I think the idea is that RAAs can bridge the reality divide by tying the pseudo-anonymous contract identity to a real life identity. You can, for example, require the user upload a video showing them, any government IDs, their house number, their last utility bills, pay stubs, etc. You might require a mobile app that could look at ongoing phone telemetry/contact info to see someone has a network and is regularly going to a job. The goal isn't mathematical certainty, just to make the effort/cost of theft < the value of the loan.

Some startups do similar things to this (Tala) to lend in countries without credit bureaus and IIRC they can achieve loan repayment rates >= 'prime' US borrowers.