One Big IdeaNFT DAOs Are Terrible
DAOs. If you’ve spent enough time in or around someone in the space, you’ve heard the acronym thrown around. During the bull market, it seemed the “solution” to every problem was to just DAO it (you can have this one for free, Nike). DAOs, or Decentralized Autonomous Organizations, promised a future in which entities became unstoppable. Governed by smart contracts. All you had to do was set up some initial rules and let Ethereum take the wheel.Set It And Forget It GIFs - Get the best GIF on G...
One Big IdeaA Beginner's Guide to Cosmos 2.0
The Scalability Trilemma & Cosmos The perfect blockchain would be decentralized, scalable, and secure. It is decentralized to be credibly fair and censorship-resistant, scalable to handle the masses, and safe from exploitation. Unfortunately, the perfect blockchain does not exist. Instead, what we have is the scalability trilemma. The tradeoffs required to develop a blockchain necessitate deprioritizing one of these pillars to benefit the other two.Bitcoin and Ethereum have prioritized decent...
One Big Idea1D = 1B
Last December, I escaped the freezing cold of Austin, Texas to venture down south to the land of Tropicana. Miami, Florida. It was Art Basel week. Fine art and culture were set to collide. This year with a twist. NFTs had taken over South Beach. Brands like Doodles, Heart Project, Cool Cats, and Poolsuite had descended on the sandy shores to show their wares to the world. From murals of Blue Cat and Letters to parties with (#free)Gunna and Amine. It was an extravaganza. Yet, it’s not the pomp...
One Big IdeaNFT DAOs Are Terrible
DAOs. If you’ve spent enough time in or around someone in the space, you’ve heard the acronym thrown around. During the bull market, it seemed the “solution” to every problem was to just DAO it (you can have this one for free, Nike). DAOs, or Decentralized Autonomous Organizations, promised a future in which entities became unstoppable. Governed by smart contracts. All you had to do was set up some initial rules and let Ethereum take the wheel.Set It And Forget It GIFs - Get the best GIF on G...
One Big IdeaA Beginner's Guide to Cosmos 2.0
The Scalability Trilemma & Cosmos The perfect blockchain would be decentralized, scalable, and secure. It is decentralized to be credibly fair and censorship-resistant, scalable to handle the masses, and safe from exploitation. Unfortunately, the perfect blockchain does not exist. Instead, what we have is the scalability trilemma. The tradeoffs required to develop a blockchain necessitate deprioritizing one of these pillars to benefit the other two.Bitcoin and Ethereum have prioritized decent...
One Big Idea1D = 1B
Last December, I escaped the freezing cold of Austin, Texas to venture down south to the land of Tropicana. Miami, Florida. It was Art Basel week. Fine art and culture were set to collide. This year with a twist. NFTs had taken over South Beach. Brands like Doodles, Heart Project, Cool Cats, and Poolsuite had descended on the sandy shores to show their wares to the world. From murals of Blue Cat and Letters to parties with (#free)Gunna and Amine. It was an extravaganza. Yet, it’s not the pomp...
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Humans are hierarchical by nature. Our instinct is to classify out of self-preservation. We are status-seeking. We look for indicators of where we stand on the totem pole of life by comparing our position to others. We are influenced and subconsciously (or consciously) mirror those we believe to be of high status.
In Robert B. Caldini’s Influence, The Psychology of Persuasion, the author breaks down the six principles of influence. They are:
**Reciprocation - **we hate feeling indebted. If someone gives us something, we feel the innate need to pay them back in kind.
**Commitment & Consistency - **we want to be seen as people who stand by their word. We will defend our self-image by completing actions consistent with things we have said or done in the past.
**Social Proof - **we feel safety is the decision of the herd. When faced with a difficult decision, we are likely to follow others. Following reviews and favorites are two prime examples of social proof.
**Authority - **we are more easily persuaded by those who appear to be in charge. By acquiring knowledge, status, or otherwise, experts have an easier time getting others to follow them.
**Liking - **we want to agree with people we like. As much as hard skills matter, you are much more likely to get the job or close the deal if the person can picture grabbing a drink with you after.
**Scarcity - **we are more likely to act on the fear of losing rather than gaining. You see retailers market “low quantity” in big red letters or “ONLY 1 PAIR LEFT” to get you to add to your cart.
In social media, we see social proof and authority principles play out consistently. Individuals are more likely to react in kind when their feeds are clustered around a particular perspective. This can quickly devolve into mob mentality if left unchecked, but that is for another article. Instead, we are going to focus our time on analyzing authority.
Authority is represented by two social media aspects - follower count and verification. Both demonstrate high status. The common thinking is that if you are worthy of a massive following, and the threat of imposters is so high the social media overlords need to verify you, then you must be someone worth listening to.
But what if this authority has not been earned?
