Why Your Impact Score Is Worth More Than Your Token Balance

Airdrop farmers and bots dilute value and distort governance. A wallet's token balance is a trivial metric to fake.

• Solution: Use Impact Score as a proxy for unique human or dedicated entity activity.
• Signal: Projects like Gitcoin Passport and Worldcoin are pioneering this, but on-chain behavior (like consistent DEX usage or governance participation) is a harder-to-game primitive.

Capital efficiency is constrained by over-collateralization. Your history is an underutilized asset.

• Mechanism: Protocols like EigenLayer (restaking) and MakerDAO (Spark) use staked ETH and on-chain history to underwrite new services.
• Signal: An Impact Score quantifying consistent, valuable interactions could unlock 0% interest credit lines or reduced collateral requirements for DeFi loans.

MEV and poor UX are a tax on users. The market rewards those who signal genuine intent.

• Execution: Systems like UniswapX, CowSwap, and Across use signed intents to route orders for optimal execution.
• Signal: A high Impact Score could grant priority in these systems—better prices, faster settlement, and protection from MEV—because the user's history indicates a high lifetime value, not a one-off arb.

Fragmented liquidity across chains makes a single balance meaningless. Value is in cross-chain presence.

• Protocol: LayerZero's immutable messages and Axelar's GMP enable composable identity across ecosystems.
• Signal: An Impact Score aggregated across Ethereum, Solana, Avalanche is a truer measure of a user's network value, enabling seamless omnichain airdrops, governance, and credit.

Token price is driven by speculation. Sustainable value is driven by fees.

• Analysis: Look at Ethereum (burn), Uniswap (fee switch debate), and Lido (staking revenue).
• Signal: An Impact Score that weights actions generating protocol fee revenue (swaps, mints, burns) identifies users who fund the treasury, not just speculate on the token. This aligns incentives for long-term growth.

Centralized sequencers (e.g., most Rollups) are a single point of failure and rent extraction.

• Shift: Projects like Espresso Systems and Astria are building shared decentralized sequencing layers.
• Signal: Impact Scores can govern access to these critical infrastructure roles, prioritizing operators with a proven history of high uptime and fair ordering, moving beyond pure stake-weight voting.

A few large token holders can dominate governance and create systemic fragility, even with a high Total Value Locked (TVL). Impact Score measures active, diversified participation, not just capital at rest.

• Sybil-resistant: Weighted by verifiable on-chain actions, not wallet balances.
• Identifies concentration: Flags protocols where >30% of governance power is held by <10 addresses.
• Predicts forking risk: Low, centralized scores correlate with higher likelihood of contentious hard forks.

Protocols can be flooded with inactive or mercenary capital that provides no real utility. Impact Score filters for productive economic throughput.

• Filters wash trading: Discounts circular, zero-sum transactions common on DEXs like Uniswap.
• Values fee generation: Prioritizes actions that create sustainable revenue (e.g., Lido staking, Aave borrowing).
• Penalizes inertia: Identifies "zombie" pools with high TVL but <0.1% weekly turnover.

DeFi's security often hinges on centralized data feeds (Chainlink, Pyth). A high token balance doesn't mitigate oracle failure risk. Impact Score evaluates decentralization of critical infrastructure.

• Audits dependency: Scores penalize over-reliance on <3 oracle providers for key price feeds.
• Values fallback systems: Recognizes protocols with multi-layered oracle strategies (e.g., MakerDAO's governance-oracle model).
• Flags latency risk: Identifies systems where oracle update delays (>60 seconds) create arbitrage vulnerabilities.

Your protocol's token might be safe, but its deepest integrations could be toxic. Impact Score maps inter-protocol dependencies to surface systemic risk.

• Analyzes collateral baskets: Flags over-exposure to a single asset (e.g., wrapped stETH across Aave, Compound).
• Tracks bridge reliance: Identifies critical dependence on specific cross-chain bridges (LayerZero, Wormhole).
• Models failure cascades: Simulates the impact of a top-5 integrated protocol failing.

Token-weighted voting is gamed by delegates with no long-term alignment. Impact Score measures voter conviction and cost.

• Quantifies participation: Tracks proposal turnout vs. eligible token supply.
• Values execution: Rewards voters who also execute the resulting transactions (e.g., Uniswap's "vote-and-execute").
• Penalizes delegation farming: Identifies delegates with high voting power but low personal stake.

A treasury full of tokens means nothing if governance can be hijacked to drain it. Impact Score stress-tests upgrade mechanisms and timelocks.

• Audits admin keys: Flags protocols where a multisig < 5/8 can upgrade core contracts.
• Values enforceable delays: Scores higher for >7-day timelocks on critical upgrades.
• Simulates attacks: Models the capital required to pass a malicious proposal via token acquisition (51% attack cost).

Impact Score maps real user behavior, not just capital. This creates a Sybil-resistant graph of economic activity that is exponentially more valuable for risk assessment than raw TVL.

• Identifies organic growth vs. mercenary capital farming airdrops.
• Enables precision targeting for protocol incentives and governance delegation.
• Forms the basis for undercollateralized lending and identity-based primitives.

Static token collateral is capital-inefficient and excludes high-quality users. An on-chain reputation score enables dynamic, behavior-based underwriting.

• Unlocks capital efficiency for protocols like Aave and Compound by moving beyond overcollateralization.
• Enables "Proof-of-Activity" loans where consistent protocol interaction reduces collateral requirements.
• Creates a native DeFi primitive more robust than off-chain credit scores (e.g., Cred Protocol, Spectral).

Investors currently rely on flawed metrics like TVL and transaction count. Impact Score provides a real-time gauge of genuine user engagement and network security.

• Surfaces retention rates and user loyalty, predicting sustainable fee revenue.
• Flags concentration risk by identifying dependency on a few large, passive capital providers.
• Provides due diligence signal superior to token concentration checks for VCs and DAO treasuries.

Token-weighted voting is plutocracy. Impact Score enables contribution-based governance, aligning voting power with proven, long-term value addition.

• Mitigates governance attacks from flash-loan acquired voting power or whale dominance.
• Rewards ecosystem contributors (developers, integrators, educators) with direct influence.
• Integrates with snapshot and Tally for a hybrid model, as seen in early experiments with Optimism's Citizen House.

Retroactive airdrops are broken, rewarding farmers over builders. Impact Score allows for proactive, merit-based distribution that bootstraps real communities.

• Shifts from retroactive (Uniswap, Arbitrum) to proactive and targeted distribution.
• Dramatically increases retention by rewarding sustained interaction, not one-off transactions.
• Reduces token dump pressure by allocating to users with proven loyalty and lower sell propensity.

Impact Score isn't a siloed product; it's a primitive. It becomes a composable data layer that any DeFi, social, or governance app can permissionlessly query and build upon.

• Enables cross-protocol reputation portability, a foundational Web3 missing piece.
• Sparks innovation in underwriting (Goldfinch), hiring (Braintrust), and DAO tooling.
• Creates network effects similar to The Graph for querying, but for economic identity.