Why Reputation Can't Be a Non-Transferable Token (Yet)

Reputation originates off-chain (GitHub, LinkedIn, credit scores). Bridging it on-chain requires trusted oracles like Chainlink or Pyth, creating a central point of failure and manipulation. The NTT is only as credible as its weakest data feed.

• Sybil Attack Vector: Oracles can be gamed with fabricated data.
• Data Latency: Real-world reputation updates slowly, making NTTs stale.
• Jurisdiction Risk: Oracle operators face legal liability for sensitive data.

An NTT minted by one protocol (e.g., Gitcoin Passport) is non-transferable and often non-composable. It creates a walled garden, preventing a unified reputation graph across DeFi, DAOs, and social apps like Farcaster.

• Protocol Lock-In: Developers must rebuild reputation systems from scratch.
• Fragmented Identity: A user's GitHub NTT is useless in a lending protocol.
• Zero Liquidity: Reputation cannot be used as collateral or delegated, unlike ERC-20 or ERC-721 tokens.

Reputation's value is contextual and non-fungible. An NTT cannot be priced by an AMM like Uniswap, making it economically inert. The only measurable metric is the gas cost to mint and update it, which scales linearly with users.

• No Monetary Utility: Cannot be staked, lent, or used in UniswapX intent flows.
• Linear Scaling: $1M in gas fees for 1M users is unsustainable.
• Zero Fee Revenue: Protocols cannot monetize reputation services directly, killing the business model.

A wallet's history is a noisy, incomplete dataset. Reputation requires aggregating signals across chains and applications to create a coherent identity graph.

• Key Insight: Raw transaction logs are meaningless without context and attestation.
• Key Benefit: Protocols like Ethereum Attestation Service (EAS) and Verax provide a standard schema for creating, storing, and querying verifiable claims.

Static scores are useless. Reputation must be dynamic, context-specific, and composable for underwriting or access control.

• Key Insight: A DAO contributor's score differs from a DeFi borrower's.
• Key Benefit: Gitcoin Passport and Sismo aggregate off-chain/on-chain data into verifiable, scoped credentials that apps can query with custom logic.

For reputation to have real economic weight, it must be stakable and slashable, creating skin-in-the-game.

• Key Insight: A non-transferable token (Soulbound) is just a badge unless it carries a bonded value.
• Key Benefit: EigenLayer's restaking and Hyperliquid's delegated staking turn validator/operator reputation into a financial primitive with $15B+ TVL at stake.

True reputation exists off-chain (employment, credit). The stack needs secure bridges to import these signals without centralized points of failure.

• Key Insight: A KYC credential is only as good as its issuer's security and decentralization.
• Key Benefit: Chainlink's Proof of Reserve and Oracle of Oracles (OoO) models provide frameworks for verifying and transporting real-world attestations on-chain.

The endgame: using programmable reputation to grant credit or access, moving beyond over-collateralized DeFi.

• Key Insight: Protocols like Goldfinch and Maple Finance already underwrite based on off-chain legal entities; the next step is purely on-chain scoring.
• Key Benefit: Enables trust-minimized lending and sybil-resistant governance by using a composite reputation score as the primary risk metric.

Full reputation transparency creates doxxing and discrimination vectors. The stack must reconcile verifiable claims with user privacy.

• Key Insight: Zero-Knowledge proofs (ZK) are the only viable path, as seen in Sismo and Aztec.
• Key Benefit: Users can prove attributes (e.g., "score > X") without revealing underlying data, making reputation usable without being exploitable.

Soulbound Tokens (SBTs) are immutable records, but reputation is a live, decaying signal. A static NFT cannot reflect a user's current trustworthiness or recent behavior, making it useless for real-time applications like undercollateralized lending or governance delegation.

• Key Flaw: No mechanism for decay or revocation of stale data.
• Real Consequence: A user's 2021 airdrop SBT holds equal weight to their 2024 MEV botting activity.

Reputation must be a continuously updated data stream, verified by oracles or a network of attesters (like EigenLayer AVSs or Hyperliquid's committee). This creates a live feed of credibility scores that protocols can query with specific parameters.

• Key Benefit: Enables time-weighted and context-aware scoring (e.g., DeFi vs. Gaming reputation).
• Architecture: Think The Graph for queries, but for trust signals, not historical events.

Critical reputation data exists off-chain (Discord activity, GitHub commits, real-world credentials). A pure on-chain token creates a fragmented identity. Projects like Gitcoin Passport attempt aggregation but face oracle trust issues.

• Key Flaw: Sybil resistance requires off-chain signals, but bridging them introduces centralization vectors.
• Integration Gap: No standard for composably merging on-chain history with Verifiable Credentials (VCs).

Build using frameworks like EAS (Ethereum Attestation Service) or IBC-style interchain attestations. These create a directed graph of signed statements about an entity that any chain or rollup can permissionlessly verify.

• Key Benefit: Chain-agnostic reputation that avoids vendor lock-in to a single L1 or L2.
• Composability: Protocols like Aave or Compound can define their own reputation schemas atop a shared attestation layer.

Public, non-transferable tokens leak identity graphs and create permanent negative records. This disincentivizes participation. Zero-knowledge proofs (ZKPs) are computationally expensive for complex, evolving reputation models.

• Key Flaw: Full transparency kills use cases like private credit scoring or anonymous governance.
• Tech Debt: Current ZK tooling (zkSNARKs, zkSTARKs) isn't optimized for frequent, cheap updates of a stateful reputation object.

Leverage ZK systems built for stateful applications (RISC Zero, SP1) to generate proofs of reputation state transitions. Users can then provide selective disclosures (e.g., "Proof of >1000 TXs" without revealing history).

• Key Benefit: Enables privacy-preserving reputation checks for applications like undercollateralized loans on Maple Finance.
• Forward-Looking: Aligns with Aztec and Aleo's vision for private application states.