Why Long-Lived DIDs Threaten Network Decentralization

A DID anchored to a single blockchain or registry creates a lifetime dependency on that system's governance and liveness. This reintroduces the central points of failure that decentralized networks were built to eliminate.

• Key Risk 1: Protocol Capture: The controlling entity (e.g., a foundation, DAO) can censor or deactivate identifiers.
• Key Risk 2: Systemic Fragility: If the anchoring chain halts or forks, the entire identity graph is compromised.

Accumulated reputation and attestations become locked capital tied to a specific DID schema. This creates massive switching costs, disincentivizing users from migrating to better systems and creating winner-take-all markets dominated by incumbents like Ethereum ENS.

• Key Problem 1: Vendor Lock-in: Users cannot port their social graph or credit history without starting from zero.
• Key Problem 2: Stagnant Innovation: New, superior identity protocols cannot compete due to entrenched network effects.

Long-lived DIDs necessitate key recovery solutions, which almost universally rely on centralized custodians (e.g., wallet providers) or small, trusted committees. This recreates the exact trust model that decentralized identity was supposed to destroy.

• Key Flaw 1: Trust Assumption: Users must trust a 3rd party's multisig or social recovery module.
• Key Flaw 2: Regulatory Target: Recovery providers become KYC/AML choke points, enabling state-level censorship.

Decouple long-term reputation from short-term identifiers. Use frequently rotating keys or session-based DIDs anchored to a user's core cryptographic seed, not a persistent on-chain record. Systems like ZK-proofs of membership can attest to reputation without revealing a fixed identifier.

• Key Benefit 1: Reduced Attack Surface: Compromised keys have a short lifespan, limiting damage.
• Key Benefit 2: Protocol Agnosticity: Reputation becomes portable across chains and identity systems.

Long-lived DIDs become massive, non-purgeable state bloat. This forces nodes to meet exponentially growing hardware requirements, pricing out average participants and centralizing infrastructure among a few professional operators, mirroring Ethereum's state growth crisis.

• Key Consequence: Node count declines, reducing network resilience.
• Key Metric: Storage needs grow O(n) with user count, not usage.

A persistent, non-rotatable DID becomes a high-value political asset. Entities controlling large DID sets (e.g., wallet providers, institutional custodians) gain outsized, permanent influence over on-chain governance, turning decentralized autonomous organizations (DAOs) into plutocracies anchored by old identity keys.

• Key Consequence: Protocol evolution captured by legacy stakeholders.
• Key Example: Compound-style governance where early whales retain perpetual veto power.

Permanent DIDs have no secure path for key rotation or recovery without a trusted third party. This creates a single point of failure, forcing users towards centralized custodial solutions (e.g., exchange-managed wallets) to manage risk, directly contradicting self-sovereign principles. Systems like ERC-4337 account abstraction solve this for EOAs, but not for native protocol-level DIDs.

• Key Consequence: Security vs. sovereignty trade-off pushes users to custodians.
• Key Flaw: Lacks social recovery or multi-sig agility of modern smart accounts.

A DID designed as a universal, permanent anchor across multiple chains (e.g., Cosmos IBC, Polkadot XCM) creates a systemic risk. A compromise or consensus failure in the home chain invalidates identity across the entire ecosystem, turning a local issue into a cross-chain contagion event. This contrasts with intent-based, ephemeral identifiers used in UniswapX or Across.

• Key Consequence: Single chain failure breaches security for all connected chains.
• Key Risk: Contradicts the modular blockchain thesis of fault isolation.

A persistent DID becomes a unique, trackable fingerprint across all transactions. Over time, chain-analysis firms can build exhaustive profiles, destroying pseudonymity. This makes protocols like Tornado Cash necessary yet insufficient, as the DID itself is the leak. Zero-knowledge proofs (ZKPs) for identity must be session-based, not permanent.

• Key Consequence: Pseudonymity asymptotically approaches zero over time.
• Key Need: ZK-proofs of membership, not persistent on-chain identifiers.

The fix is to treat identity as a temporary, task-specific permission, not a permanent anchor. Protocols like UniswapX and CowSwap use intent-based architectures where users sign a desired outcome, not a transaction. A relayer (e.g., Across, SUAVE) fulfills it using a temporary session key. The DID is never a long-lived on-chain state burden.

• Key Benefit: Eliminates permanent state bloat and governance anchors.
• Key Shift: From identity-centric to outcome-centric design.

Indelible identity data creates a permanent, non-prunable state burden. This directly contradicts the stateless client ethos of protocols like Ethereum and burdens all future nodes with historical baggage, raising the hardware barrier to entry.

• Exponential State Growth: A DID for 1B users with 1KB of data = 1 Petabyte of mandatory history.
• Centralizing Force: Only well-funded entities can run archival nodes, creating a regulatory single point of failure.

A globally unique, long-lived identifier is a perfect censorship hook. Unlike pseudonymous addresses, a sanctioned DID can be permanently blacklisted at the protocol level by a captured validator set, freezing all associated assets and smart contract interactions.

• Protocol-Level Enforcement: More potent than OFAC-compliant RPCs; it's baked into consensus.
• Irreversible Damage: Unlike rotating an EOAs, a compromised DID's reputation graph is permanently tainted, destroying network effects.

Decouple durable reputation from permanent on-chain identity. Use short-lived, revocable attestations (like X.509 certificates) anchored to a mutable, off-chain root. This mirrors the key rotation best practices of TLS and IBC client states.

• Minimal On-Chain Footprint: Store only the latest state root or a compact proof.
• User Sovereignty: Users can cryptographically 'forget' and rebuild reputation, negating permanent blacklists.
• See It In Action: Models used by Worldcoin's Proof of Personhood (renewable) and IBC light clients (updatable).

Avoid a global singleton namespace. Let applications or rollups issue their own DIDs within isolated scopes (e.g., an arbitrum:// or uniswap:// namespace). This contains blast radius and aligns with the multi-chain, modular future.

• Contained Risk: A compromise in one namespace doesn't affect others.
• Regulatory Arbitrage: Jurisdictional attacks become fragmented and less potent.
• Existing Pattern: This is how DNS subdomains and Cosmos Zones inherently operate to limit systemic risk.