Delegation based on reputation scores vs Delegation based on token holdings: Sybil Resistance

Delegation based on token holdings excels at creating clear, cryptoeconomic alignment because it directly ties voting power to financial stake in the network's success. For example, protocols like Compound and Uniswap demonstrate that large token-holders (e.g., a16z, Paradigm) have a vested interest in long-term protocol health, as seen in governance proposals affecting fee switches or treasury management. This model provides a measurable, on-chain metric for influence and is simple to implement.

Delegation based on reputation scores takes a different approach by decoupling influence from capital, using metrics like past contributions, verified identity, or community trust. Systems like Gitcoin Passport or Optimism's Citizen House attempt to quantify human capital. This strategy aims for more diverse, meritocratic participation but introduces the trade-off of complexity in score calculation, potential centralization in the scoring algorithm itself, and challenges in maintaining sybil resistance without a direct cost-of-attack.

The key trade-off: If your priority is immediate, quantifiable sybil resistance and capital efficiency for a DeFi protocol, choose token-based delegation. If you prioritize long-term, contributor-aligned governance and mitigating plutocracy for a public goods or social protocol, choose reputation-based systems, acknowledging the need for robust, ongoing identity verification infrastructure.

Delegation based on token holdings excels at providing a direct, cryptoeconomic cost to attack because it requires the acquisition of substantial, liquid capital. For example, a 51% attack on a network like Ethereum 2.0 would require controlling over 10 million ETH (over $30B at current prices), creating a massive financial barrier. This model, used by Lido, Rocket Pool, and most major L1s, aligns security directly with staked value, making large-scale Sybil attacks prohibitively expensive.

Delegation based on reputation scores takes a different approach by decoupling influence from capital, focusing on proven historical behavior and identity verification. This results in a trade-off: it can foster more decentralized and diverse validator sets (as seen with projects like Gitcoin Passport or BrightID), but introduces complexity in quantifying and securing the reputation oracle itself, creating a new attack vector. The cost to attack shifts from capital expenditure to the cost of fabricating a credible, long-term identity history.

The key trade-off: If your priority is maximizing Sybil resistance for high-value, financial settlement layers where capital-at-risk is the ultimate deterrent, choose token-based delegation. Its security is mathematically quantifiable and battle-tested. If you prioritize fostering permissionless, capital-light governance or curation (e.g., DAO voting, grant allocation, content moderation) and can manage oracle risk, choose reputation-based delegation. It enables participation based on contribution, not just wealth.