What is human identity?
Where does identity come from?
Are you born within a framework of identity?
What does identity serve as?
How does identity relate to the physical world?
Identity cannot exist in a world of becoming, but rather only in a world of being. To have an identity maintains that there is a stable essence to existence beneath the flux of appearances. Identity is for the herd. The herd need an identity of some description or existential anxiety will get the better of them. The desire for an identity, or the claim to have an identity, is purely psychological in nature.
Spot-on, and I guess existential anxiety is indeed a herd thing. But if you don’t project identities (into “yourself” and upon “others” and “other things”), how can you do anything at all? How can you will anything at all? The perfect nihilist cannot be or do anything. Indeed, he cannot even be conscious (for consciousness presupposes a content, of “things” - and a container). The question “herd or above the herd” is, I fancy, not a question of identity or no identity, but a question of anxiety or no anxiety. I do not feel anxious when thinking nihilistically; for, in consistent nihilism, there is no “I” to be anxious about anything. But insight into reality’s nihilism is not the complete truth: an essential part of it is the fact that lies are necessary in order to live. Now of course the nihilist may ask: “Why live?”; but it’s opposite, “Why not?”, is equally valid. As Satyr said:
“There’s time enough for the void, pudding, this is the time for life.”
Identity is that little card with your physical likeness pasted on it and the name you have on your alleged birth certificate, along with other pertinent data of your selfness. The DMV gives them out. Go get one. 
would that mean that there is no identity in the universe
No static identity, anyway. If people keep morphing, how can identity exist? In a world of becoming, our mental and physical world is always ‘flowing’; not to any determined point, but where … ?
Good points, particularly about anxiety. In a world of becoming there isn’t any “I”, so realistically why be anxious about anything. But this view of the world takes a great effort to accept and live by, especially when one has had a world of being rammed down their throat for most of their life. So you are probably right, we may need the ‘lie’ in order to live. This is why the ‘herd’ needs the ‘lie’, even though they can’t see the ‘lie’. They need a static, objective view of the world so they can give their own existence meaning. Without thinking their life stands in the context of some kind of supreme organization, they fall into existential anxiety.