What if those followers were purchased or are filled with bots? Twitter has been on record, claiming they ban **over 1 million bots daily. **Even if you claim bots aren’t as big of a deal as Elon Musk will have you believe, the fact we are implicitly giving influence to people based on juiced-up followings should be cause for concern. four
This brings us to verification. This status is supposed to denote that you are speaking with an audited and verified individual. The problem? Many verified accounts are being purchased and then used to farm out scams to the public. Over the past several months, we have seen countless verified accounts pretending to be founders of NFT projects like Bored Ape Yacht Club, Azuki, Moonbirds, and Doodles. In each instance, the verified account attempted to convince users to interact with a scam mint link meant to drain their wallets. As a result, millions of dollars in scammed NFTs and cryptocurrencies have been lost as users accidentally approved these malicious actors.
Worse still, we have seen a flurry of influential accounts like Zeneca, Keyboard Monkey, and Franklin get hacked in the past several days. According to Yuga Labs, these attacks seem to be coordinated by a single group.
Being susceptible to unearned influence that shapes your perspective is terrible. Being sensitive to unearned effects that put your livelihood at risk is downright awful. How do we put measures in place to protect our community? What actions can be taken to regain trust in the individuals and information we receive daily?
One solution proposed by Zeneca33, whose influential Twitter account with 300k followers was compromised this week, is more education and self-accountability. His reason for the latter is that bailing individuals out when their funds are compromised only gives them a false sense of security; we must take self-sovereignty seriously and can no longer rely on the safety nets of Web2.
I tend to agree with Zeneca. We must operate with a healthy level of paranoia regarding the security of our accounts and wallets. Two-factor authentication, yubikeys, and proper wallet hygiene are all practical steps to protect yourself.
However, this does nothing to validate the reputation of those we interact with online. To that end, the authority should not be given out by broken follower counts and verification statuses. Instead, we need a new system that rewards meaningful contributions non-transferrable.
Enter Soulbound Tokens (SBTs).
Initially conceived by Vitalik Buterin in January of this year, SBTs can be used to represent accomplishments and reputation on-chain. Vitalik makes the analog to Soulbound Tokens in World of Warcraft. These items require work (i.e., they cannot be purchased), and the user forever wields them once earned.
SBTs can impact any industry currently on-chain and many that are not. Some examples include:
Banking - an SBT denoting an individual has good credit could be referenced to give them an undercollateralized or zero collateral loan. This would be a massive boom to the DeFi space as it mirrors how most people do business in the real world (e.g., you do not need to put up collateral to use a credit card).
Governance - individuals with varying levels of responsibility could be given SBTs to denote aspects of governance, such as what they can vote on and how much their vote is worth. Additionally, rewards could be delivered based on the individual's level of SBT.
Housing - SBTs could denote if an individual has (or does not have) an outstanding loan. Lenders will read these SBTs to determine if an individual qualifies for a mortgage.
Healthcare - SBTs could denote if a person is an organ donor, has allergies, or has been vaccinated. Given the sensitivity of some of this information, we would need to protect the privacy of the info cryptographically. Permission could be given for users to either see the presence of the SBT, read the SBT, or see nothing at all.
Social Media - Finally, we turn our attention to the focal point of this article, improving trust in authority on social media. We can also leverage SBTs to solve botted follower accounts and verification scams.
For example, we could implement SBTs tied to an individual completing a “Know Your Customer” (KYC) application. KYC is typically required for investors interacting with centralized exchanges in the US. Individuals must submit articles that prove their identities, such as a social security number, passport, and driver’s license.
Upon completion of the KYC, an SBT could be generated to denote the individual has been verified. The SBT itself would not contain personal information and is tied to the individual rather than a single wallet. These SBTs would then be a requirement for social media account creation.
In this type of future, there are several benefits, including:
Humans-only - bots are eradicated outside of particular use cases. This would restore trust in both the follower counts we see and the people we interact with.
More challenging to compromise influential accounts - in a world where your wallet is used to sign into your social media account, verified individuals could only be compromised if someone gains access to their wallet.
Further, we could move away from our reliance on followers and verification to denote authority. Instead, SBTs could be leveraged to reward good actors. Similar to how POAPs are used today, SBTs could be awarded for attendance and participation. Additionally, rewards could be displayed (e.g., a spot on the NFT100 or Forbes 30 under 30). This way, our wallets would become less about what we buy and more about who we are.
So how do we get there?
Fortunately, many companies are taking varying approaches to tackle reputation online.
Proof of Humanity is an on-chain identity registry where application approval requires others to vouch for you. The application consists of creating a profile, including a video submission to prove they are human. After submitting a deposit (a scam deterrent), other users in the network can vouch that the applicant is indeed who they say they are. Once approved, registration is denoted on Ethereum Mainnet. Proof of Humanity hopes human authentication will serve use cases like Universal Basic Income (UBI), DAO voting (i.e., one human can not spread their votes across multiple wallets), and reputation systems (e.g., credit scores and rep points).
