Exploration of On-chain Reputation and the Construction Ideas of Boutique Accounts

Author: 0xcuop

Reputation: A License to Excellence

Kevin Durant (KD), who played for the Thunder for nine years without winning a championship, made a shocking decision in 2016 to leave the Thunder and join their rivals, the Golden State Warriors. Since then, he has often been labeled as a "softie," and his loyalty has been questioned. However, the negative reputation did not follow him for long. In his first two years with the Warriors, he and his teammates won two NBA championships, and he stood out in crucial moments of the games, earning the FMVP honor, thus starting his journey of reputation repair. After dominating on the court, KD publicly "endorsed" African American players, focusing on social equality and racial justice, giving back to the community, and donating to youth basketball training programs. In no time, KD rapidly accumulated an excellent reputation.

This reputation has brought him tremendous benefits on both commercial and social levels: as of August this year, KD has earned a total of $358 million in his career, ranking third in NBA history. In addition to his professional earnings, Durant also has endorsement income. His influence even extends into the business realm, where he founded a venture capital firm and successfully invested in numerous startups, including the cryptocurrency exchange platform Coinbase.

Reputation originated from the implicit incentive mechanism in economics that encourages agents to act positively (Holmstrom, 1999). The integrity of an agent's business behavior can provide them with a good reputation, which is beneficial for gaining more cooperation opportunities and higher price premiums in the next round of games. When applied to individuals, it reflects how people often forgo short-term opportunistic behavior to maintain a good reputation in hopes of obtaining long-term benefits. Social members evaluate an individual based on various collected signals such as behavior, social media activity, and professional achievements, which constitutes the process of forming personal reputation. In this context, trust, ability, and recognition are essential elements of a good reputation.

How do we measure a person's reputation? One method is to divide a person's reputation into cognitive reputation and emotional reputation. Cognitive reputation is the stakeholders' understanding, judgment, and evaluation of an individual's behavior, while emotional reputation refers to the stakeholders' feelings of liking, respect, or aversion towards the individual's image. In the physical world, a person is a social unit, but on-chain, a unit often corresponds to a wallet address. An individual (an identity) is usually composed of one or more units (wallet addresses). The cognitive and emotional reputation of one or more wallet addresses that make up an identity can constitute the on-chain reputation of that identity.

Coinbase founder Brian Armstrong and the Base ecosystem fund have both published articles outlining their favored tracks or directions for on-chain construction. They believe that with the emergence of decentralized identities, the current issue is how to determine who is trustworthy and how to establish individual reputations on-chain. To this end, they proposed the idea of building an on-chain reputation protocol, believing it will play a key role in the interconnection of decentralized identities and on-chain entities, creating more trust for users.

The Value of Personal Reputation

The renowned public relations firm Dentsu has summarized the value of personal reputation. Their team believes that a good personal reputation:

• Is your stepping stone;
• Helps you get off to a good start;
• Aids in building interpersonal relationships;
• Facilitates contact and dialogue with others;
• Gains support;
• Gives you the greatest goodwill;
• Allows for quicker recovery after mistakes;
• Provides you with a second chance;
• Builds word-of-mouth;
• Promotes trust;
• Attracts customers to return;
• Draws potential clients to reach out to you;
• Narrows or even eliminates competition;
• Ensures a warm welcome;
• Spreads friendship;
• Builds a network;
• Makes praise more genuine;
• Makes criticism more constructive;
• Leads to faster promotions;
• Helps foster a supportive cultural atmosphere;
• Allows for openness and honesty;
• Supports teamwork;
• Builds partnerships;
• Ensures others respond to you;
• Makes it easier for you to find new jobs;
• Makes your ideas more acceptable to others;
• Encourages others to take the right actions;
• Makes it easier for you to gain respect from others;
• Constructs an atmosphere of integrity;
• Gains support for your values;
• Sets high standards for behavior;
• Demonstrates values;
• Indicates motivation and determination;
• Articulates your personal "brand";
• Allows others to know you before meeting you;
• Paves the way for your career development;
• Gains positive feedback;
• Hinders inappropriate behavior;
• Supports correct actions;
• Wins others' friendliness and goodwill;
• Drives you to succeed.

The collection of all these benefits reminds us that while a good reputation is not the only factor that drives your success, it is undoubtedly one of the most important factors, as it can help you build a successful career and achieve a good living environment in many ways.

In the Crypto world, personal reputation scores do not yet influence all aspects of our lives (from financial credit to borrowing an eraser from a classmate) as they do in the physical world, but many real use cases of reputation scores have occurred or are occurring.

• For example, the Superchain Faucet released by Optimism allows developers to obtain up to 20 times the testnet ETH using on-chain reputation data;
• For instance, Nomis can now provide returns for the reputation scores on its platform. Their ScoreFront is a one-stop platform for Nomis score holders to utilize their on-chain reputation;
• For example, Degenscore's Cafe offers three types of rights derived from Degenscore on-chain reputation, such as early access to beta testing, product benefit boosts; showcasing rights in Phi and Interface; and seeking job opportunities that match your skills.
• For instance, projects like CreDA, SpectralFi, Repute_x, and RociFi can provide high-reputation score users with increased leverage (loans versus collateral) and even loan services without over-collateralization. An effective credit scoring system will enhance liquidity in the DeFi market, as more users will be able to participate in lending activities with less collateral, greatly improving market liquidity and the overall efficiency of the ecosystem.

