Reputation is defined as the beliefs or opinions that are generally held by someone based on certain behaviours and accomplishments. Since the beginning of civilization, reputation has been a metric of skills and qualities, conveyed through positions of power, badges etc. Even in the Web2 corporate, it's the reputation that is measured in titles, to indicate positions in hierarchy, which in turn determine one’s salary and benefits. In the gaming universe, reputation has been the core of game economics, where players earn in-game tokens based on their gameplay and then exchange it for skins, weapons and characters, etc, and higher reputation is depicted by a rare collection of in-game accessories and skills badge.

Reputation for brands and individuals is built over time based on good or bad actions and results that they achieve. This means, individuals are more conscious of their actions, as they cannot alter their past actions, leading to a more supportive community.

We have seen that building values and missions for the decentralised community is very crucial for setting the right culture. This also attracts intrinsically motivated talent to join our community. This forms strong communities that sustain participation even with uncertain monetary benefits.

For people who believe early in a project and help them build it for a larger audience and scale it, are rewarded for their actions and earn a reputation within the community. If this activity is tracked on-chain, reputation will be visible to a global audience and this individual can be listed out as a top-rated talent for his/her particular skill, eg: Community Building. This enables other newer projects to select members whom they know have experience to do the needed job, which is also verified. The value added to the community by a member’s contribution will directly impact the size of points received by a member. So, for a relatively new community, higher rewards are given to early community members.

Getting serious members is the first step, post which members need to engage to build for the common mission. This can be started by figuring out the right set of members, and we can select them using their reputation score in respective skill domains, and award them with initial opportunities to engage and contribute. But does this restrict newer members with lesser scores to participate and contribute in a community? Does this system increase the barrier of entry in the communities? If so, we need to figure out how we can find a better system.

Reputation token serves two main purposes:

• Identify and reward users who have contributed value to the platform - which these people use as signal on their public profiles/ platforms

• To provide a form of compensation that enables contributors to liquefy fractional value they have earned into an exchangeable currency

Challenges for using Social token as a measure of reputation:

• Anyone can buy tokens : Anyone with financial power can buy tokens to increase their voting rights and reputation. This will be unfair to those who earned it via hard work and meaningful contribution.

• Web3 Wallets don’t optimise for Social tokens : Holders can’t showcase their holding to others, or hide certain tokens.

• On-Chain makes things expensive : With members having to pay higher gas fees, its expensive to build reputation by setting up everything on chain

Challenges for using NFTs as a measure of reputation:

• Can only be issues once at a particular point in time: Serves more as a badge, rather than a live-view of someone’s reputation

• Transferrable and Represents wealth: Can be sold on marketplaces, hence easily corruptible in showing reputation, rather a good symbol of wealth

• By default, public by virtue of being on public blockchain: However, since they are chain specific, the reputation reduces because of cross-chain support for NFTs

Challenges for using Quantifiable scores as a measure of reputation:

• This method considers the fact that nature of reputation is a spectrum, and also changes based on context of perception

• Scores quantify on-chain reputation, that is continually updated and assess an address based on their on-chain and off-chain behaviour

In the Web3 universe, reputation is being defined by social tokens that define your access to resources, social capital and ownership. These tokens sometimes translate into rewards (financial or otherwise). One major difference between reputation in Web2 and Web3 economies is that it’s not confined to a particular game or company, rather, it's available on a public blockchain that is accessible by everyone.

Here, comes the paradox of reputation tokens, where it’s difficult to know if it was earned or bought? Because, the more liquid the token is, the lesser is the signal of reputation. By transferring ownership, not only the reputational capital is destroyed, but also their ability to serve as valuable compensation. This then creates a need for other metrics to gauge actual reputation. As the token signalling value decreases, the willingness for sharing it reduces too, reducing the market value of the token. Thus, this makes it very clear that reputation tokens having signalling value cannot be transferable.

In a physical world, a driving licence can be used to prove a person’s identity, but this doesn’t give us much information about their reputation in, say, their own field of work. Currently, to know a person in the physical world and to learn about his reputation, it would require talking to their acquaintances, which is not possible at times due to time limitations and inefficiency. There are multiple aspects of one’s personality subjective to work, family, Twitter etc, bringing all these on-chain will enable better interaction, as it will be more transparent that just being trusted. Also, in the present scenario, the work of a person is tied to the organisation he is working for instead of his personal identity, and it gets lost once the person changes organisation. Especially for content creators, their work being tied to a platform like Youtube, Tiktok reduces their understanding of engagement of their own content.

Today, it's very easy to build social identity but its difficult to control everything present online and verify available info, and most of the things come down to trust. This brings the need for reputation being linked to identity, freeing one’s work from organisational tag.It promotes long-term thinking, empowering people to build and maintain personal identities online, by linking personal history to on-chain activity. Going back to the content creator example, artists will now be able to identify top fans based on on-chain interaction with their content, and curate special benefits for them. Also, the creator can bring his content along with him to any space, and reap benefits attached to it. This will force platforms like Tiktok and Youtube to increase creator rewards, as creators will no longer be dependent on YT for showcasing their content, bringing a wave of other platforms for creators. Making creator owners of their engagement data and producing paid content for the selective users. Another good thing is that creators exactly know which content is a success/ failure for them as it is no more dependent on the YT recommendation system to bring their content to top for users to see.

The linkage of identity and reputation also presents us with a few challenges like not escaping from bad actions similar to credit score, implication of permanence, requirement of better wallet infrastructure and security, etc.

Retroactive rewards award those members whose past contributions have added value to the community’s overall growth. Now that personal activity is tracked on-chain, the amount of rewards earned retroactively can be a good feature to have along with reputation showcasing sincerity and work ethic. In Web3, DAOs are the future of work and hence, members will be working towards building and scaling communities whose mission and values they align with, thus, need to setup the right culture is of utmost importance, and that requires the community to act in a certain way, gaining rewards for every good action will build up their reputation within the community, as well as on-chain.

This Web is of the individuals giving them control and open ecosystem. The link of identity and reputation poses certain challenges that need to be solved before we can see its application, but that is the most sustainable way forward to digital economies.

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