On-chain credentials: A Primer 🔖

On-chain credentials: A Primer 🔖

The credentials of tomorrow will look nothing like what they do today.

Thinking from first principles must come easy to you if you're involved with DAOs. In fact, when we were reflecting on our dissatisfactory experience as DAOs contributors ourselves, we were forced to think from first principles to arrive at an answer. What was really going wrong?

For starters, the whole contributor experience was a long-drawn affair. After task completion, one had to rigorously follow up to get their work seen and get paid. Then, the reputation so built in one DAO did not transfer easily to another DAO. We had to, in many cases, start from scratch to prove ourselves.

Lastly, and this is what irked us the most, people with money could possibly have more governance power than those who were super active in the community but didn’t have the same resources. How could all of this be made better? We started brainstorming around a reputation primitive and fell down the proverbial rabbit hole.

While we haven't reached the end of it, as of today we've got a growing team of eight with a protocol that’s live on mainnet (and several new features in the pipeline). But before we take a closer look at what we've built and what we are building, it’s a good idea to zoom out a little.

Coordinated Action & Shared Narratives

Our ability for coordinated action separates us from all other species on this planet. This has been the most significant enabler of all substantial change, and is further based on our ability to believe in shared narratives — language being the most common of all.

Without consensus on basic rules of language, discussing and sharing ideas would be very tough. However, since we all (broadly) agree on rules around, say, the English language, we can communicate, share and believe in narratives.

So if shared narratives form the bedrock of coordinated action, it is only natural for coordinated action to break down when we lack shared narratives. Take the classic example of going to a new country and not knowing the language. It is tough to communicate anything except the bare necessities because there isn't a shared narrative between you and everyone else there.

The Progression of Credentials

A narrative is essentially a story with several parts. At any given point in time, we find ourselves in one part of the story. To sustain the narrative, we must coordinate with each other and take action to move successfully to the next part of the story. So our destination has always been clear — however, the way to reach there isn't always so.

The way we decide on the next steps is by hypothesizing what actions will get us to the next milestone, and then tweaking our course of action on the fly. This hypothesizing-acting-tweaking motion is easy to do in small groups, but becomes increasingly challenging in larger groups. The need for an organizational solution emerges here. Take the case of every startup.

In the beginning, we have a handful of people who believe in a specific vision of the future. As time goes on (and if they do well), they recruit more and more individuals who believe in their narrative, of which some join their company.

This is how functional areas and KRAs evolve naturally. So what starts off as a few people doing everything, progresses into soft divisions among people, which then ossifies over time. Such a progression is always mediated through credentials.

💡 Credential (noun) — A qualification, achievement, quality, or aspect of a person's background, especially when used to indicate their suitability for something.

As we have seen, credentials that start off purely for organization purposes (i.e., to reduce chaos in the system) go on to become a potent tool for member recognition, and eventually become a marker of reputation. In this way, credentials form the substrate for sustained, coordinated action and help us organize our communities.

Credentials as a Substrate for Coordinated Action

Early hunter-gatherer societies differentiated members from non-members (or the general public) in several ways. This was done through physical or bodily markings and through ornaments or adornments.

In addition to defining membership this way, they also had rituals of conferring these markings, which usually remarked something like a good hunt, a victory, or even just a display of exemplary effort. It would not be uncommon to see these individuals then display these ornaments as a way of signaling their reputation to others in the group. We see a version of this play out in modern-day corporations with titles, bonuses, awards, etc.

In fact, a lot of our societal activity or our "coordinated action" is bootstrapped via these credentials, and we use them way more than we may guess. For example, someone who has gone to medical school and has the relevant degrees is considered eligible to medically treat other people.

This is something we as a society have collectively agreed upon — we assume trained doctors to have a basic level of competence and trust them with our health.

Similarly, in other aspects of our work lives — and this is also the focus of the next couple articles — we use credentialing for access, organization, recognition, and reputation. Good credentials amply clarify the context for both the credential holder and anyone else interacting with them.

But on closer inspection, the scaffolding of our credentialing systems makes itself apparent, and their stagnation signals their unsuitability for the future.

Inequities of the System

The critical difference between the credentialing systems of yore and those of today is the increased amount of centralization. In early human societies, credentials were bestowed upon each other rather than received from someone.

Sure, it could be argued that credentials would be given by the elderly or the established and were thus centralized, but even then, these “centralized entities“ or leaders came up organically, and challenging their authority was straightforward (and possible).

Contrast this to our modern age — we see governments around the world increasingly penetrate the lives of their citizens. What started off essentially as a way for nations to introduce order in their jurisdiction grew into something completely different. We have at our hands a credentialing infrastructure that is highly centralized and marred with issues.

Governments hold a monopoly on people's "identities”.

Big Tech holds the same in the digital realm.

And this centralization becomes a problem when upending incumbents requires much more than simple rebellion and proving yourself.

Consequently, those in power at such institutions might not be fully accepted by those they govern, or worse, might not even have their best interest at heart. And such centralization is unfortunately present in all types of organizations.

