Towards More Identifiable Worlds with Web3 Reputation

Key Takeaways

• As digital interactions become more complex and individual identities become more important, current systems struggle to collect and utilize diverse reputations due to structural limitations.

• Web3 reputation solutions provide rich context to user-owned credentials, holistically organize fragmented reputations, and allow users to publish reputations on their own terms across multiple platforms.

• In conjunction with exploring diverse reputation solutions, it is also crucial to delve into efforts addressing privacy concerns, interoperability standards, and mechanisms to curate the multitude of credentials, enabling on-chain credentials to fully realize their potential.

1. Introduction

“Reputation(noun) ; The opinion that people have about what somebody/something is like, based on what has happened in the past” — oxford dictionary

Reputation serves as a basic layer for interactions in many aspects of our lives. Reputation has long been considered a key factor in determining the quality and diversity of interactions from personal social relationships to business transactions, acting as a ‘lens’ through which we perceive an individual, organization, or product.

In particular, in the digital age, reputation is becoming more diverse and dynamic than ever before. With the advent of social media and online platforms like blogs and forums, people can easily express their opinions and evaluations of various entities. Search engines have further amplified the reach of this information, influencing a large audience. Furthermore, the growth of the content and creator economy has highlighted the significance of personal branding, expanding the concept of reputation, which was previously focused on companies and products, to encompass individuals and small collectives.

Despite the increasing importance of individual identity in the increasingly complex digital landscape, existing systems face inherent challenges in organizing and facilitating widespread access to a variety of reputations.

Therefore, we will briefly discuss the desired properties of reputation data in the future, and explore how on-chain space can be leveraged to create and manage reputation data with these properties, using a few project examples to illustrate the concept.

2. The Need of Contextual, Holistic, and Portable Reputation

We consider the reputations of individuals and organizations to gain a holistic understanding of them before making decisions in various situations. Conversely, they also strive to maintain a positive reputation across all platforms and interactions to ensure continued engagement with consumers and other stakeholders. As the digital landscape becomes increasingly intricate and interconnected, reputations are bound to be shaped in more intricate and varied manners, necessitating more effective methods of articulation.

First of all, It is crucial for reputations to reflect the context in which they are generated. As platforms and communities continue to diversify, it becomes increasingly challenging for individuals and companies to establish a consistent reputation across all of them. Furthermore, reputations are shaped and evaluated differently within different communities and industries due to their distinct cultural norms and contextual factors - for example, the expression of intentions can vary significantly across cultures. In some cultures, direct and assertive communication is appreciated, while in others, indirect and polite language is preferred. Such differences can create a misconstrued impression during interactions with others.

Also, constructing a holistic reputation is essential as it provides a unified and comprehensive perspective of a person or organization, transcending the limitations of isolated platforms. Rather than fragmenting evaluations based on specific criteria or channels, a holistic reputation encompasses an entity's overall digital footprint, weaving their diverse activities across different platforms into a cohesive narrative. Individual reputation data is presently fragmented across a few centered platforms, each specializing in specific types of reputations. Consequently, individuals and companies face constraints in comprehensively representing themselves using reputations established on a single platform. Therefore, if a holistic reputation is constructed that can span multiple platforms, they would be able to represent their presence across the digital landscape in a more accurate and nuanced way.

Finally, reputation needs to be portable. This is particularly important in terms of ownership and centralization, as reputation data is currently siloed within centralized platforms, denying individuals autonomy over their personal information. Such siloed nature of reputation data limits individuals and companies from seamlessly transferring their reputation across platforms. If they choose to move to a different platform, they must reconstruct their reputation from scratch. So, if reputation data were entirely in their hands, individuals could independently construct and maintain their identities, promoting a consistent and autonomous online persona.

3. Web3 Grammars in Reputation Representation

3.1 W3C’s Verifiable Credential Data Model

W3C’s Verifiable Credentials Specification seeks to enhance identity and reputation management by standardizing existing verification methods, which have been characterized by inefficiency and centralized control. This standard specification enables individuals or companies (i.e., ‘Holders’) to acquire a digital certificate called a ‘Credential’ from an ‘Issuer’ to verify their identity or reputation to a ‘Verifier’ who needs to validate that information.