Curious Addys is using SBTs to reward individuals who ask and answer questions on their platform. Individuals can receive credit for their contributions by collecting badges and growing their reputation within the ecosystem.
Disco is taking an off-chain approach to reputation. Using Decentralized Identifiers (DIDs), individuals can prove ownership over Verifiable Credentials (VCs) for themselves or others. These VCs are akin to SBTs and are used to represent identity, reputation, and membership. Relying Parties (e.g., applications) read VCs to inform what action to take. For example, a VC could be used to denote membership in a DAO. Upon the Relying Party recognizing the VC in an individual’s wallet, they are granted access to the DAO’s discord.
If you have the time, I strongly recommend listening to Disco’s CEO Evin McMullen and Vitalik discuss the pros and cons of on- and off-chain reputation systems.
Solving for reputation online can restore trust in our digital communities. We will build a system based on merit and authenticity by rewarding good actors and rooting out malicious ones.
Thanks so much for reading this week’s edition of The Multiverse. Be sure to subscribe to receive my newsletter every Monday. I hear your morning cup of coffee tastes better with The Multiverse.
Also, if you enjoyed it, please consider sharing it with your network.
Reputation is broken. Soulbound Tokens (SBTs) offer a solution.
Finally, for more thoughts on Web3, follow me on Twitter @austin_hurwitz.
Till next time,
Austin
Humans are hierarchical by nature. Our instinct is to classify out of self-preservation. We are status-seeking. We look for indicators of where we stand on the totem pole of life by comparing our position to others. We are influenced and subconsciously (or consciously) mirror those we believe to be of high status.
In Robert B. Caldini’s Influence, The Psychology of Persuasion, the author breaks down the six principles of influence. They are:
**Reciprocation - **we hate feeling indebted. If someone gives us something, we feel the innate need to pay them back in kind.
**Commitment & Consistency - **we want to be seen as people who stand by their word. We will defend our self-image by completing actions consistent with things we have said or done in the past.
**Social Proof - **we feel safety is the decision of the herd. When faced with a difficult decision, we are likely to follow others. Following reviews and favorites are two prime examples of social proof.
**Authority - **we are more easily persuaded by those who appear to be in charge. By acquiring knowledge, status, or otherwise, experts have an easier time getting others to follow them.
**Liking - **we want to agree with people we like. As much as hard skills matter, you are much more likely to get the job or close the deal if the person can picture grabbing a drink with you after.
**Scarcity - **we are more likely to act on the fear of losing rather than gaining. You see retailers market “low quantity” in big red letters or “ONLY 1 PAIR LEFT” to get you to add to your cart.
In social media, we see social proof and authority principles play out consistently. Individuals are more likely to react in kind when their feeds are clustered around a particular perspective. This can quickly devolve into mob mentality if left unchecked, but that is for another article. Instead, we are going to focus our time on analyzing authority.
Authority is represented by two social media aspects - follower count and verification. Both demonstrate high status. The common thinking is that if you are worthy of a massive following, and the threat of imposters is so high the social media overlords need to verify you, then you must be someone worth listening to.
But what if this authority has not been earned?
What if those followers were purchased or are filled with bots? Twitter has been on record, claiming they ban **over 1 million bots daily. **Even if you claim bots aren’t as big of a deal as Elon Musk will have you believe, the fact we are implicitly giving influence to people based on juiced-up followings should be cause for concern. four
This brings us to verification. This status is supposed to denote that you are speaking with an audited and verified individual. The problem? Many verified accounts are being purchased and then used to farm out scams to the public. Over the past several months, we have seen countless verified accounts pretending to be founders of NFT projects like Bored Ape Yacht Club, Azuki, Moonbirds, and Doodles. In each instance, the verified account attempted to convince users to interact with a scam mint link meant to drain their wallets. As a result, millions of dollars in scammed NFTs and cryptocurrencies have been lost as users accidentally approved these malicious actors.
Worse still, we have seen a flurry of influential accounts like Zeneca, Keyboard Monkey, and Franklin get hacked in the past several days. According to Yuga Labs, these attacks seem to be coordinated by a single group.
Being susceptible to unearned influence that shapes your perspective is terrible. Being sensitive to unearned effects that put your livelihood at risk is downright awful. How do we put measures in place to protect our community? What actions can be taken to regain trust in the individuals and information we receive daily?
One solution proposed by Zeneca33, whose influential Twitter account with 300k followers was compromised this week, is more education and self-accountability. His reason for the latter is that bailing individuals out when their funds are compromised only gives them a false sense of security; we must take self-sovereignty seriously and can no longer rely on the safety nets of Web2.