Perhaps that is why lying on resumes, bribing your way through college, lawmakers trading stocks on privileged information, etc., is so common. It clearly highlights the need for something better. And this need is urgent, because the harm is not only obvious when we’re looking at the big picture; it is also obvious in our day-to-day lives.

In most corporations, credentialing is opaque or not as transparent as people would like. This is true especially of larger corporations, and is one of the biggest reasons behind organizational inefficiency and incompetence.

This opacity and centralization open the door to exploitation, which is again not uncommon. Big Tech harvesting user data for profit makes a lot of people feel shocked ("they shouldn't be doing this!") or cheated ("why am I not getting anything from them selling my data!").

This is not the future we dreamt of.

A New World

The excitement of web3 is nothing new, it is just rebranded excitement of the internet’s early days — a time when the idea of a federated approach to society captured people's imagination.

A society wherein people could communicate with each other freely (without reliance on third parties), and mediate their identity and reputation in ways most organic and comfortable to them. This was delightful indeed.

However, as most people saw, we lost the plot somewhere from then to now. Our digital, online lives saw the emergence of a digital ruling class. The Big Tech companies, in their profit-maximization motive, ironically ended up recreating the very system they held disdain for.

This stunted growth, if we may, did have tangible benefits to society (stunted growth is still growth). But it also motivates us today to do better. And the world of blockchains is the perfect playground for experimentation.

The idea of a running a non-fallible contract on top of an always public, fully-verifiable database is certainly interesting. For once, there is the possibility of having truly equal access to information, and smart contracts make agreements in this context truly trustless.

This gave us innovations such as decentralized finance (like AMMs) and other exciting experiments (like DAOs) that aim to rethink some societal primitives which have remained unchanged for a very long time (like banking and governance).

It is only natural to then take a look at other areas of society and wonder what better systems could look like there.

The Appeal of On-chain Credentials

By bootstrapping a network of nodes across the world through neat incentive engineering, Bitcoin presented a novel take on mass coordination. The rise of ERC20 tokens, particularly the ones used for governance, presented another. By now, it is amply clear that blockchains have in them the seed of a solution that will unlock smoother and better coordination. In fact, they might have already done so.

While entering or exiting an organization or choosing its leaders has traditonally been a long-drawn process, we've been able to do the same much more easily using blockchains and tokens. For example, communities have been using NFTs for membership, and they have been able to grant more governance power to their most committed members via governance tokens. Our approach to the above though, is still hacky at best.

The transferability of governance tokens and NFTs, in general, leaves the door open to several attack vectors. They let external parties "hijack" governance and are  unfair to those active members of the community that hold fewer tokens than other inactive members with more tokens (since the latter, having more resources, picked up tokens from the open market).

In such cases, the appeal of a crypto-primitive, on-chain credential becomes apparent.

Rep3's On-chain Credentials

Today, communities need to figure out NFT collections or their own token if they want to token-gate community membership. But this reflects neither the activity of the member nor the changing nature of their membership. Such a solution also makes it difficult to express memberships of sub-groups (such as those based on functional areas or interests).

And while this way of managing communities somewhat addresses the organizational aspect of a credential, it does worse on the reputation, recognition, or access parts of it.

Beyond simple memberships, there needs to be a way to manage and build members' reputations for the work they do or don’t do. There also needs to be a mechanism to recognize members to keep them motivated and appreciate outstanding work or commitment.

Lastly, credentials have been used to permit access to things — in the world of web3 this could mean access to restricted Discord channels or restricted content on other platforms. We need to ensure that these credentials are interoperable and digestible by other applications, and that these credentials are beyond the influence of the distributing authority or even the platform used for disbursal.

As an aside, we’d like to bring up the fact that most of us, at one point or another, have wondered what it would be like to have a single profile across all social media platforms. These platforms, with their arbitrary shutting down or shadowbanning of users, have made us wonder what true ownership would feel like.

In light of the above, on-chain credentials make even more sense, and this is what rep3 enables for members of all communities.

In under two minutes, communities can set up an on-chain credentialing system that lets them organize their members (via memberships), build their reputation (by giving them credentials for the work they do), recognize exceptional effort (through one-off credentials and payouts) and permit access (since credentials issued through rep3 are interoperable with most popular tools).

Above all, the members finally become true owners of their reputation. This means that they can take their credentials and everything else with them outside of the walled gardens of the credentialing authority or the credentialing platform.

We have already seen rep3 increase transparency in large communities, and sow the seeds for effective governance in smaller ones.

Yours could be next.

Parting Thoughts

While the word "credential" does have a serious tone to it, it's a straightforward concept that all of us already have a deep understanding of. We interact with credentials every day — showing ours, demanding others', and then using these in different ways (formally or informally, in official matters or otherwise).

Paired with our innate understanding of credentials is our awareness of the massive potential of blockchain paradigms. After all, it is not uncommon to see parallels with the early days of the internet, which has transformed society beyond recognition over the past couple decades.

Blockchains have simply resumed the revolution that started then, and bringing credentials on-chain is the next step to transform our society from a hierarchical one to an equitable one.

Read part two of this series on on-chain credentials here.

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