However, credentials using this specification only cover a limited range of explicit information and have not yet gained widespread adoption as an industry standard at the moment. Part of the reason for this is that users need time to adjust to this new way of managing their digital identity and reputation, but more fundamentally, there are concerns including 1) the trustworthiness of credential issuers, 2) the potential for security vulnerabilities and privacy breaches, and 3) the high cost of managing and verifying these credentials.

In short, while the W3C's Verifiable Credential Specification offers potential benefits, it does not adequately address the fundamental trust and scalability issues associated with existing reputation management systems. As a result, there has been a consensus in some circles that the emergence of a variety of means to prove oneself and their scalable representation requires a fundamental change in the way data is circulated and managed.

3.2 Web3 Reputation Credentials through On-Chain

The emergence of blockchain technology is paving the way for the widespread adoption of W3C's verifiable credentials, offering a secure and transparent approach to managing digital identities. The figure above illustrates a simplified representation of the architecture of various emerging on-chain-based Web3 reputation solutions that integrate W3C standards with blockchain networks*.

In the above structure, the blockchain network serves as the backbone for credential creation and distribution. The primary benefit of this system is the minimal cost associated with establishing trust and producing reputation credentials. This affordability empowers virtually anyone to create a credible reputation credential at a low expense. Moreover, The methodology used to create these credentials can be openly shared, ensuring that they are developed fairly and objectively. This transparency allows for continuous improvement of the reputation model by incorporating feedback from multiple sources.

In addition, the blockchain network makes it possible to generate contextual reputation credentials by linking the activities of individual users in any context. This is because all activities on the blockchain are publicly disclosed, making it possible to track and analyze user behavior across different platforms and communities. When a person's reputation is expressed across both Web3 and the real world, they are able to portray a more complete and accurate picture of themselves. It motivates them to construct a single-complete-holistic identity. Also, users have complete ownership of the diverse reputation identities they create, allowing them to post them on the channels and in the ways they want.

However, to achieve this ‘ideal’ scenario, there are a few key factors that need to be addressed. First, individual reputation data must be non-transferable. Second, it should protect privacy.

First of all, it's pretty intuitive that reputation should have a non-transferable nature - if a certificate for a degree could be transferred to another person, we wouldn't be able to fully trust the person’s qualifications or experiences. Therefore, web3 reputation credentials are typically implemented as non-transferable NFTs, or SBTs (Soulbound Tokens) in practice.

Privacy is also one of the key challenges that will need to be addressed in the future, and the transparency of blockchain has always been considered a double-edged sword, as an individual's activities can be monitored. Therefore, the usefulness of Web3 reputation solutions can be greatly enhanced if privacy solutions are used to ensure that the validity of individual activities can be verified without disclosing the content (e.g., Zero Knowledge Proof).

*Not all of the solutions we'll look at adopt this structure.

3.3 Use Cases for Web3 Reputation

Today, we use the internet to have complex interactions with a wide range of people, but in the early days of the internet, it was simple enough to just receive information. The point at which the Internet reached its singularity was when identity models began to be adopted. As methodologies began to be applied to better identify individuals on the web, people were able to trust each other to a greater extent, and the internet began to embrace a wider variety of interactions. In other words, we have already observed in the history of the Internet that the ability to better express and identify individuals leads to a greater variety of interactions with each other.

So, if Web3 reputation solutions are well supported by the infrastructure technologies that enable them, we can envision a world where we can better express ourselves and have richer interactions with other actors across all spaces, both Web2 and Web3.

Below are some of the enabling use cases we can envision if Web3 reputation solutions become pervasive.

3.3.1 New Marketing Channels & Loyalty Programs

Of all the web services that have emerged since the advent of the internet, social media platforms have experienced the most significant growth. Social media platforms started as an idea to simply connect people to people, but now they are hubs for information discovery and a more powerful marketing channel than any other. The evolution of social media platforms into complex spaces with a wide range of interactions has led to the accumulation of a variety of data on individuals. This has made it easier for companies to identify individuals.

Therefore, as reputation solutions that can identify the activities of users become more widely available, companies will be able to classify individuals in much more detailed contexts and are likely to actively utilize reputation data as sophisticated marketing tools or customer relationship management (CRM) tools.

