Social Layer

A decentralized identifier (DID) is a portable, user-controlled identifier not dependent on a central registry. It is the core building block for self-sovereign identity on the social layer.

• Key Standards: W3C DID specification, Verifiable Credentials (VCs).
• How it Works: DIDs resolve to a DID Document containing public keys and service endpoints, enabling authentication and data exchange.
• Example: A user proves their age to a service by presenting a cryptographically signed VC from a trusted issuer, without revealing their birthdate.

Protocols that map social connections—follows, likes, trust—in a portable, user-owned format, decoupling social data from specific applications.

• Core Concept: The social graph becomes a public utility, not proprietary data.
• Examples: Lens Protocol (Polygon) stores profiles and connections as NFTs. Farcaster uses on-chain IDs with off-chain hubs for efficient social data storage.
• Benefit: Users can move their social network and reputation between different client applications built on the same protocol.

On-chain systems for issuing, storing, and verifying claims about an identity, forming a portable reputation layer.

• Attestations: Signed statements (e.g., "completed course," "is a KYC'd user") stored on or referenced by a blockchain.
• Key Protocols: Ethereum Attestation Service (EAS) provides a standard schema for creating and verifying on-chain attestations.
• Use Case: A decentralized credit score could be built from attestations of loan repayments from multiple lending protocols.

The infrastructure for storing profile data, posts, and other social content in a decentralized, censorship-resistant manner.

• Solutions: IPFS and Arweave for permanent, decentralized file storage.
• Hybrid Models: Many protocols (like Farcaster) use off-chain storage hubs for efficiency, with cryptographic commitments to on-chain registries for data integrity.
• Challenge: Balancing data availability, cost, and retrieval speed while maintaining decentralization.

Mechanisms to prevent a single entity from creating a large number of fake identities (Sybils), which is critical for governance and reputation systems.

• Methods: Proof-of-Personhood protocols like Worldcoin use biometrics. Social graph analysis and proof-of-uniqueness via trusted attestations.
• Importance: Ensures fair distribution of resources (e.g., airdrops, voting power) and reduces spam in social applications.

The ability for social layer components—identities, graphs, reputations—to be used across different applications and blockchain ecosystems.

• Standards: ERC-725 (Identity), ERC-1155 (Multi-Token for social items).
• Composability: A reputation score from one DeFi protocol can be used as input for a governance system in another.
• Vision: Enables a modular social stack where developers can plug into existing identity and graph primitives.

A core challenge is ensuring sufficient voter turnout to make governance decisions legitimate and resistant to capture. Many token holders lack the time or incentive to research proposals, leading to low participation rates. This can result in:

• Plutocracy: Decisions are dominated by a few large token holders.
• Delegation risks: Reliance on delegates who may not act in voters' best interests.
• Proposal fatigue: An overwhelming number of votes can further reduce engagement.

Protocols must defend against actors creating many fake identities (Sybils) to gain disproportionate voting power. Mitigation strategies include:

• Proof-of-Personhood: Using biometric verification or social graph analysis (e.g., Worldcoin, BrightID).
• Token-weighted voting: Basing votes on staked assets, though this favors wealth.
• Conviction voting or quadratic voting: Systems that penalize vote concentration.
• Bribery and collusion: On-chain voting can be transparently bribed, requiring cryptographic solutions like minimal anti-collusion infrastructure (MACI).

Fully on-chain, democratic processes can be slow and struggle with complex technical decisions. Key issues include:

• Slow iteration: Reaching consensus on upgrades can hinder rapid protocol evolution.
• Information asymmetry: Voters may lack the technical expertise to judge proposals accurately.
• Tyranny of the majority: Minority viewpoints or critical security concerns can be overridden.
• Off-chain coordination: Much critical discussion happens in forums (e.g., Discord, Commonwealth) outside the immutable on-chain record.

Decentralized governance structures operate in a gray area of global law, creating risks for participants.

