The Cost of Fragmented Reputation Across Ecosystems

Every new protocol forces users to rebuild reputation from zero, wasting capital and time. This is a direct tax on growth.

• Billions in capital locked in redundant, non-transferable collateral.
• ~30-60 day warm-up periods for new lending accounts on protocols like Aave or Compound.
• Zero composability between credit scores from Goldfinch, collateral history from Maker, and governance power from Uniswap.

Lenders and protocols cannot assess true counterparty risk, leading to blanket, conservative terms that stifle the entire market.

• Over-collateralization is the norm, with typical 200-300% Loan-to-Value ratios.
• High-quality borrowers subsidize risky ones because risk models are primitive and isolated.
• Undercollateralized lending (e.g., Maple, TrueFi) remains a niche <5% of DeFi TVL due to opaque risk assessment.

Voting power and influence are non-portable, cementing plutocracy and stifling innovation in DAOs like Arbitrum or Optimism.

• Whale dominance: A user's governance power in one DAO (e.g., Uniswap) doesn't translate to credibility in another (e.g., Aave).
• Protocols like EigenLayer attempt to create portable cryptoeconomic security, but forking this for social reputation is unsolved.
• Result: Low voter turnout and decision-making captured by large, static token holders.

A seamless, identity-aware Web3 experience is impossible. Every interaction is a cold start, killing UX and adoption.

• No persistent identity: Your history with Gamma on Arbitrum means nothing when using Kamino on Solana.
• Zero-liquidity onboarding: New users face the highest barriers and worst terms, the opposite of traditional finance.
• Projects like Worldcoin attempt global identity but fail to capture nuanced, financial reputation across chains.

A user with a pristine on-chain history on Ethereum is treated as a complete stranger on Solana or Avalanche. This forces protocols to either accept higher risk or impose high onboarding friction.

• Capital Inefficiency: Lenders cannot leverage cross-chain collateral, increasing borrowing costs.
• Sybil Vulnerability: Attackers can farm a fresh reputation on each new chain for minimal cost.
• User Friction: No portable "Web3 credit score" exists, stunting DeFi and on-chain social growth.

Protocols like Ethereum Attestation Service (EAS) and Verax create a shared, verifiable database of statements about any on-chain entity. This becomes the foundational layer for portable reputation.

• Sovereign Data: Users own and can selectively disclose attestations (e.g., "Coinbase verified", "Aave safe borrower").
• Composable Trust: Any app can query the graph to build custom reputation models without starting from zero.
• Chain-Agnostic: Attestations can reference identities and actions across any EVM or non-EVM chain.

Critical reputation signals—like GitHub commits, real-world credentials, or payment history—live off-chain. This creates a trust gap that pure on-chain systems cannot bridge, limiting use cases.

• Oracle Reliance: Protocols must trust centralized oracles to feed off-chain data, creating a single point of failure.
• Fake Proofs: Without cryptographic verification, attestations are just claims, not proof of work or identity.
• Fragmented Verification: Each verifier (e.g., Worldcoin, Gitcoin Passport) operates its own silo, forcing users to re-prove themselves constantly.

Networks like Worldcoin and Polygon ID use ZK proofs to verify a unique human identity without exposing personal data. This creates a Sybil-resistant primitive that any app can trust.

• Global Sybil Resistance: One proof of humanity is usable across all integrated dApps, destroying the farm-and-dump reputation model.
• Privacy-Preserving: The underlying biometric or identity data is never stored or shared, only the proof of validity.
• Compliance Ready: Enables regulatory-compliant DeFi (e.g., proof of jurisdiction) without KYC data leaks.

Even if reputation is established, it's a static score. Users cannot stake, delegate, or leverage their trust capital, leaving a massive asset class trapped and illiquid.

• No Monetization: A top-tier DAO contributor or safe DeFi user cannot directly earn yield on their reputation.
• Stuck Capital: Reputation-based undercollateralized loans are impossible without a liquid reputation market.
• Centralized Gatekeepers: Credit decisions remain with opaque protocol committees, not a transparent market.

Vitalik's Soulbound Token (SBT) concept, implemented by protocols like Masa and Clique, creates non-transferable but attestable reputation tokens. These can be staked or delegated in secondary markets.

• Stakable Reputation: Users can stake their SBTs to vouch for others or secure protocol roles, earning fees.
• Underwriting Markets: Lenders can bid on the right to underwrite loans for high-reputation souls, pricing risk transparently.
• Programmable Trust: SBTs can encode complex, verifiable histories that smart contracts can act upon directly.