3.3.2 Financial Democratization of the DeFi Market

Currently, most on-chain lending platforms currently use over-collateralized lending as their primary lending model. The model can help to prevent excessive liquidations cases, but it can also be inefficient and limit lending opportunities for those with less assets - in the real world, financial systems use credit scores to assess creditworthiness. However, it is difficult to define the elements that constitute a credit score in the on-chain environment. Therefore, this approach has not been widely tried yet.

Therefore, in order to facilitate the financial democratization that DeFi was originally intended to address, it will need to be able to leverage a variety of information about an individual (e.g., credit information) beyond the current balance in an account to bring the benefits of finance to a large number of users.

3.3.3 Systematized DAO governance

Decentralized governance is a promising use case for blockchain, but there are concerns that token-based on-chain governance could lead to plutocracy, which could be detrimental to organizational development. As such, the introduction of different methodologies (e.g., quadratic voting, proof of personhood, etc.) is providing new ways to improve governance frameworks. However, the decision-making authority of members may need to be differentiated based on their contributions, depending on the situation.

In this case, Web3 reputation information can be used to objectively measure an individual's contributions to a community. This information can then be used to reward individuals for their contributions or to grant them authority within an organization.

3.3.4 Increased Training Motivation

Historically, schools and universities have issued paper certificates to verify the academic achievements of their students. But then, digital certificates have emerged and revolutionized the way educational credentials are managed and shared. They allow for more efficient and secure storage, verification, and transfer of such credentials. Digital credentials are becoming increasingly important as a way to demonstrate skills, competencies, and experiences beyond academic degrees. This is helping to make education more accessible to people from all backgrounds.

Web3 credentials enable the comprehensive expression of credentials within a single identity, making them more widely applicable. In addition, token-based incentive structures can be used to motivate learners encourage content creation, and foster discussion. These structures can be weaved with Web3 credentials to create a more transparent and fair education system.

3.3.5 Gaming / Metaverse

The worldviews of existing games were not connected because they were developed by different game companies in isolation. That said, heavy players in a specific game were unable to carry over their reputation information, such as achievements, skills, and collaboration ability, to other games. However, in a web3 ecosystem where blockchains connect different games and metaverses, players can build a reputation that is portable across these different platforms.

This can play an important role in encouraging and motivating players to play more of a variety of games, as well as engaging in a variety of interactions with other players.

3.3.6 Collaboration and Recruiting

Web3 credentials on the blockchain are a secure and transparent way to store and verify individual skills and expertise. This can make it easier for teams to identify and evaluate talent, which can be helpful for finding the right people for specific projects and roles. Not only will this go a long way toward streamlining the hiring process itself, but it will also indirectly help team members continue to acquire new skills and knowledge in a variety of collaborative environments, enhancing the capabilities of the entire team.

4. Examples of Representative Web3 Reputation Projects

Starting with SBT, Web3 reputation solutions began to gain traction in the industry as interest in discussion that could bridge the gap between Web2 and Web3 grew. And now, as their potential and use cases become more widely known, a broader range of projects are beginning to utilize or integrate existing reputation solutions.

To better understand the current landscape of Web3 reputation solutions from a use case and usability perspective, I classified them into two dimensions : scope of application and composability - below is a brief introduction to some of these solutions, along with an illustration to help you envision what other reputations could be published on-chain.

Scope of Application

• Reputation can be used in a wide range of areas, from personal social media and e-commerce activities to employment, finance, and even government administration. However, reputation in each of these areas may or may not be meaningful in other contexts, depending on how it is utilized.

• Therefore, we can categorize solutions by constructing a spectrum of reputation use cases, with those that are ‘universal’, meaning they are widely used, and those that are ‘contextual’, meaning they are utilized in specific areas.

Composability

• Reputation can be either ‘Limited’, which already has some framework for organizing reputation, or ‘Flexible’, which allows users to organize reputation in a customized way, depending on the purpose and context in which it is used.

4.1 Degen Score

Source : Degen Score Dashboard

As its name implies, Degen Score is a service that scores a user's web3 reputation based on their on-chain activity on Ethereum network - the activities include interactions with various protocols/products such as minting, lending, staking, depositing, bridging, ENS generation, etc. Users’ DegenScore and grade increases as users connect more accounts and participate in more activities.

