Reputation is what this human society thrives on! The history of reputation goes a long way and has traces from ancient times.

Long before the discovery of modern civilisation, reputation served as the basis of societal order and survival.

In prehistoric times, communities were interdependent for survival. An individual's value was based on their skills such as hunting or gathering. Consider "Krate," a skilled hunter whose abilities earned him a reputation that spread across tribes. People spoke about his bravery and reliability, seeing Krate as more than just a hunter. This is how Krate's reputation was perceived.

As societies evolved, reputation became intertwined with power and legacy. For example, in ancient Greece, reputation influenced both personal and political life. Notably, Pericles, a key Athenian statesman during its golden age, exemplifies this. His democratic vision and oratorship, evident in the Parthenon's creation and judiciary democratization, cemented his respected leader status during the Persian Wars.

During the Industrial Revolution, Thomas Edison was a symbol of American ingenuity, known for his numerous patents and inventions, especially the phonograph and electric light bulb. His public demonstrations and media engagement influenced electricity development and adoption policies.

In this era, Elon Musk is known for challenging norms and making the impossible possible, from electric cars to space travel. His active Twitter engagement and direct public communication have shaped his image as a daring, vocal entrepreneur.

Reputation's importance has influenced society, politics, and economy throughout history. From tribal leaders to tech innovators, managing reputation has been key in creating legacies and driving change. These historical lessons underscore the ongoing power of a well-managed reputation in mankind.

To revisit - what is the definition of Reputation? At its core, reputation is the generally held beliefs or opinions about a person, group, or entity, influenced by their past actions and achievements. It is a key aspect of social life, used to assess trustworthiness, predict behaviour, and guide interactions.

Since the invention of the Internet, reputation has taken many forms. As reputation is a perceived notion, its interpretation on the internet depends on where it's being measured. Today, reputation systems occur formally (e.g., credit scores, rideshare ratings, e-commerce, government social systems, etc.) and informally (e.g., call-out culture, social media follower count, and the rise of product influencers, etc.).

Online interactions often involve strangers, making it hard to know who to trust. Digital reputation systems fill this gap by acting as a substitute for personal connections and social proof. Instead of relying on friends or family to vouch for someone, we look at their online ratings, reviews, and endorsements. A good digital reputation makes us more likely to trust someone, even without meeting them in person. So digital reputation has become a stand-in for the trust we used to build through face-to-face relationships. It helps us navigate the anonymous internet world with more confidence, whether we're buying, hiring, or just socializing.

Finally, let’s jump to Web3 and how reputation has evolved in Web3.

Firstly, we need to acknowledge that Web3 as an industry is growing significantly. Some of the numbers are mind-boggling. We will use State of Crypto Index - a platform developed by a16z Crypto to track numbers that matter amidst the hype and noise.

The most recent score on the crypto index is 4117. This metric has been calculated based on factors like active developers, interested developers, contract deployers, verified smart contracts (indication of dApps being built in Web3), active addresses, transactions (count + volume), dex volume, NFT buyers, and job search interest between people of this globe.

With billions of data lying on the blockchain, there is no ideal mechanism to give context to the data and allow people to own their data in a privacy-preserving way. In short, reputation-based systems in web3 are needed. The definition of how a reputation is defined in Web2 and Web3 is pretty different.

For instance, on YouTube, a person with a better reputation has more subscribers, garners more views on average, and earns more money through super chats. This is a specific example, but in Web3, users have more on-chain transactions, community interactions, and positive P2P behaviours.

Today, reputation in Web3 is decided by a lot of factors - Holding a ceratin token ($ETH for becoming a validator, $ARB for voting in the DAO), Community interactions (Monad, Berachain), OS contributions, etc. This is not entirely bad but has some flaws.

To dive deeper, let’s understand what can be probable reputation metrics look for different protocols.

• A liquid restaking protocol like Eigen layer would need users who have a reputation of staking tokens to become eligible for future rewards

• A P2E project like Axie Infinity would need people who play and try out different games. A user who has been actively involved in the gaming sector.

• A bridging protocol like Jumper Exchange, Bungee, or Rhinofi, would like users who bridge frequently to either farm airdrops or try to different chains.

