Proof-of-Engagement

PoE calculates a user's Engagement Score by analyzing multiple on-chain behaviors, not just capital. Key metrics include:

• Transaction Volume & Frequency: Measures economic activity.
• Protocol Interaction Depth: Rewards complex interactions like providing liquidity or using governance.
• Network Longevity: Considers the duration and consistency of participation.
• Social Graph Analysis: Maps interactions with other engaged users (e.g., in DeFi or social protocols).

A core challenge is preventing Sybil attacks, where a single entity creates many fake accounts. PoE systems implement resistance through:

• Proof-of-Personhood links: Optional integration with protocols like Worldcoin or BrightID.
• Cost-of-Attack Analysis: Making fake engagement economically non-viable by requiring diversified, sustained activity.
• Graph Clustering Algorithms: Detecting and down-weighting clusters of accounts with correlated behavior.

The Engagement Score directly influences the right to produce blocks and earn rewards. Common implementations include:

• Weighted Random Selection: The probability of being chosen as the next block proposer is proportional to one's Engagement Score.
• Committee Formation: Top scorers form a validator set for a given epoch, similar to delegated proof-of-stake but based on activity.
• Finality Gadgets: May use a separate finality layer (e.g., a BFT consensus) for security, with PoE determining block proposal rights.

Rewards (block subsidies, transaction fees) are distributed based on proven engagement. This differs from pure Proof-of-Stake (PoS) by:

• Meritocratic Allocation: Rewards are a function of f(Engagement Score), not just f(Staked Tokens).
• Retroactive Funding Models: Can align with protocols that reward past contributors, like Optimism's RetroPGF.
• Slashed for Inactivity: Scores can decay, and validators may be penalized for failing to participate when selected.

PoE is applied in contexts where active contribution is more valuable than passive capital.

• Decentralized Social Networks: Projects like Farcaster use engagement to weight influence and curation.
• DeFi Governance: Allocating voting power based on protocol usage, not just token ownership.
• Layer 2 Rollups: Sequencing rights could be allocated based on proven user engagement with the rollup's ecosystem.
• Data DAOs: Rewarding users for contributing and validating data sets.

PoE contrasts with traditional consensus models:

• vs. Proof-of-Work (PoW): Replaces energy-intensive computation with provable economic and social activity.
• vs. Proof-of-Stake (PoS): Shifts focus from capital-at-risk to activity-at-risk. A user's 'stake' is their reputation and effort.
• vs. Proof-of-Authority (PoA): Permissionless and merit-based rather than relying on a pre-selected set of known validators.

Proof-of-Engagement shifts the focus from pure capital (Proof-of-Stake) or computation (Proof-of-Work) to measurable user activity. Its primary purpose is to align network growth with genuine utility by rewarding behaviors that contribute to ecosystem health, such as:

• On-chain governance participation (voting, proposing)
• Content creation and curation
• Social sharing and community building
• Completing educational quests or bounties This creates a sybil-resistant metric of contribution that is harder to game than simple token holdings.

A PoE system typically relies on several technical building blocks to function securely and transparently:

• Engagement Oracle: A trusted data feed or smart contract that verifies and scores specific on-chain/off-chain actions.
• Soulbound Tokens (SBTs): Non-transferable tokens that act as a persistent record of a user's reputation and accumulated engagement.
• Verifiable Credentials: Cryptographic proofs that a specific action (e.g., completing a tutorial) was performed by a unique user.
• Sybil Resistance Mechanisms: Techniques like proof-of-personhood or social graph analysis to prevent users from creating multiple fake identities to farm rewards.

PoE is deployed to solve specific problems in decentralized ecosystems:

• Decentralized Social Media & Content Platforms: Rewarding creators and curators based on the quality and reach of their content (e.g., Farcaster, Lens Protocol).
• DAO Governance: Weighting voting power based on past participation and contribution depth, not just token wealth.
• Layer 2 & Appchain Incentives: Bootstrapping active users and developers for new networks through retroactive public goods funding and engagement airdrops.
• Learn-to-Earn & Gamification: Structuring educational pathways where users earn credentials and rewards for demonstrating knowledge.

Compared to traditional incentive models, PoE offers distinct advantages:

• Improved Token Distribution: Rewards are distributed to active contributors, potentially leading to a more decentralized and aligned token holder base.
• Sustainable Growth: Incentivizes real product usage and community building, not just speculative holding.
• Enhanced Security for Social Apps: Makes spam and bot attacks more costly by requiring genuine engagement.
• Meritocratic Influence: In DAOs, it can help balance influence between large capital holders and deeply involved, knowledgeable community members.

Implementing PoE effectively involves navigating significant technical and social challenges:

• Quantification Problem: Objectively measuring the 'value' or 'quality' of subjective actions like content creation is inherently difficult.
• Oracle Reliance & Centralization: The data source scoring engagement can become a centralized point of failure or manipulation.
• Gaming & Exploitation: Sophisticated actors may find ways to artificially simulate engagement, requiring constant iteration of anti-gaming logic.
• Privacy Concerns: Tracking detailed user behavior for scoring raises significant data privacy questions, conflicting with Web3 ethos.

