The future of reputation scores is all about the community
In the real world, we can use a driver's license to prove our identity, but it doesn't reveal enough personal information or reputation. Getting to know a person or their past in the real world might involve asking mutual acquaintances or chatting with him or her about a favorite topic. However, the process of getting to know a person deeply takes a lot of time and is not efficient.
By comparison, it's easier to get to know someone online and learn more about their social reputation. With just a few minutes of access to Facebook and a Google search, you can look at a person's photos, thoughts, articles they share, etc. and learn about their reputation. But there are two problems with the current network approach. First, everyone is trying to maintain their online reputation, and second, it is difficult to distinguish authenticity from falsehood.
It was at this time that the decentralized web (aka Web3) was born . Now that our data is (mostly) stored on-chain, this data is open, easily accessible, interoperable, and can be used in many different types of decentralized applications. Never before in history has it been so easy to get to know a person or check their social reputation.
In fact, our online identities and social reputations are not just important core data (e.g. names, serial numbers, ratings), they are constantly evolving. Depending on the context (eg, at work, on Twitter, with friends), we can draw on multiple aspects of our personal identities. The more information we store on the chain, the closer our quantification of personal value is to the real value of the individual. A good assessment of social reputation utilizing Web3 technologies will allow people to view each other's profile (eg competence, value, status) from a perspective of validation rather than trust, enabling new levels of interaction.
However, although we are gradually storing more and more data on the chain, there is still a lack of an evaluation system to effectively quantify our social reputation. Various solutions exist with trade-offs, but none of them are perfect.
Solution 1: Quantify Reputation Through Social Tokens
Social tokens are virtual currencies that exist on the blockchain. It can be obtained by completing specific tasks, and can be exchanged for other cryptocurrencies or special community benefits related to the pass (such as access to pass-qualified content, voting rights on future strategic decisions).
These virtual currencies are critical to the efficient operation of decentralized autonomous organizations (DAOs), they can be paid out as salaries, create stronger trust, align incentives and keep contributors.
In the world of work, social tokens can be used as virtual currency in DAOs (we can compare it to Web3 startups). It does a good job of measuring in-game skins and community engagement, it does a good job of quantifying social reputation, and it provides a lot of micro-level practical experience on how to quantify and measure experience, reputation, and online achievement.
The more tokens a person owns, the higher his contribution to participate in and help the DAO grow. Some platforms, such as Coinvise, have already implemented this feature, which aims to better reflect the quality of work and community impact through social tokens.
Social tokens can be used as verifiable credentials when applying for DAO. In exchange, the decentralized community will have the ability to pre-assess the merit of candidates and schedule their work on the project accordingly.
Social tokens provide a great system for discovering, analyzing, and using data created by users on another application, platform, network, DAO.
However, social tokens still have several problems to be solved:
Everyone Can Buy Tokens — Today, people can buy tokens to increase their reputation and voting power, which is not fair to people who work hard to earn tokens. We're going to need a system to differentiate between "tokens purchased" and "tokens earned".
Web3 wallets are not optimized for social tokens — — current wallets do not allow users to easily show their tokens to others. Web3 wallets should optimize social tokens, create a dedicated space for them and allow users to easily manage social tokens (including hiding, displaying, etc.).
Social Token is still in the experimental stage of development — as of today, it has not developed a real network effect. We need more DAOs to adopt this kind of quantified social reputation, and only then will we see social tokens flourish.
On-chain is more expensive —— currently earning social reputation only through social tokens is expensive as network members have to pay GAS fees to send social tokens (note that layer 2 blockchains are coming, It can solve this problem).
Solution 2: Quantify reputation through NFTs
“Non-Fungible Tokens” (NFTs) are (in general) a means of community access. They have status, scarcity, and a sense of belonging to a particular community member. A collection of NFTs represents membership in different communities and provides special benefits to those communities.
