ERC-725/735 are legacy standards. They mandate complex, expensive on-chain storage for claims and keys, a design antithetical to Ethereum's scaling trajectory where gas optimization is paramount. Protocols like Uniswap and Aave will never embed such costly logic for user profiles.
decentralized-identity-did-and-reputation
Blog
Why Ethereum's ERC-725/735 Standards Are Losing the DID Standards War
An autopsy of how Ethereum's on-chain identity primitives, burdened by complexity and gas costs, were outmaneuvered by the chain-agnostic, developer-friendly W3C DID and Verifiable Credentials stack.
introduction
THE STANDARDS WAR
Introduction
ERC-725/735's on-chain identity vision has been sidelined by simpler, off-chain solutions that prioritize developer adoption and user experience.
The market chose off-chain verification. W3C's Decentralized Identifiers (DIDs) and Verifiable Credentials (VCs) won by separating the lightweight on-chain identifier from the off-chain attestation. This mirrors how Sign-In with Ethereum (SIWE) and Crypto-Attestation Services (EAS) operate in practice.
Developer experience dictates standards. Frameworks like SpruceID's Credible and Disco's data backpack provide the tooling for the off-chain model, while ERC-4337 account abstraction makes key management flexible. ERC-735's rigid, monolithic structure cannot compete.
Evidence: The Ethereum Attestation Service (EAS) has registered over 1.8 million off-chain attestations, demonstrating the demand for the verifiable credential model that ERC-735 aimed for but failed to implement practically.
key-trends
WHY ERC-725/735 ARE OBSOLETE
Executive Summary: The Three Fatal Flaws
Ethereum's early identity standards are being outmaneuvered by simpler, more composable alternatives. Here's why.
01
The On-Chain Storage Trap
ERC-725/735 mandate on-chain storage for claims and keys, creating a permanent cost and scalability anchor. This model is fundamentally misaligned with modern, gas-sensitive applications.
- Cost Prohibitive: Storing a single claim can cost $50-$200+ in gas, scaling linearly with complexity.
- State Bloat: Pollutes Ethereum's global state, conflicting with scaling roadmaps like Verkle Trees and stateless clients.
- Competitor Edge: Solutions like Ceramic Network and Spruce ID use off-chain storage with on-chain pointers, reducing costs by >99%.
>99%
Cost Reduced
$200+
Per Claim Cost
02
The Composability Gap
The standards are monolithic and Ethereum-centric, failing the interoperability test of a multi-chain ecosystem. They lack the primitive-level design of modern winners.
- Chain Agnosticism Lost: Protocols like ENS and LayerZero's OFT standard dominate by being chain-agnostic; ERC-725 is an Ethereum-only contract.
- Primitive Mismatch: Competing frameworks treat identity as a verifiable credential (W3C VC) primitive, enabling seamless integration with UniswapX, Gitcoin Passport, and Worldcoin.
- Developer Friction: Building requires deep Solidity knowledge vs. SDK-based approaches from Privy or Dynamic.
1
Chain Supported
High
Dev Friction
03
The Key Management Anvil
ERC-735's claim-signer model adds bureaucratic overhead without solving real-world key management. It's a smart contract solution to a wallet problem.
- UX Dead End: Requires managing claim signer keys on top of asset keys, a non-starter for mainstream adoption.
- Solved Elsewhere: Modern Account Abstraction (ERC-4337) wallets and MPC solutions like Privy handle delegation and recovery natively, without bloating the identity standard.
- Static vs. Dynamic: The standard enforces a static set of signers, while real-world identity requires fluid, context-aware attestations from networks like EAS (Ethereum Attestation Service).
ERC-4337
Modern Solution
High
Overhead
thesis-statement
THE STANDARDS WAR
The Core Argument: Flexibility Beats Fidelity
Ethereum's ERC-725/735 identity standards are failing because their rigid, on-chain model cannot compete with the pragmatic, portable attestations of alternative systems.
ERC-725/735 are architecturally obsolete. They mandate on-chain storage for all identity claims, creating prohibitive gas costs and data bloat for simple use cases like social verification or KYC. This design ignores the reality that most attestations are low-value and transient.
The market chose portable attestations. Frameworks like Ethereum Attestation Service (EAS) and Verax decouple the attestation from the storage, allowing proofs to be verified anywhere—on-chain, off-chain, or across rollups like Arbitrum and Optimism. This flexibility is the core innovation.
Fidelity to a single chain is a bug. In a multi-chain ecosystem, a DID standard that locks data to Ethereum L1 is useless. Projects building cross-chain identity, like Gitcoin Passport, use attestation graphs that are chain-agnostic, not monolithic smart contracts.
Evidence: The ERC-725 registry has fewer than 5,000 deployments after 7 years. In contrast, EAS has facilitated over 1.3 million attestations in under two years, demonstrating clear developer preference for the flexible model.
