The Future of Social Capital is Tokenized and Portable

Your follower count, contribution history, and community standing are valuable but cannot be used as collateral, transferred, or composed across apps. This creates massive dead capital.

• Siloed Value: A top-tier Farcaster user cannot leverage their rep on Lens or in a DeFi protocol.
• No Composability: Reputation graphs cannot be queried or integrated by third-party dApps for trustless underwriting.
• Platform Risk: Your social capital is at the mercy of a single company's policies and longevity.

These protocols provide a public good for making verifiable, timestamped statements about any identity. They are the SSL certificates for reputation.

• Standardized Schemas: Create attestations for skills, KYC, event attendance, or governance participation.
• Permissionless Verification: Any dApp can trustlessly check a user's credential graph without a central API.
• Composable Data: Attestations from Ethereum Attestation Service (EAS) can be bundled into Sismo ZK Badges for privacy-preserving proof.

Proposed by Vitalik Buterin, SBTs are non-transferable NFTs that represent commitments, credentials, or memberships. They are the permanent, ownable record of your reputation.

• Anti-Sybil: Inherently resistant to purchase or transfer, ensuring reputation is earned, not bought.
• Graph-Based Identity: A wallet's collection of SBTs forms a rich, verifiable identity graph.
• Programmable Unlocks: Holders of specific SBTs (e.g., a Gitcoin Passport score) can access gated communities, claim airdrops, or receive credit.

Raw on-chain data is messy. These protocols index and compute reputation scores from across chains and attestation platforms, delivering a standardized trust score to smart contracts.

• Multi-Source Aggregation: Pulls data from EAS, Galxe, POAP, governance activity, and more.
• Compute-to-Data: Runs algorithms (e.g., PageRank for DAOs) on the aggregated graph off-chain, with verifiable on-chain results.
• DeFi Integration: Enables undercollateralized lending in protocols like Goldfinch or Credix based on a portable reputation score.

Portable rep needs a mechanism for curation and discovery. TCRs use token staking to create community-vetted lists, turning reputation into a coordination tool.

• Skin-in-the-Game Curation: To list an expert in a registry, you must stake tokens, which are slashed for bad submissions.
• Sybil-Resistant Voting: Reputation scores or SBT holdings can weight votes, moving beyond one-token-one-vote.
• **Protocols like Karma leverage this to create leaderboards and incentive structures for valuable community work.

The final frontier is using your portable reputation score to access financial services without overcollateralization. This bridges social and financial capital.

• Under-Collateralized Lending: A high Gitcoin Passport score or DAO contribution history could secure a loan on a protocol like Goldfinch.
• Reduced Gas Fees: High-reputation users might get meta-transaction sponsorship or fee discounts.
• Trustless Job Markets: Platforms like Coordinape or Layer3 can auto-match high-rep users with high-value bounties.

Global regulators, particularly the SEC, treat social tokens as unregistered securities by default. This creates an existential threat to liquidity and protocol development.\n- Legal Precedent: The Howey Test is weaponized against any token with an expectation of profit from a common enterprise.\n- Compliance Burden: Protocols like Friend.tech or Farcaster face KYC/AML integration costs that can cripple UX and growth.\n- Jurisdictional Arbitrage: A patchwork of global regulations (MiCA, SEC, etc.) fragments the market and scares institutional capital.

On-chain social graphs are trivial to fake, destroying the value proposition of 'portable reputation'. Without a robust solution, tokenized capital is just another ponzi metric.\n- Bot Farms: Inflate follower counts and engagement, rendering social capital worthless.\n- Wash Trading: Platforms like DeSo or Lens Protocol struggle to differentiate organic growth from financialized spam.\n- Reputation Oracles: Projects like Gitcoin Passport or Worldcoin attempt verification but introduce centralization and privacy trade-offs.

Monetizing ephemeral social interactions creates thin, volatile markets that collapse during downturns. Social tokens become the ultimate 'risk-on' asset with no floor.\n- TVL Fragility: A $10M+ TVL social token pool can evaporate in hours during a market panic.\n- Creator Churn: Most creators lack the financial sophistication to manage a token economy, leading to pump-and-dump cycles.\n- Utility Gap: Tokens often lack utility beyond speculation, failing the 'currency' test of mediums like Ethereum or Solana.

To achieve usability and scale, social platforms inevitably re-centralize, undermining the core promise of user-owned, portable capital.\n- Protocol vs. Client: While Farcaster's protocol is decentralized, popular clients like Warpcast hold gatekeeping power.\n- Curation Algorithms: Who controls the feed controls the value flow, recreating Twitter-style power dynamics.\n- Infrastructure Reliance: Dependence on centralized indexing services or RPC providers (like Alchemy, Infura) creates single points of failure.