Specifically, once the Degen Score reaches 700 points, a non-transferable SBT Credential called 'BeaconSBT' can be minted, and users can use BeaconSBT to enjoy various privileges offered by various protocols partnered with Degen Score through the Cafe - for example, BeaconSBT holders can enjoy exclusive benefits such as early access to new protocols, additional benefits for certain activities, or participation in events.

Projects can also collaborate with Degen Score, such as running special promotions to attract new customers through Cafe, integrating Degen Score data, and even hiring processes for people with on-chain experience.

The projects that Degen Score has partnered with through Cafe so far span Web3 social, DeFi, NFTs, gaming, metaverse, and more, and the cumulative number of BeaconSBT holders has steadily grown to nearly 4k as of today.

4.2 Rabbithole

Source : Rabbithole

While Degen Score is a platform that allows users to be labeled and assigned specific quests based on a set of past on-chain credentials, Rabbithole is more of an educational platform designed to lower the barrier to entry, allowing users to systematically build up their credentials and actually learn about various protocols.

Source : Rabbithole Quest Creation Page

Anyone can register a quest via the quest form, including the description, reward, target audience, and other conditions, and users can then selectively perform each quest. Quests can include lending, swapping, bridging, delegating, depositing, staking, and more within a specific protocol - and a great feature of Rabbithole is that users can use a variety of pre-labeled audience classes or create users’ own.

As users complete each quest, Rabbithole tracks the on-chain record corresponding to it and issues NFTs for reward claims, called 'receipt'.

Rabbithole started gaining traction in May of this year and has been growing steadily ever since. As of November 13, 2023, there are nearly 6k proposed quests, with a cumulative total of nearly 160k+ participants.

4.3 Galxe

Source : Galxe Docs

Galxe is an open web3 credential data network that developers can freely access on the Galaxy Space to create and manage their own campaigns or implement their own customized credentials through Galxe's application modules, credential Oracle engine, and credential APIs - the range of credentials that can be created includes on-chain credentials for a user's various protocols as well as off-chain credentials on channels like Discord, Twitter, and Snapshot.

Source : Galxe

For users, a Web3 reputation score (i.e., Galxe Web3 Score) is calculated based on their activities and achievements on projects integrated on Galxe, which can be utilized to claim certain rewards and as a means of strengthening their identity and as a basis for facilitating various interactions in the future.

Galxe Web3 Score is calculated through the following five attributes: Experience, Fame, Expertise, Asset, and Humanity.

• Experience —’Experience’ reflects the past history of a user's wallet and Galxe ID.

• Fame — ‘Fame’ is an indicator of a user's social influence, with the more active social media presence on-chain and off-chain, the higher the score.

• Expertise — ‘Expertise’ is a measure of a user's engagement with campaigns on Galxe platform.

• Asset — ‘Asset’ is a score that reflects the type and amount of tokens and NFTs a user owns.

• Humanity — ‘Humanity’ is an indicator of whether a user is a real person, and is calculated by Trusta using a series of data including various social impact and verification processes.

Source : Galxe

Galxe is often utilized by protocols for growth, community activation, governance engagement, and marketing strategies, with each campaign attracting users through strategies such as issuing Galxe OATs (On-chain Achievement Tokens) and rewarding tokens for completing specific quests - Polygon's Brand Awareness Campaign, BNB Chain's Incentivizing Builders Campaign, and Optimism's Ecosystem Campaign are some examples.

Meanwhile, according to Galxe's official blog, there are currently more than 12 million unique users on the Galxe platform, with more than 3k+ partnerships and about 36k+ campaigns. According to Dapprader, between 20k and 150k wallets interact with the Galxe platform on a daily basis, although there is some variation.

Source : Dapprader

In addition, Galxe offers a variety of products, including - 1) Galxe ID, a profile that allows users to view their ongoing campaigns, credentials, Web3 Score, and Smart Balance* on Galxe at a glance, and 2) Galxe Passport, an SBT-based service that provides users with a more holistic experience by connecting their real-world identity and Web3 space.

*A service that facilitates seamless cross-chain transactions between services within Galxy and manages balances.

