Reputational Capital

An on-chain method of forging trusted player identities

Introducing “Reputational Capital” as an asset in Web3 Gaming

Reputational Capital is “the quantitative measure of some entity's reputational value in some context – a community or marketplace.”[1] In Web2 contexts, Reputational Capital is often used to reward participants for taking “good actions.” Examples of Reputational Capital in Web2 include:

• Reddit: Post “karma.” Users whose comments and/or posts are deeped helpful by other users, accumulate “karma”. This helps other users weigh the value of user comments/posts.

• Wikipedia: “Over time, editors may acquire an informal reputation based on their edits and the views of their peers.” These editors have more “influence” over the content of Wikipedia entries.

• eBay: “Seller ratings” provide a reputational history for buyers to consider prior to making a purchase from a seller.

One positive- and valuable- element of Web2 reputational capital feedback loop design is the ability to engineer "self-regulation." In a well-designed system, such as Reddit's "karma" method, the reputation of the contributor can be taken into account - essentially adding a kind of "automatic regulation" of the regulatory system itself. This model is especially well suited in a Web3 context, easily transferrable into a permissionless and trustess environment.

Web2 Reputational Capital can, however, reflect the deficiencies - or biases - of dominant Web2 economic models, which privilege “walled gardens” and “winner take all” economics, where people are “users” that freely give away their data in exchange for a service:

• Participants do not own their Reputational Capital. Their identity, such as a Reddit user account, and Reputational Events attributed to that account, are owned by the Web2 entity.

• Reputational Capital accumulated in one place- say Reddit- is non-transferable to another place- say Wikipedia, by a user participating in both platforms.

• Third parties have no way of verifying the Reputational Capital of a new entrant. For example, a Reddit user with very high Karma related to their expertise in stock trading cannot enter into another community - say The Motley Fool discussion boards- and transfer their status as an accomplished analyst.

• Users have no means to self-organize around Reputational Capital, and form new collective entities by using Reputational Capital as a key, or method, of entry into the group. Instead, they must manually cross-check each applicant's social graph to ascertain their qualifications (and trust that they are indeed the identity they claim to be).

From a thematic perspective, the issues in Web2 Reputational Capital can be summarized as lacking:

• Transportability of Reputational Capital across platforms.

• Ownership of Reputational Capital across platforms by one cross-platform identity.

• The ability to trust that the identity entering a new platform is indeed representing an accurate history of Reputational Capital accumulation.

• Empowering owners of their Reputational Capital to self-organize into larger operating collectives, leveraging Reputational Capital as a trusted method to screen for qualified participants.

• With ownership of one’s Reputational Capital, the unlocking of benefits / rewards that reflect the “positive feedback loop” that comes with earning positive Reputational Capital over time across products, experiences, and “places”.

In the context of gaming, the blockchain permits Reputational Capital to become a key barometer of value- and reward- for players over time, replacing the transactional pecuniary motivations seen in the first generations of “Play to Earn” game mechanics. For example:

• Linking player achievement to on-chain events, attributed to the player identity, which itself is an on-chain pseudonymous entity.

• Enabling more robust governance structures and hierarchies to emerge: It allows for a more fluid way for a player or person to climb through the ranks of any structure in a permisionless and trustless way

• Allowing any third-party to “inspect” the on-chain achievements made by that account, and take trustless actions accordingly. For example, a player guild could inspect the attributes on-chain of a new applicant, and ascertain with confidence whether they meet membership criteria.

• Game developers, in building a new game, could recruit players known for their Reputational Capital pertaining to helping developers beta test / prototype new game features, by examining player reputation earned from other developers.

• Games could affiliate together, voluntarily, to recognize achievements in one game, as unlocking value in a second game. This could mark a shift from relying on paid media budgets to acquire new users, to an affiliate strategy, where cooperating games have incentives to recognize each other’s players.

• In a tokenized game economy, players that achieve a certain amount of qualified Reputational Capital- by taking actions consistent with building a healthy game economy- can be Airdropped future tokens in recognition of their efforts.

In order for Reputational Capital to be trusted, it’s essential that the owners of Reputational Capital cannot sell or trade their Reputational Capital to another owner. Otherwise, this could, indirectly, recreate some of the “sweatshop mechanics” seen in gaming, where an economy is built around low-wage workers grinding out Reputational Capital to resell to wealthier players that want to buy benefits without authentic participation.

In creating a “Verified User Account” - meaning an on-chain entity affiliated to a player- the underlying contract governs the account, and can set the rules as to which part of the account is tradeable (say the “handle” and “inventory” held by the account, such as NFT-backed game objects they purchased) and which in not tradeable: the achievement graph which forms the corpus of Reputational Capital.