Why On-Chain Reputation Must Be Contested and Dynamic

Without a cost to create an identity, every on-chain system is vulnerable to manipulation. This undermines governance (e.g., DAO votes), airdrop fairness, and DeFi lending risk models. The current solution—static, off-chain whitelists—kills permissionless innovation.

• Sybil resistance is not optional; it's the foundation.
• Static solutions (e.g., Proof-of-Humanity) fail to capture evolving behavior.
• Creates a $100B+ attack surface in DeFi and governance.

Reputation must be a dynamic, tradable asset subject to market forces, like a credit default swap. Entities (e.g., UMA, Kleros) can stake capital to vouch for or against a user's reputation score, creating a consensus price for trust.

• Incentivizes accurate, real-time assessment.
• Unlocks undercollateralized lending and sophisticated DeFi primitives.
• Creates a liquid market for trust, moving beyond binary whitelists.

Reputation must be a portable, verifiable asset—not siloed within one app. Think ERC-20 for social capital. This enables cross-protocol composability, where your EigenLayer restaking reputation influences your Aave borrowing limit.

• Breaks silos: Reputation from Gitcoin Grants informs Compound risk.
• Enables true Web3 identity graphs beyond follower counts.
• Foundation for intent-based systems (UniswapX, CowSwap) to route to trustworthy solvers.

Dynamic reputation is the missing piece to solve Web3's hardest problems. It allows for reputational slashing for malicious validators, creates sybil-resistant quadratic funding, and enables delegated voting with skin-in-the-game.

• Mitigates MEV extraction by identifying predatory searchers.
• Transforms DAO governance from one-token-one-vote to one-reputation-one-vote.
• Protects LayerZero and Across from oracle manipulation.

A fixed score like a Soulbound Token (SBT) is a honeypot. Once gamed, it's permanently compromised, poisoning governance and credit systems.

• Sybil Resistance Fails: Airdrop farmers can inflate scores with minimal cost.
• Stagnant Data: Cannot reflect real-time behavior changes or external black swan events.
• Centralization Risk: Reliance on a single oracle or curator creates a single point of failure.

Reputation must be a live feed, not a snapshot. Think UMA or Kleros-style dispute resolution for identity claims.

• Dynamic Scoring: Reputation is a constantly updated stream of verifiable attestations from competing sources.
• Economic Security: Challengers can bond to dispute false claims, creating a cryptoeconomic truth layer.
• Modular Composability: Scores can be weighted and combined from specialized oracles (e.g., Chainlink, EigenLayer AVS).

Implement a graph of claims where edges are staked attestations. This mirrors how The Graph indexes data but for trust.

• Contestable Edges: Any relationship (e.g., "Alice is a good borrower") can be challenged with a bond, forcing proof.
• Time-Decay & Context: Reputation weight decays over time and is scoped to specific contexts (DeFi, social, etc.).
• Forkable State: If the system is corrupted, the graph can be forked, preserving the history of honest claims.

Use EigenLayer restaking to slash operators for malicious attestation. Combine with Hyperbolic Staking models (like EigenDA) to prevent stake centralization.

• Cryptoeconomic Slashing: Malicious or lazy oracles lose real economic value, not just a score.
• Anti-Collusion: Hyperbolic rewards disincentivize large, coordinated staking pools from dominating the truth.
• Infrastructure Leverage: Builds on existing secure middleware, avoiding the $20B+ security bootstrap problem.

The killer app. Dynamic reputation enables TrueFi or Maple Finance-style loans without over-collateralization, unlocking $1T+ in latent capital.

• Risk-Based Rates: Borrowing rates adjust in real-time based on wallet history and portfolio health.
• Automated Covenants: Reputation triggers automatic loan recalls or collateral requirements via Chainlink Functions.
• Composability: A high-reputation score becomes a yield-bearing asset usable across DeFi.

A global reputation graph is a surveillance tool. The solution is zero-knowledge proofs (ZKPs) and selective disclosure, as pioneered by zkSBTs.

• ZK Attestations: Prove you have a score above a threshold without revealing the exact value or history.
• User Custody: Reputation data must be user-held, not stored in a central contract, using ERC-7231 or similar.
• Without this, you build a panopticon, not a reputation system.