But what credentials do you use to log into the personal domain name provider, to manage it? Another email?
Unless there is state-guaranteed ownership of a domain name, this will remain to be chicken-and-egg problem: to manage a domain one needs an account with an email, and to have an independent email one needs a domain. Even then, moving between countries is normal now which poses a huge challenge to the concept of "online identity", because what one state guarantees is not necessarily what another recognizes.
A physical address to receive recovery codes? In Denmark, every person has a digital identity and they can authenticate themselves using either a smartphone or a dedicated TOTP key fob, and that could also work. Heck, we even have digital mail boxes for every person.
The reason that email is popular as an online identity is that it is an easy and cheap method for the service provider and user to establish an identity. It would be acceptable for a domain name provider to use a more expensive way of establishing identity since you only have to go through this process for this single provider. A physical office could work if you don't live in a country where people have government-issued digital identities.
Edit: Actually, why would we need all that? We don't need anything but a username, password and maybe a phone number to sign up for GMail, so why should it be different for a domain name provider? Sure, you need some recovery mechanism if you lose your credentials, but that problem is already solved by current email providers by using phone numbers, recovery codes, TOTP, Yubikeys, etc.
This is the most important comment in this entire post/thread. This is what needs to be addressed to truly solve the problem. I don't know how to solve it other than perhaps using a token on a blockchain to indicate ownership of a domain.
More than that, your spare email to control your main domain needs to be on a different domain, else you risk to be unable to solve any problems with your domain, because your email won't be accessible.
Ideally your domain registrar would allow to use a username, multiple emails, a phone number, and a 2FA not connected to any of them, like TOTP.
Managing this all is a tall order. This is why gmail and hotmail are so popular.
Unless there is state-guaranteed ownership of a domain name, this will remain to be chicken-and-egg problem: to manage a domain one needs an account with an email, and to have an independent email one needs a domain. Even then, moving between countries is normal now which poses a huge challenge to the concept of "online identity", because what one state guarantees is not necessarily what another recognizes.