In a capitalistic space like web3, DeSoc provides a much-needed advancement by creating a new way of determining the value individuals bring beyond their financial holdings. We expect this to bring forth an era of improved meritocracy powered by social relations, enabling users to better leverage their online identities for various applications.
Evan, Founder of Metaroids
The full whitepaper can be found here and is collaboratively created by E. Glen Weyl, Puja Ohlhaver, and Ethereum Co-Founder Vitalik Buterin. Unfortunately, it’s too difficult to read and quite technical, especially for non-developers. Hence, we created this resource to demystify the concept of DeSoc for general readers. If some parts appear too technical, drop us an email and we’ll see what we can do.
In the last two years, web3 has already provided us with disruptive innovations like non-fungible tokens (NFTs), play-to-earn (P2E) games, and decentralized financing (DeFi), which are currently advancing in a move-fast-and-break-things pace.
But while its tech prowess is undeniable, it seems to be missing something critical: the social element.
Since its inception, web3 has been focused on powering a financially-incentivized decentralized economy for the world, so much so that it is falling short on other crucial aspects. Blockchain communities, as they stand today, lack trusted online identities and social relations for people, the bedrock of any type of economy.
These two critical elements, which exist in the traditional financial landscape, can open up opportunities like undercollateralized lending and leases.
These financial options have allowed many people to access loans with little or no collateral, and even afford decent shelters, which make them critical even on a decentralized environment.
Can the current web3 space provide these same financing options? Unfortunately, it’s not yet ready.
Why not? Because many people across the globe lack trusted identities or authentic records of their financial transactions, which could have served as proof of trustworthiness from the perspective of creditors and firms. Plus, they also lack a network of people who can vouch for their credibility.
With the lack of solid initiatives and systems to cater to these underserved web3 natives, their financing options in the space are limited, preventing them from tapping the full possibilities of a decentralized economy.
Blockchain is powerful, but it’s not enough. This technology, by all means, should also be powered by real-life, organic, and continuously growing relationships between people to bring its maximum potential to users.
What is Decentralized Society?
Decentralized Society (DeSoc) is an umbrella term for a new web3 ecosystem that aims to create a tamper-proof record of web3 users’ identity and social relations to pave the way for a co-determined society with diverse ideals and fair governance.
So, why are identities and social relations important?
In today’s economy, service providers review people’s track records to determine if they can be reliable customers. People, in turn, rely on their established records (IDs, credit scores, diplomas, certificates) including financial and rental ones.
Basically, the traditional economy heavily relies on reputation and authenticity to spark active movements from consumers and service providers.
Web3, meanwhile, attempts to replicate the same setup but is facing challenges with the lack of a trusted identity from web3 users, some of which have multiple identities (through alt accounts) online. As a result, businesses remain hesitant to offer their services as they are clueless about the reliability and track records of people in this space.
DeSoc aims to offer blockchain-powered track records for web3 users to encourage businesses to set up shop and help people access much-needed services.
Through its innovative solutions called “Soul” and “Soulbound Tokens (SBTs),” which we shall discuss in the next section, the initiative intends to lay the groundwork for a reliable conceptual system that can power the decentralized economy.
Souls
A ‘Soul’ serves as DeSoc’s version of a web3 wallet, which users can utilize to accumulate and keep specialized assets called Soulbound Tokens or (SBTs). Think of it as a digital “envelope” for all your important digital records and certifications.
Moreover, both individuals and organizations can use Soul to either keep SBTs or distribute these tokens to their intended recipients.
There won’t be any hard rules on how many Soul accounts people can have. Someone can own several Souls to organize their SBTs according to category. ‘Soul 1’ may hold SBTs for educational attainment, ‘Soul 2’ can keep SBTs gained from on-the-job (OJT) training, and so on.
If you recall the web3 problems we discussed earlier, you’ll already know that the emerging space lacks focus on two key areas: trusted identity and social relations.
The combination of Souls and SBTs can potentially solve the blockchain space’s trusted identity problem.
Here’s how: Fellow Soul owners can attest to a Soul’s authenticity and trust level. This counterparty measure helps verify if a Soul indeed has genuine SBTs as it claims.
This solution is quite funny and clever, as we can already anticipate the army of crackpots who would soon attempt to game the system and gain an unfair advantage. Hasta la vista, web3 sock puppets.
Moreover, this countermeasure is critical as Souls may soon evolve as a primary tool to prove someone’s credibility and authenticity in web3. Souls with a high number SBTs can command greater trust and likeability from the public.
In this new field, the number of credentials (SBTs) may become the new way of determining eligibility for various applications, which is why there need to be key mechanisms to mitigate any attempts to cheat the system.
Soon, this promising Soul-SBT system may evolve as a critical part of any venture or initiative that highly depends on reputation, authenticity, and scarcity.
Soulbound Tokens (SBTs)
Soulbound Tokens (SBTs) are non-transferrable tokens designed to serve as “certificates” that provide people with proof of their educational attainment, expertise, or other achievements in order to form their identity, or as we call it, their “Soul”.
The DeSoc concept made SBTs non-transferable assets to prevent anyone from selling these tokens (basically selling credentials), which would defeat the purpose of building an authentic system for society.
