Issue #40: Micro-credentials & Web3 Reputation

I’ve talked about reputation before, but I had a conversation this week that made me think about it differently, and deeper, with respect to Web3.

To quote from my earlier issue…

“Reputation is the sum total of your previous actions. Because it is based on past behavior, it serves as one of the best predictors of future behavior.

If you show up to work early and leave late every day for 365 days, you develop a reputation as a hard worker. This is also the best predictor of how you are likely to behave on day 366.”

I originally wrote about on-chain reputation in the context of credit scores - your financial reputation - but Web3 reputation will extend far beyond creditworthiness and mirror the complexity and nuance of real life. Our real life reputations are multi-faceted, made up of thousands of weak and strong signals. An amalgamation of personal, professional and social behavior over many years, and Web3 needs to reflect that.

We’re getting there, and blowing up Web2’s platform-based reputations in the process. I can’t think of a more worthy cause.

Let’s zoom in…

Online Reputation

Online reputation today is anchored to platforms - Twitter followers, Youtube subscribers, Substack readers, Github contributions, Amazon page rankings. Downsides are it’s narrow (platform-specific), and it doesn’t travel with you (platform lock-in). The upside is it’s hard to establish. It takes years of consistent value creation to build. From that standpoint, online reputation is a good indicator of future behavior as it relates to that platform. Unfortunately it’s also only yours as long as you remain a user of the platform.

Despite leaning professional, LinkedIn may be one of the most comprehensive online reputation platforms, incorporating your educational and professional credentials with a dab of social media (activity feed). While LinkedIn offers third attestations - “Jane endorses you for creative writing”, the bulk of your profile is self certified.

The problem with online “profiles” is they are distortions of who you really are; curated bulletin boards of your life that paint you in the best light possible. I’m guilty of it to. I don’t want anyone knowing I got fired from my college bartending job because I kept forgetting to wear my bowtie!

We’re moving to a world where depth, breadth and portability of online reputation are possible. Web3, decentralized applications and DAOs…over time…will create more robust and comprehensive online reputations that mimic our reputations in real life.

Superficial and Brittle

Web3 reputation today is a weird hybrid of Web2 and Web3 signals. The social aspect of Web3 still relies on Web2 platforms like Twitter, so your follower count, for example, remains a powerful signal. At the same time, new signals are emerging.

Profile pictures, or PFPs, have become the killer use case for NFTs. Jay Z has a CryptoPunk avatar. Steph Curry has a Bored Ape avatar.

As exciting as NFT-based PFPs are, I would characterize this as a superficial reputation signal, like owning a fancy sports car. It doesn’t say anything meaningful. You are either: (a) an insider, or (b) someone who can afford it.

The mechanisms for rewarding reputation in Web3 are still rudimentary too. This leads to brittle reputation.

A “snapshot” is the process whereby a team/project takes a snapshot of their user base/tokenholders/contributors at a specific point in time (ex: October 31, 2021 at 12pm) as the basis for distributing rewards and credentials.

A recent example of this came in response to US Senator Elizabeth Warren’s statement that crypto puts the financial system in the hands of “shadowy supercoders”. In typical crypto fashion, we turned it into a meme, and then an NFT. Any developer that deployed a smart contract on Ethereum can claim the Shadowy Supercoder NFT from Galaxy. The NFT entitles the holder to discounted or free developer-focused services from a variety of companies.

The Shadowy Supercoder NFT is objectively cool for so many reasons and I’m a huge fan, but single snapshots are a fairly brittle signal of reputation. Across the 110,000 eligible Ethereum developers, you have people who are the absolute best in the field, and others who played around with smart contracts for an afternoon and never came back.

Reputation isn’t a point-in-time assessment. It’s the aggregate of your behavior over a period of time.

Micro-credentials

The Internet has created a giant feedback loop. An increasing number of the actions we take online receive a positive or negative reaction. You sell a product on Amazon, someone can write a review. You publish an article, someone can leave a comment. You share an interesting thought on social media, someone can like it and repost it. It’s one giant, real-time feedback loop, and all of these tiny social interactions are micro-credentials.

As I mentioned above, these micro-credentials have historically been specific to a platform. The rules of the game are fixed, and you can’t take them with you.

Web3 will have a similar feedback loop, but the rules of the game aren’t fixed by a platform and the micro-credentials you earn will travel.

Imagine receiving, or being eligible to claim, an NFT for every online interaction. Hard to do today because of gas fees, but we’ll get there.

• You complete an online course, you get an NFT.

• You donate to an initiative, you get an NFT.

• You wrote an article that eclipsed a certain threshold of engagement, you get an NFT.

• You invested in a startup, you get an NFT.

• You travel to a new country, you get an NFT

• You get recognized at work for your performance, you get an NFT

• You’re a lawyer and lead a big M&A deal, you get a virtual deal toy as an NFT

Your actions become assets, and have signal attached to them. Overtime, you build provable reputation around a portfolio of tokenized credentials.

This naturally leads to Linkedin-like dapps showcasing your reputation the same way NFT galleries showcase your digital art today.

Rabbithole arrived at this conclusion earlier than most, but others are catching on and we’ll see different approaches to the Web3 resume emerge.

The key is allowing for context, nuance and capturing behavior over time. A single snapshot isn’t a great measure of reputation compared to a daily snapshot over a one-year period. A single snapshot also isn’t a great measure of reputation compared to the compilation of 10 snapshots across several, complimentary applications.

What’s cool about the decentralized nature of Web3 is that applications can piggy back off reputation users established through other applications. This is what I love about the Shadowy Supercoder NFT. The behavior being rewarded happened independently from the platform issuing the NFT and corresponding incentive program. This model is going to be tested a thousand different ways.

Parting Thoughts

There is an obvious cost to all of this - our privacy. The Internet has convinced us to surrendered our privacy in the name of convenience and curated user experiences.

There’s a fascinating dynamic emerging in crypto - we are the most privacy-conscious demographic in the world, while at the same time using public financial infrastructure.

This is leading many to adopt pseudonymity - having one or more online personas that aren’t tied to a real world identity. I’ve started doing this too - removing my profile pictures from social media sites and replacing them with an avatar - in my case, Ethmoji #504. Still one of the coolest NFT projects, created by the founders of Opensea in late 2017. It’s an antique :).

Andy

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