DECENTRALIZED IDENTITY STANDARDS
Standard Showdown: ERC-725/735 vs. W3C DID/VC
A technical comparison of on-chain vs. web-native identity standards, highlighting why W3C's framework is winning enterprise and developer adoption.
| Feature / Metric | ERC-725/735 (Ethereum) | W3C DID/VC (Decentralized Web) |
|---|---|---|
Core Architecture | On-chain smart contract registry | Off-chain, portable JSON-LD documents |
Verifiable Credential (VC) Support | Requires ERC-735 for attestations | Native, via W3C VC Data Model |
Primary Identity Key Type | Ethereum EOA or contract address | Any cryptographic key (Ed25519, RSA, Secp256k1) |
Interoperability with Legacy Systems | ||
Development Libraries & SDKs | < 5 major implementations |
|
Standardization Body | Ethereum Community (ERC process) | World Wide Web Consortium (W3C) |
Query Complexity for Issuers | On-chain event scanning | Standard HTTP(S) or DIDComm protocols |
Average Issuance Cost (Gas) | $2 - $15 per claim/update | $0 (off-chain) |
deep-dive
THE EXECUTION FAILURE
The Slippery Slope: How Complexity and Cost Killed Adoption
ERC-725/735's architectural over-engineering created an insurmountable adoption barrier, ceding the identity narrative to simpler, cheaper alternatives.
The Gas Cost Is Prohibitive. Deploying a full ERC-725 identity contract costs 5-10x more than a standard ERC-20 token, a non-starter for mass onboarding. Every claim addition or verification triggers a state-changing transaction, pricing out use cases like social logins or event ticketing.
Complexity Obscured Utility. The standard's ambition to be a self-sovereign Swiss Army knife—bundling claims, keys, and assets—created a steep learning curve. Developers opted for simpler, composable primitives like ERC-6551 for token-bound accounts or ENS for human-readable names.
The Wallet Integration Gap. Major wallets like MetaMask and Rainbow never built native support, as the UX complexity didn't justify the niche use case. This created a chicken-and-egg problem that stunted ecosystem growth from day one.
Evidence: The Ethereum Name Service (ENS) dominates with 2.2+ million names registered, while comprehensive ERC-725 implementations remain confined to academic proofs-of-concept and a handful of enterprise pilots.
case-study
THE ON-CHAIN IDENTITY SHIFT
Real-World Pivots: Builders Voting with Their Feet
While ERC-725/735 promised a unified on-chain identity layer, builders are adopting simpler, more composable primitives that solve immediate problems.
01
ERC-4337: The De Facto Identity Layer
Account abstraction has become the primary vector for DID-like features, rendering ERC-735's claim registry obsolete. Builders need smart accounts, not just claim storage.\n- UserOps as identity proofs replace signed claims.\n- Bundlers & Paymasters handle gas and sponsorship, solving UX.\n- ~8M+ Smart Accounts deployed vs. negligible ERC-725 adoption.
8M+
Smart Accounts
ERC-4337
De Facto Std
02
The Soulbound Token (SBT) Pivot
Vitalik's SBT concept captured the market narrative, shifting focus from technical compliance to social graph utility. ERC-725 is a framework; SBTs are a product.\n- ERC-5114 & EIP-4973 emerged as simpler, specialized standards.\n- Direct application in governance (e.g., Optimism's AttestationStation) and credentials.\n- Composability with NFTs and DeFi, unlike monolithic identity contracts.
SBTs
Narrative Winner
ERC-5114
Specialized Std
03
EAS & Verifiable Credentials Win on Cost
The Ethereum Attestation Service (EAS) and similar off-chain signing schemes provide 99% of ERC-735's utility at ~0.1% of the gas cost and complexity.\n- Off-chain attestations with on-chain verification roots.\n- Schema flexibility without contract redeploys.\n- Adopted by Optimism, Base, Arbitrum for retro funding and governance.
-99.9%
Gas Cost
L2 Native
Adoption
04
The Interoperability Trap: Chain-Agnostic DIDs
ERC-725 is Ethereum-specific, but identity is cross-chain. Builders use chain-agnostic standards like W3C Verifiable Credentials or IETF's Decentralized Identifiers (DIDs).\n- DID:key & DID:ethr provide portable, cryptographic identity.\n- Compatible with Ceramic, ENS, SpruceID ecosystems.\n- Future-proofs apps for multi-chain and off-chain worlds.
W3C VC
Industry Std
Chain-Agnostic
Core Feature
05
Over-Engineering: The 2017 Legacy
ERC-725/735 are products of the 2017 ICO era, designed for complex legal compliance that never materialized. The market favors lean, modular primitives.\n- Monolithic contract requires managing keys, claims, and execution.\n- High gas overhead for simple attestations.\n- Zero traction among major DeFi or social protocols.
