Web3 reputation will heighten existing mechanisms of identity through the verifiability, user-owned, and discoverability features that come with it.
This article focused on setting up a four part series on Web3 reputation and highlighting the technology that is currently underpinning Web3 reputation.
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What is Web3 Reputation?
Web3 reputation is a mechanism of representing one’s identity in a verifiable and self-sovereign way.
We believe that eventually this will become the default and change from “Web3 reputation systems” to just “reputation systems”. Reputation is a subset of our identity. Reputation is valued directly by how others are able to perceive ourselves whereas identity can be both self and externally created.
Reputation types
Reputation is an opinion about an entity (individual or organization) typically as a result of social evaluation and proof surrounding a set of criteria, such as behavior or performance. Reputation has the ability to influence relationships, markets, organizations, institutions, and communities at different scales. With the advent of the internet, the ability to showcase professional and social reputation to a widespread audience has increased dramatically.
Traditional reputation systems (reputation that is not stored or dependent on the blockchain for verification) are reliant on institutions and individual people housing information which has led to significant limitations in portability of reputation. This in turn increases the amount of trust that we put on other actors in our networks. These challenges and problems have made a compelling case to explore the utility of new forms of representing reputation.
The work being done to make Web3 reputation a reality is vast [On-Chain Identity Landscape]. Currently, Web3 reputation can be broken down into the following categories: endorsement; ownership; governance; bounties; data rails; proof of humanity; profiles; and aggregators.
Technology behind Web3 reputation
We intentionally do not associate any data primitives with Web3 reputation definition and rather focus on the effects these data primitives collectively yield. However, for context and to understand the state of technical innovation in reputation, we outline the key data primitives and tools being used today.
Data primitives being used today: Decentralized identifiers & Verifiable Credentials, NFTs
Decentralized Identifiers (DIDs) & Verifiable Credentials
DIDs enable users to sign and control all of the off-chain private data that is associated with a user with complete interoperability.
As noted on the World Wide Consortium (W3C) site, the key features of DIDs include:
- Decentralized: no central issuing agency
- Persistent: no dependency of an underling organization
- Cryptographically verifiable: prove control of identifier cryptographically
- Resolvable: discover metadata about the identifier
There are so many types of identifiers that can be used as DIDs: ENS, email, Bitcoin data. One of the major benefits of DIDs is that you can rotate your private keys for increased individual operations security. The best way to think about decentralized identifiers is the “backpack” that can hold information about you as a user.
Decentralized identifiers also would allow for an ecosystem of aggregate identifiers, where entities who already have verified identity through other means (e.g. an SSN, EIN, DUNS number, FIGI, etc.) could now centralize those identities with a single proof point—like a gateway to identity.
Verifiable credentials (VCs) are signed encrypted attestations about another party or about yourself. This is the off-chain version of an NFT that can contain all types of data (ie., images and text). Verifiable credentials are also non-transferrable.
Some of the best features about verifiable credentials is that they have the ability to be revoked, have a time at which they can expire, and are user controlled. You are able to share fractions of information. Additionally, verifiable credentials are a global data primitive, meaning that they are commonly legible to all DIDs regardless of the chain (Ethereum can share a VC with an email or with a Bitcoin address), enabling Web2 and Web3 to be highly interoperable.
Key tools: Everym, Trinsic, Luniverse, Okta, Ceramic, Disco
Non-Fungible Tokens (NFTs) (ERC-1155, and ERC-721 standard)
Benefits
- Widely used and accepted: NFTs are currently the most widely used mechanism for “on-chain reputation”, making them easily compatible with many reputation platforms, decentralized finance apps, and decentralized governance applications.
- Constant innovation: NFTs are constantly being innovated upon, and many of the negatives outlined below are likely to be amended with newer iterations of this data primitive. A promising innovation of NFTs that I am actively following is Ceramic Network’s NFT DID that turns every NFT into an account capable of controlling data streams on Ceramic. There are many other EIP proposals for new standards to be created.
Negatives
- Lack of agency for users: NFTs are bought, traded, airdropped, self-made, and can be stolen and publicly visible to the world.
- Expensive: In the current form, having all of our reputation data stored as NFTs is also very expensive and even more expensive if using the ERC-721 standard.
- Lack of information: NFTs do not prove anything other than association with a given smart contract. As in the real world, the association of owning assets is a part of your identity (ie., homes, cars, clothes), they do not represent who you are as compared to the assets you own. The fidelity of information represented by an NFT is higher than binary ownership since you are able to have arbitrary key value mappings embedded into NFTs.
- Non-transferrable NFTs are dangerous: Vitalik published an article titled “Soulbound” that reference non-transferable NFTs (NFTs that can not leave a wallet once minted). Soulbound NFTs have many flaws if not “earned” by the intended owner of this NFT.For example, inflammatory photos, or defaming affirmations can all be sent to your wallet that would be non-transferrable and forever associated with your public identifier. Additionally, soulbound NFTs inhibit the ability to rotate private keys that control your Ethereum address while maintaining your public identifier.
- Categorization limitations: Under the primary NFT protocol (ERC-721) there is no inherent link between NFTs of the same 'type' or class, but rather, requires a centralized platform to link them together (OpenSea, etc). When looking at its application and implications on identity and reputation, we should be concerned that utilizing the most renowned and 'battle tested' protocol would require some centralized identity platform to unify these credentials, and whether that platform is suited to validate and maintain identity proofs.
The debate around data primitives for reputation is not nearly as important as compared to the downstream impacts to the users. We need to be focusing on utilizing technology that enables verifiable and self-sovereign identity that is user governed instead of over-indexing on what tools people used to build.
This debate is similar to complaining about the use of Postgres instead of MySQL with early social platforms. They both have downfalls, but users will dictate the affordances, not the tools.
Part two of this series focuses on how Web3 reputation will transform the way we interact professionally, followed by changes in corporate and social interactions.
I want to thank Hugo Pakula, Enrico Bottazzi, Michael Gringas, Jay Scambler for helping edit and read this article in its draft form and for being open to chatting more about Web3 reputation!
Some other great readings and threads to check out about technology behind Web3: