Let's face it, crypto has trust issues and it doesn't help when people like Uncle Sam Bankman-Fried tarnish the industry.
I wrote more about the struggles and problems that crypto faces in my last post, the TrustScore Manifesto.
In this post I'm going to go into more depth on how TrustScore will attempt to solve some of these problems ...and there is a surprise at the end!
There are multiple approaches that we as investors use to trust crypto projects. Here are just a few:
Big influencer we trust says a project is good.
Multiple media outlets cover a project
Audits of the project say it looks sound
Time - the Lindy effect gives more trust to something
Transparency - The blockchain data and transactions paint a picture we can follow
Volume shows many people are using it and jumping in
Just like many things in life, there is no way that you can have 100% trust of something.
Each factor you add together gives you more confidence that the thing is trustworthy.
Time is probably one of this biggest factors of trust. If you have known a friend for years, you know what to expect when it comes to your relationship. You have built up a lot of confidence of their trustworthiness over time.
This is true with crypto projects as well. Uniswap and MakerDAO have probably built up the most trust in the industry since they have each been around since 2018 and 2015.
With these different ways to trust something in mind, TrustScore is going to be a website that indexes crypto projects with a focus on trust.
It will show the data that matters when getting an idea of how trustworthy something is.
Things like...
How decentralized is it?
Is there smart contract risk?
Can the creator just update the code?
Can the creator pull funds?
Any previous hacks?
Think a cheat sheet for crypto projects. Hopefully it becomes one of your stops to do due diligence.
Some day we may get to the point of actually having a "score" on how trustworthy a project is. This would be an algorithm that takes many things into consideration.
This would give people an idea of the project in a glance but would always be something to take with a grain of salt.
A project could have a 10/10 score and then the next day get drained to $0 by a hacker.
In the beginning stage of TrustScore, I see it being data that we can index and pull directly from the blockchain.
But another addition to this solution would be creating a system where users can add their two cents as well.
Think something like Trust Pilot or G2 for crypto projects. Seeing ratings and perspectives from intelligent users could be very valuable.
The beautiful thing is that we could use a user's wallet to analyze if they are a good fit to be listened to.
User hasn't even used the protocol - probably not great feedback.
User has 15% share of the token - Most likely some bias to be careful of.
This would become like the cheat sheet for an exam you and your friends all created together. 😅
I've actually launched the first version of TrustScore! 😲
You are probably one of the first to see it and you can check it out here.
TrustScore might not look like much yet. Check out the DeFi apps... Not much there, I know. But this is a first stab at solving the problem with data.
I'll continue to add more. My goal is to learn as much as I can about the best way to solve this problem over the next month, so if you have any ideas or feedback for me, reach out!
Noah Bragg
