The pillars supporting Web3: information, contracts, identity, "centralization" is still indispensable

Source: Solv Chinese Community

Authors: Will, Xiao Xiaopao

01 The "Achilles' Heel" of the Web3 World

In the movie "Infernal Affairs," Andy Lau plays a gangster who infiltrates the police department to relay insider information to his gang; Tony Leung is a police academy student who has infiltrated the gang. One is a bad undercover and the other is a good undercover, both of their true identities are completely erased, with no documents or records to prove their true selves. For the undercover cop Tony Leung, the only one who can prove his initial "soul" is Inspector Huang—his direct superior.

When Inspector Huang falls from the rooftop onto the car, blood splattering in that instant, this only "social relationship" also disappears, and Tony Leung's "soul" evaporates into thin air, falling into an irretrievable abyss.

Now let's change the scene: Tony Leung has arrived in the virtual world of blockchain, and all the traces he leaves on the blockchain—digital assets, NFTs, social networks, police academy certificates—are bound to a private key. If the only private key is lost, will Tony Leung also become a "transparent person" in the blockchain network, losing his "soul"? Does he have the opportunity to restore his identity through "social recovery" in the virtual world?

So far, the answer is unfortunately, Tony Leung is very likely to meet the same fate as in the real world. In the current blockchain world, the private key is everything; without the private key, everything we create and own in the blockchain world is irretrievable, with no customer service center to help you recover the private key, and no Inspector Huang to testify for you.

This is the Achilles' heel of the blockchain and Web3 world that we have high hopes for: we have an "information internet" that allows infinite input and output, and we also have a blockchain that can carry "assets" and realize value transfer; but where are our souls, identities, credits, and social relationships? They still have no place to settle.

The emergence of the concept of "soul-bound tokens" (SBT) has begun to provide us with answers. In the current Web3 blueprint, clear layers are starting to emerge—we need three towering pillars: the "Information Network," the "Asset Network," and the "Status Network" to jointly support a complete and viable "Web III."

02 Current Web3: A "Contractual Internet" Without "Identity"

Since its inception, Ethereum has carried the mission and aura of being "the world's computer." However, today's Ethereum is often criticized for "over-financialization," and to this day, its primary function remains financial and asset trading, making the positioning of the "world computer" increasingly awkward: a blockchain system that only has "addresses" without "identities," purely contractual and smart contract-based, cannot support the construction of effective, rich, and socialized applications—this has slowly become a consensus.

In the movie "Split," Kevin, who has 23 personalities, oscillates between the fashion designer Barry, the obsessive-compulsive Dennis, the conservative religious woman Patricia, and the mischievous minor— in the real world, you would need to suffer from severe dissociative identity disorder to experience this; whereas in a virtual world with only "addresses" and no "identities," any normal person can achieve this.

For example, in a witch attack, a person can use countless "addresses" to do the same thing, breaking the rules. Furthermore, in "implicit centralization," if one person can control countless addresses and assets, then he/she is the "center"—we have bypassed an explicit central government, yet welcomed an invisible controller that controls everything behind the scenes. In a world without "identity," "decentralization" seems to be a false proposition.

In the real world, we live in an environment where "identity" is as ubiquitous as air and water, completely unaware of the convenience it brings; whereas in a blockchain world without identity, everything becomes both transparent and hidden, with chaos running rampant. We must rely on establishing a "system of identity" in the digital world to complete the "theory of free evolution" in the digital world—from the "passive freedom" of a pet dog, to the "laissez-faire freedom" of an ostrich, and then to the "constrained freedom" of an ant colony.

But the question arises: how should "identity" in the blockchain world manifest?

03 "Contractual Status" and "Relational Status" in the Blockchain World

British legal scholar Maine proposed a thesis over 150 years ago: **all progress in human society, up to this point, has been a movement from "identity" to "contract." He also recognized that a person's "identity" has two sources: one comes from "social relationships" with others, and the other comes from "contract execution." Maine advocated for "progress from identity to contract" because, in the reality of 150 years ago, what people lacked most was **"contractual status," which prevented large-scale cooperation; whereas in the blockchain world 150 years later, what is lacking is precisely "relational status"—the mapping of social relationships from the real world onto the blockchain—which leads to a series of new problems.

The "contractual status" inherent in blockchain is a "status identity" that can only be obtained through the execution of smart contracts and can only be changed through smart contracts—its manifestation in the blockchain is "assets." Although in this "purely computational" system, "contractualization" has been pushed to the extreme, resulting in extremely high efficiency, the defect of having only this type of "contractual status" is also evident—narrow application scenarios make "over-financialization" unavoidable.

So, what is the "relational status" that maps from the real world into the blockchain world?

The "soul-bound token" (SBT) proposed by Vitalik, Glen Weyl, and others in the article "Decentralized Society: Finding the Soul of Web3" is a possible conception and currently the most practical solution in the Web3 field—when you map "contracts" formed due to social relationships in the real world, such as work experience, diplomas, etc., into "SBT" and bind them to yourself on-chain, the immense power of "relational status" begins to manifest: it can be issued by others—by issuing SBT to you, the other party confirms the "relationship," and it can also be modified by "revoking" or "changing" your "status/identity," and can be restored by verifying the "relationship" with you.

