The Future of Loyalty Programs: Portable, Private Proofs of Engagement

Brands hoard engagement data in proprietary databases, creating a $200B+ market of illiquid points. This prevents cross-brand partnerships and forces users to manage dozens of insecure logins.\n- Zero Portability: Points are trapped, reducing their utility and perceived value.\n- High Integration Cost: Each new partnership requires complex, brittle API integrations.

Users cryptographically prove engagement (e.g., "Top 5% Spender") without revealing raw transaction data. Protocols like Sismo and Disco enable this. Brands issue verifiable credentials to user-held identities (e.g., ENS, 0xPARC).\n- Privacy-Preserving: Prove attributes, not personal data.\n- Composable Loyalty: A single proof can unlock rewards across multiple partner ecosystems.

Portable proofs create an on-chain reputation graph. This social capital can be used as non-financial collateral. Imagine using your "Loyal Coffee Drinker" credential for a flash loan on Aave or to secure a rental.\n- New Asset Class: Reputation becomes a programmable, tradable primitive.\n- Sybil-Resistant: Cryptographic proofs are harder to farm than traditional points.

Scalable systems for issuing and verifying these proofs are critical. The Ethereum Attestation Service (EAS) and Verax provide the public good infrastructure. They act as a decentralized registry for trust, separate from execution.\n- Chain-Agnostic: Attestations can be verified on any EVM chain or L2 (Optimism, Arbitrum).\n- Standardized Schema: Enables interoperability across all dApps and loyalty programs.

The value capture shifts from owning user data to facilitating trust. Protocols that standardize and verify proofs (LayerZero V2, Hyperlane) capture fees for cross-chain attestation. Brands pay for verifiable engagement, not guesswork.\n- Efficiency Premium: Precise targeting reduces customer acquisition cost (CAC).\n- Revenue Share: Infrastructure protocols earn fees on every proof verification.

The final state is a user-controlled graph of attestations—a portable Web3 resume. This graph is queried by AI agents to find ideal customers or offer personalized deals. Projects like CyberConnect and Lens Protocol are early social graph explorers.\n- Agent-Ready: Your loyalty graph becomes an API for autonomous commerce.\n- User Sovereignty: You decide which proofs to share, with whom, and for what reward.

Points are trapped in corporate databases, creating ~$100B in dead capital. Users can't prove their status elsewhere, and programs can change rules at will, devaluing engagement.

• Zero Portability: Status from Airline A is useless at Hotel B.
• Opaque Valuation: Points have no transparent market price.
• Custodial Risk: Programs can be terminated unilaterally.

Cryptographic proofs of engagement (e.g., "Top 5% Spender") issued as self-sovereign, off-chain VCs. They are private, portable, and verifiable without a central issuer.

• Selective Disclosure: Prove you're a 'Gold Member' without revealing all transactions.
• Chain-Agnostic: Credentials live off-chain, usable across any chain or app via protocols like Veramo or SpruceID.
• User-Owned: The credential wallet, not the corporation, holds the proof.

Galxe has built the dominant Web3 credential data network, mapping over 15M identities to on-chain/off-chain achievements. It's the infrastructure for programmatic loyalty.

• Data Aggregation: Pulls proofs from Snapshot, GitHub, Twitter, and custom sources.
• Composability: Credentials power token-gated access, airdrops, and credit scoring.
• Monetization: Projects pay to design campaigns; users earn OATs (Proof NFTs).

Today's points are dumb accounting entries. They cannot be used as collateral, transferred, or integrated into DeFi, missing the entire composability thesis of crypto.

• No Financial Utility: Cannot be lent, borrowed against, or used in AMMs.
• Manual Redemption: Requires navigating a single brand's clunky portal.
• No Secondary Market: Prevents price discovery and user liquidity.

Represent points or status tiers as ERC-20 or ERC-1155 tokens on an L2 like Base or Arbitrum. This creates instant liquidity and programmability.

• Automated Market Makers: Users can swap airline points for hotel points.
• Collateralization: Use your 'Diamond Status' NFT as collateral for a loan on Aave.
• Dynamic Rewards: Smart contracts auto-distribute rewards based on verifiable credentials.

EAS provides a public good schema registry and attestation engine on-chain. It's the primitive for making any claim—from loyalty status to KYC—portable and trust-minimized.

• Schema Standardization: Brands define credential formats (e.g., 'Q1 2024 VIP').
• On-Chain Proof: Attestations are immutable, timestamped records.
• Permissionless Verification: Any app can check the validity of a user's credential without relying on the original issuer's API.

Programs become trivial to game if proof-of-unique-personhood is weak. ZK proofs of engagement are useless if the underlying identity is fake. This risks a race to the bottom in reward dilution.

• Attack Vector: Low-cost identity farming via Worldcoin oracles or simple attestation spam.
• Consequence: >90% of issued rewards could be captured by bots, destroying program ROI.

Off-chain engagement data (e.g., in-store purchases, airline miles) requires a trusted bridge to on-chain proofs. Centralized oracles like Chainlink become single points of failure and censorship.

• Attack Vector: Oracle manipulation or downtime corrupts the entire proof ledger.
• Consequence: Loss of portability guarantees, reverting to walled-garden models controlled by data aggregators.

Portable proofs could be classified as securities or financial instruments across jurisdictions. A program compliant in the EU may be illegal in the US, creating fragmented liquidity and legal liability for users.

• Attack Vector: Aggressive enforcement against proof minters (e.g., protocols like Galxe) or holders.
• Consequence: Major brands exit, stifling adoption. Remaining activity shifts to unregulated, high-risk chains.

Zero-knowledge proofs (e.g., using zk-SNARKs) protect user data but make compliance (AML/KYC) and fraud detection impossible for issuers. This forces a choice: private proofs or usable programs.

• Attack Vector: Illicit proof laundering becomes untraceable, attracting regulatory scrutiny.
• Consequence: Brands reject private systems, opting for semi-custodial models that recentralize control.

Proofs issued on Ethereum are too expensive for small rewards, while proofs on Solana or Polygon aren't trusted by enterprise issuers. This creates proof ghettos with no cross-chain liquidity.

• Attack Vector: LayerZero and Wormhole bridge risks become systemic, as a bridge hack destroys cross-chain proof integrity.
• Consequence: The promised universal loyalty layer fractures into incompatible, low-value silos.

Brands retain the power to freeze, revoke, or devalue proofs at the smart contract level, making portability an illusion. This is the CBDC model applied to loyalty.

• Attack Vector: Issuer uses admin keys to blacklist proofs from competitors or censor users.
• Consequence: On-chain proofs become merely fancy databases, replicating the very vendor lock-in they promised to solve.