4.4 POAP

Source : POAP

POAP stands for ‘Proof of Attendance Protocol’, which was first introduced at the 2019 ETHDenver hackathon. An ERC-721-based digital badge, POAP is free for anyone to issue, and while it was initially deployed on Ethereum mainnet, since October 2020 it's been deployed on xDAI sidechain.

While POAPs are primarily utilized within communities as a way to measure the contributions of individual members, markers for airdrops, digital tickets, and proof of access to certain services, they are also being used by brands, influencers, and others in a variety of ways - for example, popular influencer gmoney had given out POAPs to people he had met in real life and gave them some allowlist spots on his Admit One Community.

POAPs are being used in a variety of industries, including gaming, education, and entertainment, to track participation, contributions, and reward participants with special offers. To date, more than 110+ applications have been built using POAPs, and nearly 7 million POAPs have been issued.

4.5 Orange Protocol

Source : Orange Protocol Docs

Orange Protocol is a solution that allows users to create and own reputation credentials that are more flexible and versatile than those offered by traditional solutions. Through Orange Protocol, users can create their own reputation credentials based on any on-chain and off-chain data, including various protocols, NFT projects, DAOs, and social media data.

Here, the entity that designs and provides the schema of the data is called Data Provider (DP), and the entity that creates the reputation model is called Model Provider (MP), where they have the option to either make the data sets and model sets they generate publicly available or not.

Source : Reputation Studio

Orange Protocol is used by Web3 users and DApp builders. They can configure their own reputation reports through Orange Reputation Studio or leverage the SDKs/APIs provided by Orange Protocol to configure customized services based on different credentials (e.g. voting in governance based on reputation NFTs, loan products with holistic credit scoring, etc).

To date, data from AAVE, Gitcoin, Snapshot, Uniswap, Curve, etc have been provided to Orange Protocol.

4.6 Cred Protocol

Source : Cred Protocol’s API Docs(Beta Versioin)

Cred Protocol is a platform that calculates an individual account's credit score and enables new customized DeFi product offers based on it - Cred Protocol integrates both on-chain and off-chain data to define and quantify a set of factors (i.e., Credit Factors) that can be used to measure creditworthiness as follows

• Borrwing History — metrics related to the account's past borrowing and repayment history.

• Account Composition — metrics related to the composition of the assets in the account.

• Account Health — metrics related to how often and at what size the account makes transactions.

• Interactions — metrics related to which communities the account primarily participates in in the Web3 ecosystem.

• Trust — metrics related to whether the account is primarily operated by real people.

• New Credit — metrics related to an account's borrowing behavior trends.

While Cred Protocol does not disclose the details and calculation methodology for each of the credit factors as it is concerned that individual accounts will abuse the way it calculates credit scores, the protocol notes that it is 1) dynamically changing the weight of each factor to prevent abuse and 2) entering into identity proofing partnerships with various entities (e.g., Coinbase, Quadrata, Masa Finance, Oasis Protocol, MetaMask, Valora) to increase the completeness of its model.

Source : Cred Protocol’s API Playground

Through Cred Protocol, users can see at a glance the status and credit score of the assets they own, and each project (especially DeFi lending protocols) can utilize Cred Protocol's API or integrate smart contracts to manage access to service users, develop customized products, and introduce new services such as credit lending.

4.7 Gitcoin Passport

Source : Gitcoin Passport Dashboard

Gitcoin is a platform launched in November 2017 to encourage developer initiatives for open-source software. As a way to finance individual projects, it is designed to allocate more funding to projects that receive votes from more individuals (i.e., not the amount of tokens), using Quadratic Voting method. However, the problem with this approach is that it is vulnerable to a Sybil attack, which splits donations across multiple addresses to increase the amount of funds Gitcoin allocates to the matching pool.

To address this, Gitcoin has been exploring methods for identifying individuals, and come to launch Gitcoin Passport. Gitcoin Passport integrates a variety of Web2 & Web3 credentials, called 'Stamps', to calculate a Humanity Score for each account - the higher the Humanity Score in the Passport, the more likely it is that the account is primarily managed by a real human.

