Title: Web3 and Social Capital

Author: Wang Chao, Empower Labs

Social Capital refers to the connections between individuals or groups—social networks, norms of reciprocity, and the trust that arises from them. It is the resources that people derive from their position within the social structure.

There is no universally accepted definition of the concept of "social capital." Fundamentally, social capital is a concept relative to economic capital and human capital. It refers to the state and characteristics of close connections among social entities (including individuals, groups, and organizations). Its manifestations include social networks, norms, trust, authority, consensus on actions, and social morality. Social capital exists within the social structure and is intangible; it enhances social efficiency and integration through cooperation among individuals.

Putting aside these complex academic definitions, the simplest manifestation of social capital can be understood as, "When you want to do something, how many people are willing to support you based on their understanding of you and your social identity."

The case of Mr. Chu Shijian, who started Chu Orange while on medical parole, illustrates this. A group of business elites was willing to invest time and money, which reflects Mr. Chu's social capital. Despite having no money at that time, he could easily make a comeback by relying on the social capital he had accumulated.

When a person encounters an urgent situation and needs to borrow money from friends, whether there are enough people willing to lend, or even if a post is made in a social circle asking for help, this all reflects personal social capital.

I once heard a friend describe social capital in the simplest terms: "Who knows you, and who you know." Although it's not comprehensive, it indeed captures the essence.

Due to various factors such as technology limitations, social range, and transparency of actions, traditional applications of social capital have been concentrated in small, familiar circles. Even so, it constitutes the most important lubricant in society.

The emergence of Web3 networks and DAOs has given me hope. Based on technology and a global collaborative network, various protocols can push the depth and breadth of social capital applications to a whole new level, forming a new global credit network based on social capital. This is a disruptive opportunity.

I have seen some interesting DAOs on Discord, and sometimes I reach out to founders or core contributors to chat. Everyone is busy, so why are they willing to communicate with you? Besides a simple self-introduction, one of the most important criteria for judgment is the Discord feature that shows "mutual servers." I have encountered more than one person who said, "Bro, no need for so much introduction; I know we are the same kind of people." Why? Because upon checking the information, we found that we have over 20 mutual servers, a significant proportion of which are niche servers with only a few hundred members, indicating a high degree of shared interests, thus establishing a foundational trust.

Of course, this trust is still quite shallow. My second way of judging whether an ID is trustworthy is to look at their activity in various discussions. For example, if I encounter a member of FWB, I will check the FWB server to see if they are active and what they are discussing. If they are an active member, seem friendly, and have engaged in many quality discussions, the trust level will rise rapidly. If I find that they are only in various servers to collect airdrops, the trust level will drop to negative.

The identity status and roles in various servers are also important bases for trust. If someone has made significant contributions in a DAO with very good values, even if we have never communicated, a natural trust will arise.

The scenarios mentioned above do not rely on a person's real identity but purely on their behavior within the DAO. I do not need to know who they are in real life, whether they are male or female, or how successful they are.

On-chain behavior is also an important basis for judgment, such as what assets they hold, which applications they use daily, whether they are speculators chasing after meme coins, or long-term investors with diamond hands. Their participation in various DAO votes and what they voted on can all be used to assess a person (address). In fact, some projects have already begun to explore this field, and it is expected that projects will emerge soon.

A person's actions are the most direct basis for judging whether they are trustworthy, but on-chain data is far from sufficient, as it can only reflect a very small part of a person's actions. To form a more powerful trust network based on social capital, more aspects need to be taken into consideration.

Fortunately, in the Web3 world, within a global collaborative network, a person's actions, contributions, and deep social relationships are very easy to observe. When combined with on-chain identities and blockchain characteristics, it may unleash tremendous energy.

For example, if I am a member of a certain DAO and I strongly resonate with a core contributor based on my observations and understanding, if they need urgent help, I might be willing to provide various forms of assistance, including unsecured credit loans.

What if it’s not my willingness, but rather a protocol that analyzes various collaborative behaviors, identity status in the Web3 network, and a large amount of on-chain data to make a trust decision and is willing to support them? If we all trust the judgment of this protocol, the scenario will transform from a narrow circle of trust to a global trust network. I do not need to know them, observe them, or even know their identity, but the protocol tells me they are trustworthy. At this point, any Web3 participant in need of funds can use the social capital they have gained in this world to obtain more or less unsecured loans. When needing to start a project, it may be easy to secure investment.

Similar scenarios can be expanded greatly and are certainly not limited to financial matters. Once this trust network is established, it will unleash tremendous value. Individuals can also gain more value based on their Web3 social capital. This, in turn, encourages the Web3 community to value their social capital more, thus forming a more harmonious Web3 network.

However, it is clear that realizing this is extremely difficult. It cannot be achieved in a day or two. But the hope is indeed visible, and the next phase should be a time for various experts to innovate and brainstorm in this field. I look forward to the arrival of that day.