Identity in web3 functions in a very different way than it does today. In most cases, identities in web3 apps are linked to the wallet address of the issues that can result with the app. Wallet addresses are fully anonymous unless the user chooses to link their own identity to it publicly, unlike web2 authentication techniques like OAuth or email and the password.
This almost usually requires users to send over sensitive personal information. If a user uses the same wallet for various dapps, their identity is smoothly transferred between them, and starts building up their reputation over the years.