2017
Design Era
High Gas
Legacy Burden
06
The VC & CEX On-Ramp: Real-World Identity
Regulated entities (Coinbase, Circle) build identity layers for compliance (Travel Rule, KYC), not on-chain claims. Their solutions bypass ERC-725 entirely.\n- Coinbase Verifications and Circle's Verite use off-chain attestation networks.\n- Focus on regulatory compliance, not programmable claims.\n- Drives adoption where real money and users are.
Verite
Enterprise Std
KYC/AML
Driver
counter-argument
THE STANDARDS WAR
Steelman: But What About Maximum Composability?
ERC-725/735's on-chain identity model is losing to off-chain attestations due to fundamental economic and architectural mismatches.
On-chain identity is economically unviable. Storing verifiable credentials directly on Ethereum imposes prohibitive gas costs for mass adoption, a problem solved by off-chain attestation protocols like Ethereum Attestation Service (EAS) and Verax.
Composability shifted off-chain. The verifiable credential (VC) standard (W3C VC-DM) won, creating a portable data layer. Projects like Gitcoin Passport and Worldcoin issue VCs, which are consumed across dApps without on-chain overhead.
ERC-725 creates vendor lock-in. Its smart contract-centric model binds identity logic to a single chain, while cross-chain identity solutions like Polygon ID and ENS with off-chain resolution enable multi-chain interoperability.
Evidence: The ERC-4337 account abstraction standard, the dominant smart account framework, uses off-chain UserOperations and signatures, not on-chain identity registries, proving the market's architectural preference.
future-outlook
THE STANDARDS WAR
The Synthesis: Ethereum as Anchor, W3C as Interface
Ethereum's on-chain identity standards are losing to the W3C's portable, verifiable credential model, which better serves cross-chain and off-chain reality.
Ethereum's DID standards failed because they treat identity as a stateful, on-chain asset. ERC-725 and ERC-735 bind credentials to a smart contract wallet, creating high gas costs and chain lock-in that users reject.
W3C's Decentralized Identifiers (DIDs) and Verifiable Credentials (VCs) won by separating the cryptographic proof from the chain. This creates portable, chain-agnostic identity that works everywhere, from Polygon to Arbitrum to off-chain KYC flows.
The market chose interoperability. Projects like Ceramic Network and Spruce ID implement W3C standards, enabling credentials to be signed once and verified across any environment, a flexibility Ethereum-native standards cannot match.
Evidence: Major identity protocols (e.g., Gitcoin Passport, Worldcoin's World ID) build on W3C's VC model, not ERC-725. They use Ethereum as a secure signing layer and settlement anchor, not the data store.
takeaways
WHY ERC-725/735 LOST
TL;DR for Builders and Investors
A first-principles autopsy on why Ethereum's on-chain identity standards were outmaneuvered by off-chain, portable alternatives.
01
The On-Chain Storage Trap
ERC-725/735 binds identity data directly to the EVM, making it expensive to write and impossible to scale. Every claim or key update burns gas.
- Cost Prohibitive: Managing a rich identity profile costs $100s in gas, versus ~$0.01 for off-chain signatures.
- State Bloat: Pollutes Ethereum's global state, conflicting with the core scaling roadmap of rollups and danksharding.
>1000x
Cost Premium
State Bloat
Core Conflict
02
Walled Garden vs. Portable Protocol
The standard creates Ethereum-locked identities, while the market demanded chain-agnostic solutions. W3C Decentralized Identifiers (DIDs) and Verifiable Credentials won by being blockchain-agnostic.
- Vendor Lock-In: An ERC-725 identity is useless on Solana, Cosmos, or Bitcoin.
- Winner-Take-All: Portable standards like did:key and did:web became the base layer for Sign-In with Ethereum (SIWE) and Clerk, not ERC-725.
Chain-Agnostic
Market Demand
SIWE
Adopted DIDs
03
Complexity for a Non-Existent Market
It solved for sophisticated, multi-key management and claim attestations before a clear use case emerged. Builders needed simple sign-in and reputation, not a sovereign identity framework.
- Over-Engineered: ~90% of dApp identity needs are met by a wallet address and an off-chain signed profile (e.g., Lens Protocol, ENS).
- Adoption Flywheel: Simpler, composable primitives like ENS names and NFT-based memberships captured network effects first.
ENS / Lens
Winning Primitives
YAGNI
Core Principle
04
The Verifiable Credential End-Around
ERC-735's 'claim' model was superseded by the W3C's Verifiable Credential (VC) data model, which is signature-agnostic and designed for selective disclosure. Zero-Knowledge Proofs require VCs, not on-chain claims.
- ZK-Native: Protocols like zkPass and Sismo use VCs for privacy-preserving verification.
- Regulatory Alignment: EU's eIDAS 2.0 and ICAO's Digital Travel Credentials are built on the W3C VC standard, not Ethereum-specific schemas.
W3C Standard
Regulatory Fit
ZK-Proofs
Tech Fit
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