I tend to agree with Zeneca. We must operate with a healthy level of paranoia regarding the security of our accounts and wallets. Two-factor authentication, yubikeys, and proper wallet hygiene are all practical steps to protect yourself.
However, this does nothing to validate the reputation of those we interact with online. To that end, the authority should not be given out by broken follower counts and verification statuses. Instead, we need a new system that rewards meaningful contributions non-transferrable.
Enter Soulbound Tokens (SBTs).
Initially conceived by Vitalik Buterin in January of this year, SBTs can be used to represent accomplishments and reputation on-chain. Vitalik makes the analog to Soulbound Tokens in World of Warcraft. These items require work (i.e., they cannot be purchased), and the user forever wields them once earned.
SBTs can impact any industry currently on-chain and many that are not. Some examples include:
Banking - an SBT denoting an individual has good credit could be referenced to give them an undercollateralized or zero collateral loan. This would be a massive boom to the DeFi space as it mirrors how most people do business in the real world (e.g., you do not need to put up collateral to use a credit card).
Governance - individuals with varying levels of responsibility could be given SBTs to denote aspects of governance, such as what they can vote on and how much their vote is worth. Additionally, rewards could be delivered based on the individual's level of SBT.
Housing - SBTs could denote if an individual has (or does not have) an outstanding loan. Lenders will read these SBTs to determine if an individual qualifies for a mortgage.
Healthcare - SBTs could denote if a person is an organ donor, has allergies, or has been vaccinated. Given the sensitivity of some of this information, we would need to protect the privacy of the info cryptographically. Permission could be given for users to either see the presence of the SBT, read the SBT, or see nothing at all.
Social Media - Finally, we turn our attention to the focal point of this article, improving trust in authority on social media. We can also leverage SBTs to solve botted follower accounts and verification scams.
For example, we could implement SBTs tied to an individual completing a “Know Your Customer” (KYC) application. KYC is typically required for investors interacting with centralized exchanges in the US. Individuals must submit articles that prove their identities, such as a social security number, passport, and driver’s license.
Upon completion of the KYC, an SBT could be generated to denote the individual has been verified. The SBT itself would not contain personal information and is tied to the individual rather than a single wallet. These SBTs would then be a requirement for social media account creation.
In this type of future, there are several benefits, including:
Humans-only - bots are eradicated outside of particular use cases. This would restore trust in both the follower counts we see and the people we interact with.
More challenging to compromise influential accounts - in a world where your wallet is used to sign into your social media account, verified individuals could only be compromised if someone gains access to their wallet.
Further, we could move away from our reliance on followers and verification to denote authority. Instead, SBTs could be leveraged to reward good actors. Similar to how POAPs are used today, SBTs could be awarded for attendance and participation. Additionally, rewards could be displayed (e.g., a spot on the NFT100 or Forbes 30 under 30). This way, our wallets would become less about what we buy and more about who we are.
So how do we get there?
Fortunately, many companies are taking varying approaches to tackle reputation online.
Proof of Humanity is an on-chain identity registry where application approval requires others to vouch for you. The application consists of creating a profile, including a video submission to prove they are human. After submitting a deposit (a scam deterrent), other users in the network can vouch that the applicant is indeed who they say they are. Once approved, registration is denoted on Ethereum Mainnet. Proof of Humanity hopes human authentication will serve use cases like Universal Basic Income (UBI), DAO voting (i.e., one human can not spread their votes across multiple wallets), and reputation systems (e.g., credit scores and rep points).
Curious Addys is using SBTs to reward individuals who ask and answer questions on their platform. Individuals can receive credit for their contributions by collecting badges and growing their reputation within the ecosystem.
Disco is taking an off-chain approach to reputation. Using Decentralized Identifiers (DIDs), individuals can prove ownership over Verifiable Credentials (VCs) for themselves or others. These VCs are akin to SBTs and are used to represent identity, reputation, and membership. Relying Parties (e.g., applications) read VCs to inform what action to take. For example, a VC could be used to denote membership in a DAO. Upon the Relying Party recognizing the VC in an individual’s wallet, they are granted access to the DAO’s discord.
If you have the time, I strongly recommend listening to Disco’s CEO Evin McMullen and Vitalik discuss the pros and cons of on- and off-chain reputation systems.
Solving for reputation online can restore trust in our digital communities. We will build a system based on merit and authenticity by rewarding good actors and rooting out malicious ones.
Thanks so much for reading this week’s edition of The Multiverse. Be sure to subscribe to receive my newsletter every Monday. I hear your morning cup of coffee tastes better with The Multiverse.
Also, if you enjoyed it, please consider sharing it with your network.
Reputation is broken. Soulbound Tokens (SBTs) offer a solution.
Finally, for more thoughts on Web3, follow me on Twitter @austin_hurwitz.
Till next time,
Austin
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