There are a lot of such examples that can be dug more. But I will reserve that for later.

A catch is that these reputation indicators often fail to capture the nuances and context of an individual's true impact and contributions within the ecosystem. A more robust and equitable reputation system in Web3 should consider a broader range of factors, balancing on-chain actions, peer-to-peer interactions, and Sybil-resistant humanity traits.

How reputation has evolved can be understood by simple observations n the pattern in which different protocols have started to incentivize users. Btw, this is a very good post by Pash (founder of Mercle) on how incentivizations (primarily through airdrops) have evolved. You can read it HERE.

There are a few ways in which Protocols define your reputation and issue incentives (part of getting users and initial liquidity). The only way used to be - One time incentives via airdrop to its users.

This system of airdrops in itself was flawed due to several reasons:

1. Inefficient differentiation: Incentivizing to users to no to little reputation (no active involvement in the protocol/chain)

2. One-time drops, no phasing and

3. Sybil: People were gaming the system creating several wallets.

Protocols like Auracoin gave free money to its users creating above mentioned problems.

Then came retroactive drop based on your past reputation (past activity on the chain). Examples include Uniswap, ENS, etc. A very good case study on Uniswap airdrop programme.

Again, the flaws were:

1. Distributing large amounts of money (without actual ROI) to its users for just being vaguely active.

2. Sybil: People were creating several wallets in anticipation of these airdrops.

Now the major trend we see in defining the reputation of a user is - Continuous activity on the protocol/chain to get eligible for incentives. This is what we call Concurrent drops. Perfect examples would include - Optimism, Blur, Layer3, etc. The major flaws in this system are still two things - Sybil + PoH (proof of personhood). We will discuss this in our next blog when we write on - Designing Reputation Systems.

As mentioned previously, only the on-chain metrics are not enough to create your reputation as this crypto space is a highly P2P-driven space. A very specific example is Monad. Leaving all technicalities behind, Monad has created one of the finest communities out in the space. Their motto is “No Community input will go unnoticed”.

As per Monad, if you have a certain role in their discord (NadOG, Nads, etc.), you have a good reputation. Can you see what is happening here “People are speculating on the reputation of these roles within Monad”. So your reputation in Web3 is also perceived via your off-chain community interactions.

Let’s also talk about sybil activities that is a BIG headache for protocols. There are a few methods that different protocols use to filter Sybil. Some existing solutions include Gitcoin passport, World Coin’s world IDs, trusta Labs scoring mechanism. Here is a good post that analyses steps taken by Arbitrum to reduce sybils from getting an airdrop allocation.

But some protocols are also exploring different ways to filter out sybils. One such example was recently seen with LayerZero’s Self-report mechanism wherein their officials mentioned “We are allowing all sybil users to self-report within the next 14 days in return for 15% of their intended allocation, no questions asked.” They also invited Sybil hunters to report addresses who may be Sybils, and get certain allocations from the layerZero team.

This is a positive move that can serve as an effective case study for future token-dropping projects. Analyzing the impact could help identify sybils. Imagine sybils reporting their activities, allowing private investigators or projects to analyze their patterns and take precautions in the future.

In summary, your reputation in Web3 is influenced by numerous factors. There is no foolproof way to predict or define a user's reputation, but there are methodologies in place to address this issue.

Working at Mercle, we are building a global ledger for reputation data, featuring autonomous reward distribution. Our design specifically caters to the requirements of large-scale incentive design and distribution. This blockchain, developed with incentives in mind, empowers web3 users to control their reputation data across the internet. It provides developers with a customizable incentive logic, fostering a fully decentralized ecosystem that promotes trust and transparency among all participants.

More details will come soon, anon!

PART 2 - How to design effective Reputation Systems in Web3 (coming soon).

Until then,

we move forward.

Quick intro of me - I have been in the Web3 space for the last 3 years and being a 22-year-old, there’s a lot of passion for the space. I am still a learner. You can connect with me on Twitter.

I will keep writing an article every week on some good topics in the Web3 space, as a token of support, mint this Zora NFT and there’s a promise of quality content every week.

