Why SBTs Make Reputation a Non-Fungible Asset

The Problem: Sybil attacks plague quadratic funding and airdrops, diluting capital for real users.\nThe Solution: A composable SBT-based identity aggregator that scores unique humanity via verified credentials from platforms like BrightID and ENS.\n- Enables $40M+ in grants distribution with proven sybil-resistance.\n- Stamps are non-transferable, making reputation costly to fake.

The Problem: Reputation data is siloed and non-composable, preventing cross-protocol trust networks.\nThe Solution: A public good infrastructure for making on-chain or off-chain attestations (SBTs) about anything.\n- Schemas for KYC status, skill verification, and loan repayment history.\n- Zero gas fees for off-chain attestations, enabling mass adoption.

The Problem: Traditional credit scores are opaque, exclusionary, and ignore on-chain behavior.\nThe Solution: A decentralized reputation protocol that mints SBTs representing programmable credit scores based on wallet history.\n- Scores derived from DeFi activity, NFT holdings, and transaction patterns.\n- Enables under-collateralized lending and tailored interest rates in protocols like Credix.

The Problem: Real-world and digital event participation is unverifiable, limiting community building and rewards.\nThe Solution: SBTs as cryptographic proof of presence at an event, creating a persistent social graph.\n- 20M+ POAPs minted across 5,000+ events and communities.\n- Used for DAO governance weighting, exclusive access, and airdrop eligibility.

The Problem: DeFi lending requires over-collateralization (~150%), locking capital and limiting credit.\nThe Solution: Use SBT-based reputation as a substitute for collateral. A user's soul (wallet) with a strong history of repayment SBTs can borrow more.\n- Creates a native crypto credit economy detached from traditional finance.\n- Shifts risk assessment from static collateral to dynamic, programmable reputation.

The Problem: Users must expose their entire wallet history to prove a single trait, sacrificing privacy.\nThe Solution: Zero-Knowledge Proofs (ZK) that mint SBT badges proving specific claims (e.g., "Top 10% Uniswap LP") without revealing the underlying data.\n- Enables privacy-preserving reputation across DAOs and applications.\n- Badges are non-transferable and composable, building a private reputation graph.

SBTs are designed to be non-transferable and potentially non-burnable, creating a permanent record. This immutability, a core feature, becomes a liability for rehabilitation or correcting errors.\n- Social Scoring: A single negative attestation (e.g., a DAO slashing) becomes an inescapable scarlet letter.\n- No Right to be Forgotten: Contradicts GDPR and evolving digital privacy norms, creating legal friction.

The value of an SBT-gated system is inversely proportional to the cost to forge its inputs. Attackers will always probe the weakest link in the attestation stack.\n- Oracle Manipulation: Compromised attestation oracles (like Bloom, Gitcoin Passport) poison the entire reputation graph.\n- Collusive Issuance: DAOs or institutions issuing SBTs for bribes, undermining the system's credibility from within.

Reputation is multidimensional and context-specific. Flattening it into a universal on-chain ledger leads to misinterpretation and gaming.\n- Voting Power Distortion: SBTs from one context (e.g., Compound credit) misapplied to another (e.g., Aave governance) leads to poor decisions.\n- Reputation Washing: Entities like Vitalik Buterin or a16z could leverage off-chain fame to capture on-chain systems, centralizing power they aim to decentralize.

By making reputation a non-fungible, non-transferable asset, SBTs destroy its natural liquidity. This creates systemic rigidity and reduces network resilience.\n- Capital Lock-up: Social capital cannot be re-deployed, slowing the evolution of decentralized organizations.\n- Adoption Friction: Users hesitate to engage with systems where their reputation is permanently locked to a single wallet or identity, fearing loss or hacks.

Airdrop farming, governance attacks, and fake engagement plague Web3. Current solutions like proof-of-humanity are clunky and lack composability. SBTs provide a native, portable identity layer.

• Key Benefit: Enables on-chain KYC/AML without centralized custodians.
• Key Benefit: Unlocks sybil-resistant airdrops and governance (e.g., Optimism's Citizen House).

DeFi over-collateralization locks up capital and excludes creditworthy users with thin files. SBTs create a persistent, verifiable record of on-chain behavior (e.g., Aave repayment history, Gitcoin grant participation).

• Key Benefit: Enables reputation-based credit scores for 0% or low-collateral loans.
• Key Benefit: Creates a new asset class: future cash flow from reliable counterparties.

Fungible tokens (ERC-20) and transferable NFTs (ERC-721) cannot encode persistent identity. SBTs, as non-transferable ERC-721 or ERC-1155 tokens, bind reputation to a Soul (wallet), creating a permanent record.

• Key Benefit: Immutable provenance for contributions (e.g., Polygon ID, Ethereum Attestation Service).
• Key Benefit: Enables programmable privacy via zero-knowledge proofs for selective disclosure.

Building reputation systems from scratch is complex and lacks network effects. Protocols like Galxe, Orange, and Rabbithole are emerging as RaaS providers, issuing SBTs for on-chain achievements.

• Key Benefit: Plug-and-play reputation graphs for dApps, reducing development time by ~6 months.
• Key Benefit: Monetization via data oracles and verification fees for high-stakes applications.

An immutable negative record (e.g., a default) can permanently blacklist a wallet. This requires sophisticated revocation mechanisms and governance, akin to credit bureau disputes.

• Key Benefit: Forces high-stakes accountability in anonymous systems.
• Key Benefit: Drives innovation in time-locked SBTs, expiring attestations, and reputation rehabilitation markets.

Off-chain resumes are unverifiable and siloed. SBTs can encode verifiable credentials for developers (GitHub commits, Code4rena audits), DAO contributors, and artists.

• Key Benefit: Creates a global, composable resume for talent discovery and streamlined hiring.
• Key Benefit: Enables automated bounty/ grant distribution based on proven skill SBTs.