Source : Gitcoin Passport Dashboard

Gitcoin Passport has been turned into a product to support more use cases beyond just Gitcoin Platform, such as NFT airdrops, faucet support, or decentralized governance by protocols. Developers can leverage the data in Gitcoin Passport or integrate their own stamps by referring to the API in the developer documentation.

To date, over 750k+ unique addresses have been issued Gitcoin Passports.

4.8 Sismo

Source : Sismo Docs

Sismo is a solution that utilizes zero-knowledge proofs and privacy techniques to allow users to aggregate their identity data and selectively disclose it to different applications - the data can come from on-chain sources such as Ethereum wallets, as well as off-chain sources such as Twitter and Telegram - by generating a ZK proof for each piece of data and disclosing it to the applications.

The first application of Sismo is a single-sign-on (SSO) project called Sismo Connect. Sismo Connect enables developers to request aggregated user data from Data Vault without exposing personal information using ZK Proofs. This allows products to create customer groups and provide personalized services without violating user privacy.

All applications built with Sismo Connect can be found in Sismo App Store.

4.9 Other Notable Projects

Other notable projects include the following:

• De.Fi Shield automatically scans users' DeFi portfolios to assess their security level, much like an antivirus program on our laptops. It calculates the level of risk based on its proprietary scoring system, and if it finds serious code issues in the contracts of the protocols users use, it categorizes them as high risk and alerts users through a smart notification system.

• Spectral Finance has developed an on-chain credit rating model called the Multi-Asset Credit-Risk Oracle (MACRO) score by learning from transactions across various lending protocols on networks including Ethereum, Polygon, and Avalanche. The model can be embedded as an SDK into a user's wallet or other DeFi protocol to analyze liquidation risk and others.

• Credora is a disintermediated credit rating solution that provides real-time credit analysis of CeFi and DeFi transactions while protecting the privacy.

• Otterspace is a protocol that allows users to freely issue and distribute reputation badges. For projects, it provides open-source contracts, APIs, and a no-code interface for flexible integration.

• Kleoverse is a platform that helps developers collect credentials based on their skills and community participation. Developers can score their development proficiency by earning badges that demonstrate their knowledge of various programming languages like Typescript, Rust, and Solidity, and their scores can be posted on a leaderboard.

• SOURC3 is a reputation system that tracks the contributions of blockchain software developers, where it is similar to GitHub, a popular platform for collaborative software development. Developers can migrate their code from GitHub to SOURC3, where it is working to establish a new standard called KYD (Know Your Developer) by providing decentralized IDs to each developer and creating an environment where their contributions and various metadata can be tracked.

• Karma uses a points system to track user reputation based on their contributions to DAOs. This system can be used to identify and reward active DAO contributors.

• Disco is a credential issuance/management protocol. Users can collect various credentials including off-chain sources and selectively control who they are disclosed to through Disco. Disco is currently in private beta.

These solutions represent a small subset of the total, and there are many other Web3 reputation solutions in a much wider variety of contexts. Additionally, each network has very different gas fee policies, so the accompanying analytics should be taken as a trend-following indicator rather than an absolute proof of the dominance of any particular project.

In conjunction with exploring diverse reputation solutions, it is also crucial to delve into efforts addressing privacy concerns, interoperability standards, and mechanisms to curate the multitude of credentials, enabling on-chain credentials to fully realize their potential.

5. Final Thoughts

Source : From Silos to Synergy: The Significance of Data Pipeline in Web3

A decade ago, 'big data processing' and 'data pipelines' were among the most prominent buzzwords in the IT industry. Since then, these methodologies have undergone significant advancements, leading to an explosion of innovative intelligence across various sectors.

The current blockchain industry appears to be following the similar trend. Each of the protocols that construct Web3 data pipelines has made notable progress in enabling the transformation of raw data into valuable insights. Furthermore, the development of concepts like account abstraction and intents is paving the way for seamless interaction between applications and users by enabling the aggregation of multiple underlying transactions into coherent units of information.

In short, to harness the vast trove of data generated by blockchain networks, advanced data indexing and analytics tools are becoming indispensable for effective data management.

From this point of view, on-chain reputation solutions offer the potential to not only enhance an individual's identity but also serve as a refined identifier that can be utilized by various projects.

Thanks to Kate for designing the graphics for this article.