Mint HERE

Reputation is what this human society thrives on! The history of reputation goes a long way and has traces from ancient times.

Long before the discovery of modern civilisation, reputation served as the basis of societal order and survival.

In prehistoric times, communities were interdependent for survival. An individual's value was based on their skills such as hunting or gathering. Consider "Krate," a skilled hunter whose abilities earned him a reputation that spread across tribes. People spoke about his bravery and reliability, seeing Krate as more than just a hunter. This is how Krate's reputation was perceived.

As societies evolved, reputation became intertwined with power and legacy. For example, in ancient Greece, reputation influenced both personal and political life. Notably, Pericles, a key Athenian statesman during its golden age, exemplifies this. His democratic vision and oratorship, evident in the Parthenon's creation and judiciary democratization, cemented his respected leader status during the Persian Wars.

During the Industrial Revolution, Thomas Edison was a symbol of American ingenuity, known for his numerous patents and inventions, especially the phonograph and electric light bulb. His public demonstrations and media engagement influenced electricity development and adoption policies.

In this era, Elon Musk is known for challenging norms and making the impossible possible, from electric cars to space travel. His active Twitter engagement and direct public communication have shaped his image as a daring, vocal entrepreneur.

Reputation's importance has influenced society, politics, and economy throughout history. From tribal leaders to tech innovators, managing reputation has been key in creating legacies and driving change. These historical lessons underscore the ongoing power of a well-managed reputation in mankind.

To revisit - what is the definition of Reputation? At its core, reputation is the generally held beliefs or opinions about a person, group, or entity, influenced by their past actions and achievements. It is a key aspect of social life, used to assess trustworthiness, predict behaviour, and guide interactions.

Since the invention of the Internet, reputation has taken many forms. As reputation is a perceived notion, its interpretation on the internet depends on where it's being measured. Today, reputation systems occur formally (e.g., credit scores, rideshare ratings, e-commerce, government social systems, etc.) and informally (e.g., call-out culture, social media follower count, and the rise of product influencers, etc.).

Online interactions often involve strangers, making it hard to know who to trust. Digital reputation systems fill this gap by acting as a substitute for personal connections and social proof. Instead of relying on friends or family to vouch for someone, we look at their online ratings, reviews, and endorsements. A good digital reputation makes us more likely to trust someone, even without meeting them in person. So digital reputation has become a stand-in for the trust we used to build through face-to-face relationships. It helps us navigate the anonymous internet world with more confidence, whether we're buying, hiring, or just socializing.

Finally, let’s jump to Web3 and how reputation has evolved in Web3.

Firstly, we need to acknowledge that Web3 as an industry is growing significantly. Some of the numbers are mind-boggling. We will use State of Crypto Index - a platform developed by a16z Crypto to track numbers that matter amidst the hype and noise.

The most recent score on the crypto index is 4117. This metric has been calculated based on factors like active developers, interested developers, contract deployers, verified smart contracts (indication of dApps being built in Web3), active addresses, transactions (count + volume), dex volume, NFT buyers, and job search interest between people of this globe.

With billions of data lying on the blockchain, there is no ideal mechanism to give context to the data and allow people to own their data in a privacy-preserving way. In short, reputation-based systems in web3 are needed. The definition of how a reputation is defined in Web2 and Web3 is pretty different.

For instance, on YouTube, a person with a better reputation has more subscribers, garners more views on average, and earns more money through super chats. This is a specific example, but in Web3, users have more on-chain transactions, community interactions, and positive P2P behaviours.

Today, reputation in Web3 is decided by a lot of factors - Holding a ceratin token ($ETH for becoming a validator, $ARB for voting in the DAO), Community interactions (Monad, Berachain), OS contributions, etc. This is not entirely bad but has some flaws.

To dive deeper, let’s understand what can be probable reputation metrics look for different protocols.

• A liquid restaking protocol like Eigen layer would need users who have a reputation of staking tokens to become eligible for future rewards

• A P2E project like Axie Infinity would need people who play and try out different games. A user who has been actively involved in the gaming sector.

• A bridging protocol like Jumper Exchange, Bungee, or Rhinofi, would like users who bridge frequently to either farm airdrops or try to different chains.

