It's odd this thread doesn't mention the sovereign self identity (SSI) efforts, DID Auth, etc. Folks who have been working in this area for years at this point and have some traction.
Not your keys, not your life sounds awful.
For what it's worth I think the whole effort is wrong-headed except in some pretty niche areas of credentialing, somewhat for reasons you allude to; but it's weird context to ignore.
I am not so sure this kind of authentication will really catch on - the UX of Metamask and other wallets is just atrocious for say my father.
BUT I do happen to like to connect to a site just with my ETH wallet, it is much nicer than using username/password or handing over ALL your data to Google for the OAuth convenience. It's a bit sad that the web is no longer a place for people with basic tech literacy, I'd love to use my Ledger Nano everywhere.
I also was really fond of Civic for KYC and stuff, but it's gotten awfully silent.