Bullish Case for Decentralized Reputation

The Problems

Our digital reputation is fragmented. We own hundreds of accounts across web2 and web3. DAO contributor rating, Uber driver reputation or Amazon seller profile are not portable and interoperable. Companies in the same industry, such as banks, social networks or marketplaces, are required to build separate reputation systems that are actually working in a surprisingly similar way. Giving up reputation data back to the customers reduces the need for duplicate work and creates network-of-networks effect where each application benefits from their users having richer and more trusted identities.

Solving Decentralized Reputation

To address the problems outlined above we need to create a decentralized reputation protocol which would be open, permissionless, work across reputation domains and use cases. We need to borrow a few important principles from blockchain and self-sovereign identity communities to ensure decentralization of the system and user sovereignty that comes with it.

Pseudonymous and private by default

Reputation system should not evolve into the Social Credit System of China or any other centralized blacklist. Users are identified via their decentralized identifiers [DID] and should not reveal their real names or any personally identifiable information. Unlike NFTs or tokens, all reputation data (reputes) is stored off-chain and is not accessible publicly. Whenever user decides to share the information they should have a granular choice of privacy settings:

  • Share reputation event or reputation score directly with the verifier (encrypted with verifiers PK)
  • Share data publicly
  • Share data selectively (only choose one attribute or aggregated score)
  • Share zero knowledge proof of having a certain reputation event or score.

Segregation of reputation data and scoring models

Reputation is just a combination of facts and opinions. Those facts can be objective data points issued and signed by some reputable entity (smart contract, government, organization, web2 platform, peer). But the scoring is always subjective. To make the reputation system universal we shouldn’t introduce bias by adding assessment and evaluation right away.

  • It can be as simple as just a single number representing a credit score. In the DeFi case the input data would be on-chain activity across multiple blockchains, centralized exchanges, traditional banks and some qualification of being an experienced investor.
  • It can be a professional profile. Imagine the reputation profile of an engineer. It will take in their online activity across web2 platforms (github, stackoverflow, jira), web3 networks (deploys and calls of smart contracts), education (bootcamps, personal projects) and prior work (hackathons, grants completed, freelance and full-time job). The output would look something like a LinkedIn profile but with skills and experience being actually verified and proven, not just self-reported.

Reputation models competition

From the examples above we can see that computing a credit score or assessing an engineer is actually a subjective task and can be done in a myriad of ways. We can have a person doing an assessment, it can be a pre-defined algorithm or even a neural net. Those algorithms or assessment methodology should be public so that the whole system is trusted. But once we make a methodology public we also expose ourselves to cheating and people trying to game the system.

Open source and community-driven

In web3 you will not get adoption or success by building a siloed full stack solution. Instead, we need to think of ways to combine amazing work done by many open source projects. Even though reputation systems largely remain fragmented there’s a few quite interesting experiments being done in the community: SourceCred and CoordinaApe transform engineering contributions into monetary rewards; TheConvo computes score of NFT and DeFi users on Ethereum, Degenscore is… well, you can probably figure out for yourself; ArcX is looking to build an on-chain credit score; RabbitHole is building an on-chain resume; DAO management systems like Colony have internal reputation engines; and many many more examples…

Cross-chain, cross-domain

Blockchain world doesn’t end with just Bitcoin and Ethereum. Decentralized web doesn’t end with just blockchains. Human coordination and need for trust doesn’t end with just the web. The architecture of the system should be modular to support multiple information domains and technical protocols.

Let’s make it a reality

Whatever your goal is — from verifying personhood of your users to building programmable finance, giving out grants, enabling meritocratic voting and decision-making, building holacratic organization, hiring and assessing employees, doing directed airdrops, creating a decentralized social media or a closed community of experts — you will need a pseudonymous reputation system.

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Stepan Gershuni

Stepan Gershuni

SSI, Verifiable Credentials, Crypto, Bitcoin, Decentralized Web.