There are a lot of such examples that can be dug more. But I will reserve that for later.

A catch is that these reputation indicators often fail to capture the nuances and context of an individual's true impact and contributions within the ecosystem. A more robust and equitable reputation system in Web3 should consider a broader range of factors, balancing on-chain actions, peer-to-peer interactions, and Sybil-resistant humanity traits.

How reputation has evolved can be understood by simple observations n the pattern in which different protocols have started to incentivize users. Btw, this is a very good post by Pash (founder of Mercle) on how incentivizations (primarily through airdrops) have evolved. You can read it HERE.

There are a few ways in which Protocols define your reputation and issue incentives (part of getting users and initial liquidity). The only way used to be - One time incentives via airdrop to its users.

This system of airdrops in itself was flawed due to several reasons:

1. Inefficient differentiation: Incentivizing to users to no to little reputation (no active involvement in the protocol/chain)

2. One-time drops, no phasing and

3. Sybil: People were gaming the system creating several wallets.

Protocols like Auracoin gave free money to its users creating above mentioned problems.

Then came retroactive drop based on your past reputation (past activity on the chain). Examples include Uniswap, ENS, etc. A very good case study on Uniswap airdrop programme.

Again, the flaws were:

1. Distributing large amounts of money (without actual ROI) to its users for just being vaguely active.

2. Sybil: People were creating several wallets in anticipation of these airdrops.

Now the major trend we see in defining the reputation of a user is - Continuous activity on the protocol/chain to get eligible for incentives. This is what we call Concurrent drops. Perfect examples would include - Optimism, Blur, Layer3, etc. The major flaws in this system are still two things - Sybil + PoH (proof of personhood). We will discuss this in our next blog when we write on - Designing Reputation Systems.

As mentioned previously, only the on-chain metrics are not enough to create your reputation as this crypto space is a highly P2P-driven space. A very specific example is Monad. Leaving all technicalities behind, Monad has created one of the finest communities out in the space. Their motto is “No Community input will go unnoticed”.

As per Monad, if you have a certain role in their discord (NadOG, Nads, etc.), you have a good reputation. Can you see what is happening here “People are speculating on the reputation of these roles within Monad”. So your reputation in Web3 is also perceived via your off-chain community interactions.

Let’s also talk about sybil activities that is a BIG headache for protocols. There are a few methods that different protocols use to filter Sybil. Some existing solutions include Gitcoin passport, World Coin’s world IDs, trusta Labs scoring mechanism. Here is a good post that analyses steps taken by Arbitrum to reduce sybils from getting an airdrop allocation.

But some protocols are also exploring different ways to filter out sybils. One such example was recently seen with LayerZero’s Self-report mechanism wherein their officials mentioned “We are allowing all sybil users to self-report within the next 14 days in return for 15% of their intended allocation, no questions asked.” They also invited Sybil hunters to report addresses who may be Sybils, and get certain allocations from the layerZero team.

This is a positive move that can serve as an effective case study for future token-dropping projects. Analyzing the impact could help identify sybils. Imagine sybils reporting their activities, allowing private investigators or projects to analyze their patterns and take precautions in the future.

In summary, your reputation in Web3 is influenced by numerous factors. There is no foolproof way to predict or define a user's reputation, but there are methodologies in place to address this issue.

Working at Mercle, we are building a global ledger for reputation data, featuring autonomous reward distribution. Our design specifically caters to the requirements of large-scale incentive design and distribution. This blockchain, developed with incentives in mind, empowers web3 users to control their reputation data across the internet. It provides developers with a customizable incentive logic, fostering a fully decentralized ecosystem that promotes trust and transparency among all participants.

More details will come soon, anon!

PART 2 - How to design effective Reputation Systems in Web3 (coming soon).

Until then,

we move forward.

Quick intro of me - I have been in the Web3 space for the last 3 years and being a 22-year-old, there’s a lot of passion for the space. I am still a learner. You can connect with me on Twitter.

I will keep writing an article every week on some good topics in the Web3 space, as a token of support, mint this Zora NFT and there’s a promise of quality content every week.

Mint HERE