@Revertron I should probably provide more context. The goal is to build a user-friendly decentralized identity system for Fediverse. It will co-exist with DNS-based handles like @user@social.example, so readability is not a priority.
The idea is described in more details in this proposal: https://codeberg.org/fediverse/fep/src/branch/main/fep/ef61/fep-ef61.md
Key-based identity will also be allowed, so people who want more control could choose that. The 'smallchain' option that I'm thinking about is supposed to be a middleground between key-based identity and centralized identity providers.