Absence of reputation system

There is a clear need for protocols to be able to identify their respective valuable users in order to reward them. However there is currently no standard either method widely adopted to tackle this need, and as a consequence there is currently a lack of reputation systems in blockchains.

We already saw several attempts from projects trying to recognize and reward their users such as Uniswap which airdropped some UNI tokens to each address that has interacted with their protocol . This approach was, at this time, considered by some cryptocurrencies users as one of the most β€œfair” airdrops. After this way of thinking came out, this list of Uniswap user addresses was used by a lot of other projects which considered that it formed a community of DeFi users and enthusiasts. However this list can of course not be sustainable even if projects keep adding to it users of protocol X or Y.

We can also cite the cases of ICOs/token sales or NFT drops that try to distribute their tokens to as many small holders as possible instead of traders / investors which tend to speculate and sell for profits as soon as they can. Since the ICO mania in 2017, various sales models were experienced trying to provide better equity for all investors. Following this, today’s sales are defining various vesting periods, lowering purchase limits per user and often rely on a random whitelisting or queue system to select allowed participants (which can also sometimes force KYC processes). More recently, some projects already using a queue system (such as Coinlist or Nba Top Shot) migrated to a priority queue system where some users have better chances to be selected based on their previous actions within the project (such as participation in previous sales etc).

Alternatively, launchpad platforms that experienced a certain period of popularity during the bull market such as Polkastarter or centralized exchanges can also require to have a minimum of their tokens staked since (or for) a period of time in addition to being randomly selected. However it is not capital efficient for funded projects to ask their potential buyers to also invest in the launchpad tokens to access it (as the capital used to access the sale could be spent into it directly) and this also results, most of times, in small investors being unable to access it even despite community/project engagement.

Some more innovative approaches also exist, such as UMA which provides ’KPI options’. Those options’ rewards value depends on a key metric of their protocol usage: the total value locked. These options result in ’betting’ on the project usage so it involves the holder in the project community as he has interest to grow its usage. These KPI options were distributed to a list of curated addresses (previous participants of the protocols) as a reward of their actions.

All these attempts to provide user incentive mechanisms are highlighting the fact that some platforms want to reward their users but there is a need for a standardization of techniques to better identify them.

Last updated