Decentralized identity startups are having a moment as investors seek the next generation of killer applications in web3, even in times of market volatility. Blockchain-based identity systems, they argue, are the portal to user-facing applications in the decentralized land, whether the piece of identity is used to send tokens or showcase a gamer's achievement.
Entrepreneurs have come up with an array of solutions for decentralized identity or DID. We've covered Magic, a San Francisco-based startup that wants to make access to DID as simple as logging into Slack and Medium. Spruce, another DID provider, offers a "sign in with Ethereum" feature that can be interoperable with web2 identity systems. Then there's Singapore-based .bit, which was founded by two Tencent veterans to use domain names for DID.
Los Angeles-based Carv is the latest contender in the space to have attracted investor attention. The company recently raised $4 million, valuing it at a handsome $40 million, it tells TechCrunch. The round was led by Vertex, an early-stage focused VC firm under the Singaporean sovereign wealth fund Temasek.
Carv is taking a different approach from other all-encompassing DID solutions by zeroing in on the gaming industry first. Its main products include an engine that aggregates gamer data from both web2 and web3 and corrals that information under unique user IDs. On the enterprise front, Carv provides white-label data service to game operators that can then query cross-platform data about new users, such as their reputation and achievements on established ecosystems like Steam.
"When you onboard a web2 user, lowering the barrier is very important. If you log in with Metamask, which is like a safe for your private key, and you want to log in from another laptop, then you have to memorize all those secret phrases," says Victor Yu, co-founder at Carv. "So giving yourself an ID in a way that's more user-friendly, I think it's essentially very crucial."
Carv starts with games because it's where much of the consumer-facing development in web3 is happening, Yu reckons, but the startup eventually wants to expand to other user scenarios when they are more mature.
"Essentially in the market, we're talking about to-consumer-driven use cases. Many of [the current decentralized apps] probably have only hundreds of daily users, so it's hard to promote why users need DID," Yu says.
Six months after launching its beta version, Carv has partnered with over 90 games and exceeded 300,000 registered users. Around 160,000 of them are active monthly, spending an average of nine minutes on the platform each session. The DID system is compatible with more than 20 Layer 1 networks including Ethereum and Solana, which Yu says will allow Carv to cover 95% of the blockchain games on the market.
"There are currently 300 to 400 blockchain games that have a significant number of users and with that, we already cover more than 70," Yu explains.
Carv is already generating revenues from its white-label data service. It also takes a cut from NFT sales launched by games on its platform. In the future, the identity builder plans to enable customized user experiences such as tipping others for their comments, and it will charge a fee for such microtransactions.
The company's seed round was backed by a long list of participating investors -- typical for web3 deals where startups try to forge partnerships with ecosystem players. They included EVOS (ATTN Group), SNACKCLUB (Loud Gaming), Infinity Ventures Crypto, YGG SEA, UpHonest Capital, Lyrik Ventures, Lintentry Foundation, PAKADAO, 7UpDAO, and angel investor Aliaksandr Hadzilin, co-founder of NEAR.