable seamless gaming & social interactions\n- UniswapX and CowSwap already use intents, abstracting wallet complexity

A user's $100K DeFi history on Arbitrum is worthless when they mint an NFT on Base. This siloing destroys capital efficiency and forces over-collateralization. Lending protocols cannot assess cross-chain creditworthiness.\n- Zero native credit scoring across EVM chains\n- ~$30B in idle collateral locked in isolated silos\n- Compound on Ethereum cannot see your Aave history on Polygon

Build on Ethereum Attestation Service (EAS) and Hyperbolic to create a portable, verifiable identity layer. This turns on-chain history into a cross-dApp asset, enabling under-collateralized loans and reputation-based access.\n- EAS schemas for portable credit scores and credentials\n- LayerZero's Omnichain Fungible Tokens (OFTs) for reputation mirroring\n- Goldfinch-style underwriting becomes possible with a global identity graph

Users must choose: reveal your entire financial history for airdrops and access, or hide in a fresh wallet with no history. This false dichotomy stifles adoption from institutions and privacy-conscious users. Tornado Cash sanctions exemplify the regulatory risk.\n- No selective disclosure of credentials (e.g., prove age, hide balance)\n- ZK-proofs are not user-friendly for generic identity\n- Monolithic identities create unacceptable data leakage

Implement zk-SNARK/STARK-based credential systems like Sismo or Polygon ID. Users prove attributes (e.g., "Holder of NFT X", "Credit Score > Y") without revealing the underlying data. This unlocks compliant, private onboarding.\n- Selective disclosure via ZK proofs for regulatory compliance (KYC)\n- Sismo's ZK Badges are portable, private reputation primitives\n- Aztec Network provides the privacy layer for sensitive identity data