Why Your DAO's Reputation System is Gamed (And How to Know)

Systems like Proof of Humanity or BrightID are bandaids, not cures. They fail to scale and create new attack vectors like collusion rings and identity rental markets. The core problem is treating identity as a binary, not a spectrum of trust.

• Symptom: A small, static group controls >60% of voting power.
• Signal: Low-cost, high-frequency proposal spam from new "verified" identities.
• Root Cause: One-person-one-vote is incompatible with pseudonymous, global coordination.

Platforms like SourceCred and Coordinape reward volume, not value. This creates governance farmers who optimize for points, not protocol health. The result is signal dilution and proposal fatigue.

• Symptom: 90%+ of proposals pass with minimal discussion.
• Signal: Reputation leaders are prolific commenters, not code contributors.
• Root Cause: Quantifying qualitative contribution is an unsolved ML problem.

veToken models (inspired by Curve Finance) and staking-based reputation conflate capital commitment with governance wisdom. This leads to voter apathy and whale dominance, as seen in many DeFi DAOs. The system is gamed by those who can afford to lock, not those who know best.

• Symptom: <5% voter turnout on critical upgrades.
• Signal: Voting power is rented via vote escrow markets.
• Root Cause: Financial weight ≠ informed judgment.

Token-weighted voting is not identity. Projects like Gitcoin Passport and Worldcoin attempt to solve this, but most DAOs rely on easily gamed $10M+ airdrops and multi-sig whitelists. The result is vote-buying and low-quality governance.

• Key Signal: >70% of voting power held by <10 addresses.
• Key Fix: Layer in non-transferable, programmatic attestations (e.g., EAS, Otterspace).

Measuring forum posts and Discord messages rewards noise, not signal. Systems like SourceCred and Coordinape can be gamed by high-frequency, low-value participation, drowning out deep contributors.

• Key Signal: High correlation between reward payouts and quantity of low-engagement posts.
• Key Fix: Implement peer-reviewed contribution graphs or delegate-based attestations (Karma, Clr.fund).

When reputation unlocks treasury access, governance becomes a rent-extraction game. This creates proposal spam and grant farming, seen in early Moloch DAOs and Aave Grants. The treasury becomes the target, not a resource.

• Key Signal: Grant approval rate >80% with minimal post-disbursement accountability.
• Key Fix: Implement milestone-based, streaming vesting (e.g., Sablier, Superfluid) and mandatory retrospectives.

Snapshot votes are cheap signals with no execution risk, leading to governance theater. This divorces sentiment from on-chain action, as seen in conflicts between Snapshot polls and Tally execution.

• Key Signal: <10% of successful Snapshot proposals result in executed on-chain transactions.
• Key Fix: Use intent-based, executable frameworks like Governor Bravo with enforced timelocks or move to fork-based governance (inspired by Uniswap).

A top Curve voter is not a qualified Aave risk assessor. Monolithic reputation scores (like early Project Galaxy NFTs) are useless for specialized work. This leads to poor delegation and committee formation.

• Key Signal: Delegates voting uniformly across all proposal types (DeFi, marketing, tech).
• Key Fix: Build modular reputation using namespace-specific attestations (e.g., Ethereum Attestation Service) or sub-DAO structures.

Who judges the judges? Reputation systems often rely on a central panel or founder multisig, reintroducing the very centralization DAOs aim to eliminate. This creates political gatekeeping and stagnation.

• Key Signal: >50% of reputation weight controlled by founding team or their direct appointees.
• Key Fix: Implement futarchy (e.g., Gnosis), conviction voting, or Holographic Consensus to let market signals and emergent behavior dictate value.

Proof-of-Humanity and BrightID are band-aids, not solutions. They create a false sense of security while airdrop farmers use low-cost identity attestation to create thousands of pseudonymous wallets. Your governance is still controlled by capital, just with extra steps.

• Audit Signal: Check for >80% of voting power controlled by wallets with <1 month of activity.
• Real Fix: Move to soulbound tokens (SBTs) with continuous, multi-faceted attestation (e.g., Gitcoin Passport).

Protocols like Compound and Uniswap rely on delegation, which centralizes power. A few large token holders become de facto oligarchs, and their delegates' votes are not truly expressive of community sentiment.

• Audit Signal: Identify if <10 delegates control >50% of the voting power.
• Real Fix: Implement conviction voting or quadratic voting to dilute whale power and reward sustained, aligned participation.

Systems that reward simple forum posts or Discord activity (like SourceCred) are easily gamed by bots and low-effort spam. This creates reputation inflation where the signal-to-noise ratio collapses.

• Audit Signal: Measure the correlation between reputation score and meaningful PR merges or bug bounties won. If it's near zero, the system is broken.
• Real Fix: Use retroactive public goods funding (RPGF) models, like those pioneered by Optimism, to reward tangible, verifiable outcomes, not just activity.

One-token-one-vote is the default because it's easy, not because it's correct. It guarantees that governance is a derivative of the capital markets, not a mechanism for steering protocol evolution. This is why Curve wars happen.

• Audit Signal: Analyze proposal outcomes: do they consistently favor short-term token price pumps over long-term protocol health?
• Real Fix: Architect hybrid models blending token voting with proof-of-personhood or non-transferable stake to separate governance rights from tradable assets.

Reputation locked in a single DAO's silo is worthless. Contributors build credibility across GitHub, Discourse, and multiple protocols. Without a portable, verifiable record, you can't assess true merit.

• Audit Signal: Can you audit a member's cross-protocol contribution history? If not, you're flying blind.
• Real Fix: Integrate with open attestation standards (e.g., EAS - Ethereum Attestation Service) to build a composable, on-chain resume that is owned by the user, not the DAO.

Reputation without slashing or downside is just a points system. If bad actors face no cost for malicious proposals or apathy, the system incentivizes governance extraction.

• Audit Signal: Is there a mechanism to burn or slash reputation for provably harmful actions or chronic absenteeism?
• Real Fix: Implement bonded reputation or conviction voting, where influence is earned through locked capital or consistent, correct participation, aligning long-term incentives.