We can also envision that during the guiding phase of the reputation system (initial stage), certain reputation platforms can expand or narrow your voice in governance decisions by quantifying your contributions and impacts to the community; your on-chain reputation can also match you to corresponding social circles more quickly; and more directly, a certain reputation proof could be adopted by airdrop projects as a quantitative standard for distributing rewards.

In summary, the key value of future reputation systems can help with search and discovery within communities or networks. As the guiding phase matures, users can begin to use reputation scores to find the projects they need, and projects can provide more matching value and incentives based on users' reputation scores. Future on-chain reputation systems may also impact traditional finance: off-chain business entities or financial entities can use consumers' reputation scores to assess their on-chain behavior and provide corresponding services.

Current Status of Reputation Building

If you agree on the importance of establishing an on-chain reputation system, then we can explore some execution-level issues together. Currently, it seems challenging to find a comprehensive and accurate metric for building reputation on-chain in its early stages, as different users and application scenarios may require different measurement scales. However, we can understand a relatively efficient reputation-building model in the short term through the interaction between users, data, infrastructure, and projects.

In terms of infrastructure, the Ethereum-based EAS allows any entity to attest to various matters in the form of digital signatures. This is crucial for establishing trust in information in an online and on-chain world filled with real and false information. The design philosophy of EAS emphasizes decentralization and openness, ensuring that the protocol layer is not controlled by a single stakeholder. Although EAS is a foundational layer, its flexibility allows it to provide comprehensive support for building trust, verification, and reputation systems.

Op's on-chain proof service is now also adopting EAS. Linea's Verax has further enhanced interoperability, helping developers issue attestations compatible with other standards, thus promoting the birth of more unified reputation assessment standards. Meanwhile, Verax allows multiple reputation protocols to use the same attestations, enabling users to choose the reputation protocol that suits their needs and preferences without worrying about being "locked" into a single protocol.

Additionally, through Verax, reputation protocols can more flexibly utilize attestations to construct a comprehensive assessment of user, protocol, or dapp reputation. This also shows that Linea has been actively attracting potential reputation-building projects since the inception of Verax.

In the art market, understanding who a person is and their true record is crucial for judging their taste and appreciation of art. However, the value of artworks in the traditional art market is often dominated by the opinions of a few experts. $RARE stake calls for reconstructing the traditional art market with an on-chain reputation system to make it fairer, more transparent, and provide more individuals with opportunities to showcase and develop.

They introduced the concepts of community pools and curated lists in their products, promoting the establishment of an art platform where individuals can not only build an indisputable reputation in the fashion field but also self-curate in the Web3 creator economy, showcasing their talent and taste creation abilities.

For users aiming to receive project rewards for early contributions, having a good reputation associated with their wallet address to avoid being identified as a Sybil attack address is also very important. Before the Arbitrum airdrop snapshot, a model for on-chain distribution was created in collaboration with Nansen for token allocation. Some addresses that participated early in Arbitrum were considered not for practical purposes but focused on obtaining airdrops.

Ultimately, Offchain Labs researchers identified potential witch wallets by using clustering algorithms on transaction data from Nansen Query's fromaddress/toaddress and integrating tracking and token transfer models on Arbitrum and Ethereum. In this case, witch addresses and genuine behavioral addresses may exhibit identical patterns on-chain, but the project team excluded the possibility of witch addresses participating in governance based on motive theory.

At this point, on-chain reputation becomes a solution for proving that you are not a witch address. A good on-chain reputation becomes a powerful screening tool, helping users assure projects of their authenticity and credibility, thus indirectly providing energy for the overall security and reliability of the ecosystem.

The DeFi market is the area where reputation building is most likely to be practiced on a large scale in the short term. The DeFi industry can change the existing over-collateralization model by introducing an effective on-chain reputation scoring system. For example, an on-chain credit scoring system will allow DeFi platforms to assess users' credit risks more accurately, rather than relying solely on collateral value. Users can also obtain lower interest rates and better borrowing conditions by maintaining a good credit history.

• Similarities:

• Both focus on leveraging on-chain reputation to provide credit ratings for users within the blockchain ecosystem.

• Provide on-chain identity and credit ratings, offering users more financial and social opportunities.

• Differences:

• CreDAfinance: Creates user credit profiles in the form of cNFTs, primarily applied to unlock discounts and incentives on DeFi platforms and reduce borrowing rates.

• Repute_x: Focuses on referencing multiple data points to establish comprehensive credit profiles suitable for individuals in the Web3 ecosystem for trust building and financial services.

• RociFi: Introduces NFCS, emphasizing the realization of credit, reputation, and trust tokens in DeFi, providing users with verifiable identities and credit ratings applicable to lending, governance, and trust system building scenarios.

All of the above projects share a common characteristic of using scores to correspond to users' reputation values, similar to the credit evaluation systems in the real world (off-chain) such as FICO, Experian, Equifax, TransUnion, and Sesame Credit. Here we can't help but ask, is there a more crypto way to assist users in building reputation?

We can consider using credentials to represent reputation. How do we determine the reputation of the person behind an address? Typically, "reputation" represents our image in the eyes of others. Therefore, the key question is: "What is others' perception of us based on?" The brief answer to this question is: "Our actions, or our behavior." If you agree that your behavior can influence your reputation, then the on-chain behavior (collection) of the wallet address you control will also represent the reputation of that address. When on-chain behavior is reflected in data, it is complex and abstract, while upgradable credentials somewhat "tag" that data, presenting it in a more concrete form that showcases your on-chain behavior, thus helping you accumulate on-chain reputation.

Currently, there is a project on Base that uses credentials to represent user reputation. Users can apply for upgradable, human-readable credentials on Metopia to quickly discover the value of their accumulated on-chain interaction data within the Base ecosystem and attach reputation XP to quantify their overall progress in all interactions on the Base chain. These credentials encapsulate users' on-chain history in a human-readable form to showcase their participation and contributions throughout the ecosystem. This approach focuses more on assisting users in reflecting their personalized, dynamically changing reputation, enabling them to better perceive their progress on-chain and gain social recognition.

Accumulating Reputation: Contribution, Holding, and Building

The core of personal reputation management lies in establishing a clear self-awareness, that is, what style you want your on-chain image to be, and what qualities people see in you.

First, you need to envision how you want to be perceived by others on-chain. This may include personal traits, professional abilities, social skills, and more. Then, accordingly enrich or adjust your behaviors and activities to ensure they align with the desired image. For example, in the recent popular Celestia airdrop TIA case. Unlike Arbitrum, which focuses on contributions to its ecosystem, Celestia considers more complex data, including:

• Multi-chain interaction data monitoring: Opening interaction data between the Ethereum mainnet, Optimism, and Arbitrum One. This includes the flow of information on-chain, transaction interactions, etc., providing a more comprehensive understanding of user activity and participation across different chains.
• Gitcoin donations: The Celestia Airdrop also considers participants' donation records on Gitcoin. This aspect highlights community participation and support for developers, providing strong support for social reputation and contribution.
• Ens domain names: Examining users' activities in the Ens domain system reflects individual identity recognition and brand building in decentralized networks, further emphasizing personal roles in the blockchain ecosystem.
• Address age and active months: The Celestia Airdrop adopted a snapshot method for address age and active months, taken 6-9 months in advance. This helps identify long-term participants and active users, providing more accurate data support for airdrop weight.

This series of examination points indicates that the maturity and complexity of your on-chain behavior help you be recognized as a "high-value user" by the Celestia project team. Therefore, continuous contribution and building are necessary to let your high-value actions bring you a good reputation, thereby gaining recognition and rewards.

Secondly, it is essential to deeply understand where the risks lie. "____ is concerned about my on-chain ____ behavior," the first blank can be considered as institutions, employers, or project teams, which we refer to as personal stakeholders. The second blank refers to our specific on-chain behaviors, such as interactions, social comparisons, and whether there are any negative on-chain records. Understanding the expectations and concerns of these stakeholders can help individuals manage their on-chain reputation more effectively. The example we previously mentioned about project teams excluding witch attack accounts is a typical case of personal reputation facing risks—accounts viewed as witch attacks by HOP still suffer the pain of being excluded from the very first step years later.

Moreover, improving personal reputation also requires planning. Individuals can plan how to further enhance the value of their addresses based on their current reputation status, which involves some systematic practical work discussions. Here we can propose some methodologies for reference. To accumulate a good reputation, you can pursue the following directions:

1. Holding: Long-term participation and holding project tokens demonstrate confidence and support for the project. This not only helps personal financial appreciation but also establishes your commitment to the stability of the ecosystem within the community.
2. Contribution: Further refine contributions, including time, skills, and money. This includes but is not limited to donations, participating in community building and management, engaging in open-source projects, submitting code, and providing valuable work for the community (Build).
3. Education and Sharing: If you have expertise, consider writing blogs, creating educational content, and sharing your insights and experiences about the ecosystem you are in. Refer to Starknet's "Early Community Member Program," which rewards individuals who encourage technical discussions, organize Starknet-related events, and regularly publish Starknet brand content.
4. Supporting Others: Help solve others' problems, provide valuable advice, and gain community recognition with a friendly and professional attitude.

Finally, I want to say that the power of reputation comes from trust. Trust is the fundamental element of relationships, but with the development of globalization and information technology, the risks of centralized trust models have become more apparent, while the Crypto world is attempting to redefine social trust through decentralization. Reputation, as a concept that combines trust and responsibility, still deserves high attention but also faces new specific challenges. I hope we can soon utilize reputation to "create" new trust on-chain, which means we are about to "create" a new society through autonomous collaboration.