With an identity based on social relationships, the "Achilles' heel" of the Web3 world seems to be resolved; it can not only resist witch attacks (because the third party issuing SBT is clearly visible), but also offers a glimmer of hope for the currently unsolvable "on-chain unsecured lending."

Thus, our "complete status" in the digital world should include "information," "assets," and "relationships"—missing any one of these makes it incomplete. Consequently, a "Web III blueprint" clearly emerges—only by bringing "social relationships" into the Web3 world can we form a complete decentralized social structure (DeSoc).

We need to build an "identity internet" on top of the "information internet" and the blockchain's "contractual internet" that can perfectly accommodate Maine's "social relationships" from 150 years ago.

04 The Upcoming "Web III": "Information Internet" + "Contractual Internet" + "Identity Internet"

The Web3 world we have high hopes for should be one that has an "information internet" (Information Network) that allows infinite input and output, a "contractual internet" (Asset Network) that can carry "assets" and realize value transfer, and an "identity internet" (Status Network) that can house our souls, identities, credits, and social relationships, solving the questions of "who am I, what do I own."

With these three towering pillars, we can jointly support "Web III."

The "information network" built on the internet is the foundation of everything. Ethereum is a powerful world state machine capable of synchronizing the execution of all smart contracts, thus it can independently handle the construction of the "contractual internet." But how should the "identity internet" be realized? Can the internet and Ethereum meet the scenario where a person in modern society simultaneously possesses multiple "status identities" and can securely and independently hold "assets"? Can the blockchain infrastructure support these three "pillars" of "Web III"?

The answer is most likely negative. Due to the fundamentally different underlying technical logic of "identity" and "contract," these differences exist not only in concepts or cognition but also at the technical, algorithmic, and structural levels. The realization of the "identity internet," if it is to cover all areas of social relationships, will be a monumental project. SBT is an important means of realization within the existing system, and the "status identity" it represents must come from social relationships in the real world—this requires technical means to map onto the blockchain under the premise of security, integrity, and privacy, which is far more complex than simply issuing a "token."

Therefore, if a decentralized society (DeSoc) aims to carry the complex structures of social relationships, data governance, privacy protection, and rights distribution from the real world, the "identity internet" (relationship network) should be an independent "identity network" system, a new layer of infrastructure.

If we continue to think outside the box, it could even rely on independently deriving a "status/identity layer" (status chain) from the "asset layer" (asset chain) within the Ethereum network, constructing "Ethereum 3.0." The "status/identity layer" (status chain) could "fork" to expand multiple parallel universes, while the "asset layer" remains unchanged, maintaining the mapping relationship with real-world asset forms and being accepted by smart contracts in both parallel universes—achieving consistency with the real world.

05 "Web III" is not a perfect world—"Centralization" remains indispensable

The frequent "over-financialization" in the crypto world is not only due to the absence of an "identity status layer" but also because of a crucial missing factor—a "third party" that is secure, transparent, purely algorithmic, records only addresses and transaction facts, and does not establish any "relationship" with the transactors. Having a third party that can issue and confirm "social relationships" (relational status) is an indispensable piece of the puzzle in building a decentralized society (DeSoc).

When this "third party" platform is large enough, it not only plays a key role in establishing every reputation system and every relationship network in DeSoc but also becomes a beneficiary of the entire system: a public "relationship status" can allow the interconnected relationship nodes in the network to reference each other. As the intertwined factors in a network increase and the "relationships" become richer, society as a whole will place greater importance on "relationships"—a network where "you are good, I am good, everyone is good" and mutual trust can be expected, providing a foundation for various financial tools such as credit loans, installment payments, and asset mortgages.

But doesn't this reintroduce "centralization" into the "decentralized society"?

Although when the era of the "identity internet" arrives, the concept of "third party" will gradually converge towards the form of today's "Web2 giant platforms," it will still be built on an open, computational system, a transparent "third party" without black boxes—we should have a moderate choice of "green pills" between the illusory beautiful world constructed by Web2 giants with "blue pills" and the extreme insistence of crypto punks on unlimited freedom with "red pills."

In the "Web III" society, what we need is the "constrained freedom" of an ant colony.

06 Conclusion

The realization of the concept of a decentralized society ("DeSoc") requires the construction of a new infrastructure "identity layer," which can simultaneously support the three pillars of "Web III"—the "Information Network," the "Asset Network," and the "Status Network."

However, achieving the "mapping relationship" with the real world on a public chain is a challenge that those who have attempted it know well—the bodies of the pioneers in the "chain circle" still float in the "digital weak water river" at the intersection of reality and virtuality, faintly visible.

From contractual freedom to "Radical Markets," and then to SBT and decentralized society, since the bonds that string together all human activities and developments—"identity" and "contract"—have already appeared in Maine's mind over 150 years ago, we have ample reason to believe: the realization of "Web III" and DeSoc supported by the "contractual internet" (Asset Network) and the "identity internet" (Status Network) is merely a matter of time (good timing)—being a step ahead may lead to becoming a pioneer, while lagging behind may be ruthlessly crushed by the wheels of the times.