They're a great way to quantify reputation, and after all the hype surrounding NFTs in 2020, they already have a strong network effect. It is one of the most widely adopted technologies in Web3 technology today, and people have created their own online identities around their NFTs (such as @punk6529 or @BAYC2745) to promote the easy-to-adopt, use, and integrate nature of NFTs. Additionally, there are dozens of projects building Web 3 social/identity tools for NFTs. This technological network effect is the strongest factor in favor of using NFTs as the basis of identity.
NFTs are also a great way to show your affiliation in a particular community, and the interface of the Web3 wallet is optimized for displaying community membership. Buying a rare NFT instantly increases social reputation, it's as simple as that.
Finally, since the existence and value of NFTs do not need to rely on liquidity, there is no cost to maintain liquidity, which makes NFTs a good way to quantify social reputation, which is promising and cost-effective.
However, there are several issues that need to be addressed if NFTs are to be an effective way to quantify reputation:
It is issued only once at a specific point in time. It's more of a "badge" than a real-time look at someone's reputation.
It is transferable, and it represents more wealth and status than reputation (e.g. Crypto Punks, BAYC).
It's good for the community, but not really focused on individuals (eg FWB, WHALE).
They exist on public blockchains, so are public by default. But they exist on specific chains and lack cross-chain support for NFTs, so their reputations are isolated.
Solution 3: Quantify Reputation Through Scores
As the famous saying goes, "It takes years to build a reputation and one day to ruin it". The nature of reputation means it is a 'spectral' comprehensive assessment rather than a simple 'yes or no' answer. Not only is it an overall rating, but it also varies by reputation rater. For example, you may behave differently in front of your friends than you do in front of your family or colleagues.
Scores offer a new perspective on quantifying on-chain reputation. They can be thought of as context-specific numbers that are constantly updated, evaluating an address' reputation based on their on-chain and off-chain behavior (if both are associated with the same address). This mimics how reputation works in the real world, allowing people to more broadly express how someone is "trusted" and where that trust comes from. Scores derived from looking at on-chain data, snapshot voting data, DAO contribution metrics alone or in combination can be narrowly or broadly defined, at the option of the score creator. Examples of scores can include:
Token: A specific HODL score, which measures how long you have held the token.
Airdrop: A specific Airdrop score, which measures how many airdrop tokens you have retained compared to other participants.
Protocol: A specific Credit score that measures your credit for providing dynamic load conditions.
Scores are still a new genre compared to other genres of reputation, and there's a lot to be discovered about it. A big concern about scores is that they can become binary in nature, similar to China's credit reporting system. The key difference here is that it only judges behavior at the wallet level. If a user doesn't want their past behavior to follow for a lifetime, he can start over (change the wallet).
There is another major part of the score —— which are computed purely off-chain, uploaded on-chain due to the massive datasets that need to be processed and traversed. This means that after the score is stored on one chain, it can be used on other chains. Its disadvantage is that users have potential trust in the off-chain calculation engine and need to ensure that the score is fully released on the chain. Platforms like ARCx are working to create score functionality for powering reputation-enabled Web3 applications.
epilogue
On-chain reputation and identity are the next major frontier for cryptocurrencies, and they can enable a whole new class of applications. We are at a stage right now where everyone is trying to understand how various architectural approaches can achieve the ultimate goal of "creating real end-user value". As far as our current situation is concerned, there are currently several outstanding issues worthy of our consideration:
1. Should the reputation element be dynamic or static?
2. Should it store all content on-chain, or can some elements be stored off-chain?
3. Should non-transferability be a mandatory requirement or optional?
4. Do they need to be tied to real-world identities (social tokens), or do they support pseudonymous identities?
5. How should reputation elements be placed on the storage chain? Should it be uploaded as an NFT, an oracle, or an ever-updating Merkle root?
These are fundamental questions about how to quantify reputation, but we will gradually have the answers to all of them as more products are launched on the market.
Edmund
Davin
Snake
nftnow
Web3Go
The Crypto Star
Cointelegraph
Bitcoinist