• Security vs. utility classification: Governance tokens may be deemed securities by regulators (e.g., SEC actions).
• Liability for decisions: Who is legally responsible for a DAO's action? This question remains largely unanswered.
• Jurisdictional conflict: A global participant base faces conflicting regulations from different countries.
• KYC/AML compliance: Implementing identity checks for voting can conflict with decentralization ideals.

Managing a protocol's treasury, often worth billions, is a high-stakes governance challenge.

• Capital allocation: Deciding between funding development, grants, liquidity incentives, or token buybacks.
• Runway risk: Ensuring the treasury has sufficient assets to fund operations long-term.
• Diversification: Managing the risk of holding a large portion of the protocol's native token.
• Transparency vs. secrecy: Full on-chain transparency can reveal strategy to competitors during sensitive negotiations.

A hard fork is the ultimate governance mechanism—and a sign of its breakdown. When consensus cannot be reached, the chain can split.

• TheDAO Hack (Ethereum): Led to the Ethereum/ETC split, a landmark event in on-chain governance.
• High coordination cost: Forking a major protocol requires rebuilding ecosystem, liquidity, and community.
• Value dilution: Competing forks can split network effects and token value.
• Social consensus: The "legitimate" chain is ultimately decided by community and exchange adoption, not just code.

A self-sovereign identity standard (W3C) where users control their identifiers and verifiable credentials without centralized registries. Key components include:

• Decentralized Identifiers (DIDs): Unique, persistent URIs anchored on a blockchain or other decentralized system.
• Verifiable Credentials (VCs): Tamper-evident claims, like attestations or memberships, that can be cryptographically verified.
• Identity Wallets: User-held software that manages DIDs, private keys, and VCs. Examples include SpruceID and Microsoft's ION on Bitcoin.

A protocol for storing and querying social connections—follows, likes, interests—on decentralized networks, separating social data from application logic. This enables data portability and composability.

• Lens Protocol: A composable social graph on Polygon where user profiles are NFTs and interactions are recorded on-chain.
• Farcaster: A sufficiently decentralized social network protocol with an on-chain registry and off-chain data hubs.
• CyberConnect: A social graph protocol for Web3, allowing developers to build applications on top of a user's portable social network.

A system for quantifying trust and contribution based on verifiable on-chain activity, moving beyond simple token holdings (e.g., Proof-of-Stake) to assess behavior.

• Soulbound Tokens (SBTs): Non-transferable tokens representing credentials, affiliations, or achievements.
• Attestations: Signed statements from other identities or protocols about a user's actions (e.g., completing a course, repaying a loan).
• Reputation Aggregators: Protocols like Gitcoin Passport that compile verifiable credentials to generate a trust score for sybil resistance in governance or airdrops.

Member-owned communities governed by smart contracts and on-chain voting, representing a core organizational primitive of the social layer.

• Governance Tokens: Confer voting rights on proposals (e.g., treasury management, protocol upgrades).
• Proposal & Voting Systems: Frameworks like Snapshot (off-chain signaling) and Governor Bravo (on-chain execution).
• Treasury Management: Collective control over shared assets, often managed via Gnosis Safe multisigs. DAOs coordinate resources and align incentives at scale without a central hierarchy.

Mechanisms to enhance wallet security and usability by moving away from single private key custody.

• Social Recovery Wallets: A model where a user's account can be recovered by a predefined group of guardians (e.g., friends, other devices) if a seed phrase is lost. Pioneered by Vitalik Buterin and implemented in wallets like Argent.
• Account Abstraction (ERC-4337): Allows smart contracts to function as user accounts, enabling features like:
  • Session keys for temporary permissions.
  • Gas sponsorship by applications.
  • Multi-factor authentication setups.

Infrastructure that enables creators to own and monetize their content directly, bypassing platform intermediaries.

• Mirror: A publishing platform that turns blog posts into collectible NFTs, allowing direct monetization and community ownership.
• Rally (Superfluid): Enables streaming money—continuous micro-payments in real-time—for subscriptions or royalties.
• Audius: A decentralized music streaming protocol where artists are paid directly and listeners can own stakes in artists' work. These protocols use smart contracts to automate revenue splits and royalty distributions.