Proof-of-Engagement intersects with several adjacent Web3 primitives:

• Proof-of-Personhood: Protocols like Worldcoin that cryptographically verify unique human identity, a common component for sybil-resistant PoE.
• Retroactive Public Goods Funding (RetroPGF): A funding model, used by Optimism, that rewards past valuable contributions, often using PoE-like metrics.
• Verifiable Credentials (VCs): W3C standard for tamper-proof digital claims, used to prove engagement actions.
• Attention Economy: The broader economic model where user attention and engagement are the primary scarce resources being quantified and traded.

A Sybil attack is a primary threat where a single entity creates many fake identities (Sybils) to artificially inflate their engagement metrics and gain disproportionate influence. Mitigation requires robust, cost-intensive Sybil resistance mechanisms like Proof-of-Personhood or social graph analysis to link accounts to unique humans.

• Example: A botnet could spam likes or transactions to simulate engagement.
• Challenge: Balancing identity verification with user privacy and decentralization.

The security of a PoE system depends on the integrity of its engagement metrics (e.g., likes, shares, content creation). These metrics are inherently vulnerable to gaming through click farms, automated scripts, or collusive rings.

• Consequence: Rewards and governance power flow to manipulators, not genuine contributors.
• Defense: Requires sophisticated, constantly evolving anti-gaming algorithms and anomaly detection, which can be complex and centralized.

Determining what constitutes 'valuable engagement' often requires subjective judgment. This can lead to centralization risk if a core team or a small committee controls the curation algorithms or reward parameters.

• Power Concentration: A centralized curator becomes a single point of failure and censorship.
• Governance Challenge: Decentralizing subjective quality assessment is a significant unsolved problem in PoE systems.

Unlike Proof-of-Stake, where validators risk slashed funds, PoE participants often risk little of tangible value. This creates a "nothing-at-stake" analogue, where attacking the network is cheap.

• Low Cost of Failure: Creating Sybils or gaming metrics may only require time and bandwidth, not capital.
• Implication: The cost of attacking the network must be raised through other means, such as persistent identity costs or reputation burn.

PoE systems require extensive data collection on user behavior to measure engagement. This creates significant data privacy risks and potential for exploitation.

• Surveillance: The network inherently monitors user actions.
• Data Breaches: A centralized data store becomes a high-value target for hackers.
• Regulatory Risk: May conflict with regulations like GDPR, which grant users the 'right to be forgotten.'

Security depends on sustained, genuine engagement. Incentives that reward simple, spammy actions can lead to incentive misalignment, degrading network quality and security over time.

• Tragedy of the Commons: Users optimize for personal reward, not network health.
• Sustainability: Requires dynamic incentive models that penalize low-quality engagement and promote long-term value creation, which are difficult to design and govern.

A foundational consensus mechanism where validators secure the network by staking their cryptocurrency. PoS is often the underlying security layer for PoE systems, which then add an engagement layer on top. Key differences:

• Resource: PoS uses locked capital, PoE uses active participation.
• Goal: PoS ensures security and finality, PoE incentivizes network growth and utility.
• Examples: Ethereum (PoS base layer), Cosmos, Solana.

The economic model governing a cryptocurrency's supply, distribution, and utility. PoE is a core token distribution and incentive mechanism within a project's tokenomics. It defines how tokens are earned through actions like:

• Providing liquidity (liquidity mining)
• Creating content or social interactions
• Completing on-chain quests or bounties PoE aims to align token issuance with genuine, value-adding network activity.

An organization governed by smart contracts and member votes, often using governance tokens. PoE mechanisms are frequently used to distribute these governance tokens to active, contributing community members, not just capital holders. This creates a more meritocratic and engaged governance body. PoE metrics can help answer: Who has truly earned a say in the protocol's future?

The distribution of free tokens to a set of wallet addresses. PoE is increasingly used to design merit-based airdrops (or "airdrop 2.0") that reward past on-chain activity rather than simple eligibility. This shifts the focus from speculation to retroactive public goods funding. Examples include rewarding early users, testnet participants, or liquidity providers based on verifiable engagement data.

A tamper-proof digital record of an achievement, attribute, or qualification. In PoE systems, on-chain actions generate verifiable proof of engagement. These credentials can be:

• Soulbound Tokens (SBTs) representing a user's reputation or history.
• Used as input for sybil-resistant airdrops and governance.
• Portable across different applications, creating a composable reputation layer.

Subsets of PoE that gamify specific types of engagement. They tokenize real-world or in-game actions.

• Play-to-Earn: Rewards players with tokens for gameplay achievements and contributions (e.g., Axie Infinity).
• Move-to-Earn: Incentivizes physical activity verified via devices (e.g., STEPN). Both models demonstrate PoE's principle: token issuance is directly tied to a measurable, value-added action.