But even though these tokens run on a blockchain, the platform hinted that SBT issuers could possibly be able to revoke these certificates from the recipients. While the blockchain can accurately pinpoint an asset’s exact date of issuance, it is not enough to verify something’s authenticity.
This is where SBT comes in.
To provide another layer of verification, SBT will trace the “social provenance” of Souls, preventing sophisticated frauds from taking place in the Soul-SBT system.
Social provenance serves as the “map” or the “picture” of a Soul’s social interactions, which consist of certificates or SBTs an owner has accumulated.
But there’s always a risk of malicious actors attempting to cheat the system by creating Souls with the same SBTs within them. To combat this fraud, SBT allows holders to clearly see a Soul’s social provenance or how rich its social interactions are. This social richness is quite hard and time-consuming to counterfeit, making it a trustworthy criterion.
Two Souls may have the same number of SBTs, but the richness of their social connections will differentiate the authentic from the fake.
What are the Potential Applications of DeSoc?
Decentralized Society (DeSoc) protocols are still being developed today, but multiple use cases have already been recognized. Over time, we will likely see projects being built around these concepts.
Currently, the top use cases we have recognized are:
- Verifying Scarcity, Reputation, or Authenticity
- Censorship-Resistant Credit System
- Souldrops
- Provide Better Governance for DAOs
Verifying Scarcity, Reputation, or Authenticity
Today, the web3 space still lacks robust standards in identity, reputation, and authenticity verification, preventing entities from identifying trustworthy users. To recap, DeSoc’s innovative solutions help web3 users gain an authentic identity that can prove and measure their trustworthiness.
With the creation of tamper-proof track records, more companies, organizations, universities, etc. would be willing to accommodate web3 users and serve their needs. Why? Because they can immediately see a person’s track record and determine if they’re the right candidate for their respective applications.
Through DeScoc’s ‘Soul’ and ‘SBTs’, more firms can potentially be motivated to roll out their services in a decentralized community as they can finally have a trusted verification system to lean on.
Censorship-Resistant Credit System
In today’s economy, people’s credit scores are handled by centralized entities like TransUnion, Equifax, and Experian, which use varying methods to compute these numbers, which affect an individual’s ability to borrow money, command lower interest rates, and have greater negotiating power.
While we can assume that these organizations will always produce accurate and unbiased scores for the masses, unfortunately, it hasn’t always been the case.
Since the methods, formulas, and considerations they’re applying come only from a handful of people, they can potentially tip the scales in favor of their biases. In other words, a centralized credit system is always prone to potential rigging due to censorship or discrimination, among other motives.
This is where SBTs come in, again.
Basically, SBTs can turn a centralized credit score system into a (de)centralized one, moving from a few decision-makers to a community of SBT holders.
In the Decentralized Society system, a person’s creditworthiness will be determined, not by mere scores, but by the quality (richness) and variations of the SBTs they hold.
As an example, SBTs for educational background, career, business awards, and great payment history can clearly show someone’s eligibility to take out a loan.
Think of it this way. Instead of checking your credit score, a credit provider will instead ask for your certificates to determine if you are indeed trustworthy for the loan.
And the blockchain nature of these certificates or SBTs, which cannot be tampered with, adds to the authenticity and trust of the entire process.
Souldrops (New and Improved Airdrops)
You’ve probably heard of “airdrops,” right? These are web3 teams’ way of kickstarting and hyping their projects by randomly giving away their NFTs or tokens en masse.
Despite its random distribution, people can increase their chances of getting that free item by interacting more with the project’s platform or product. In short, the more they use a project’s services, the higher their chances of winning an asset.
Unfortunately, people can cheat this system through a fraudulent act known as a Sybil Attack, which involves creating multiple accounts or digital wallets to magnify one’s influence on a platform.
This attack is prevalent in the web3 space; in fact, one user can possibly create more than 100,000 private keys (accounts) per second, making it a powerful tool to gain a drastically unfair advantage in winning airdrops, or any decision-making process that requires community voting.
To derisk, DeSoc has put forward its own version of airdrop called “Souldrops.”
In this improved system, a Soul owner can distribute a free digital item to other Souls with specific numbers and types of SBTs. For example, a tech conference may Souldrop limited-edition NFTs on Souls with SBTs on previous web3 events or SBTs from its sponsors.
A Souldrop allows a person or a project to distribute free items on wallets (or, in this case, Souls) with specific attributes that match their requirements. This system is a lot harder for bad actors to successfully execute a Sybil attack on.
Provide Better Governance for DAOs
Decentralized autonomous organizations (DAOs) equip governance token holders with the power to vote on critical issues of web3 projects. Through this, decisions come from the community and not from a few selected people in an organization.
While it is a more innovative structure, the blockchain community has found DAOs to be also vulnerable to Sybil attacks, the fraudulent activity we discussed earlier. But a Sybil attack is actually more dangerous when used against a DAO, as it can potentially change key policies on its underlying protocol and even divert tokens from an intended destination.
By simply creating multiple wallets, a single person or a handful of people can easily outnumber the genuine members of the voting community. With multitudes of fake wallets on their hands, bad actors can outvote the community and select choices that could benefit their vested interests.
DeSoc has developed a solution to mitigate this enormous risk.
It will first “scan” a voting Soul’s SBTs to determine if it’s a genuine voting member of the community or a false online identity. Remember, a DeSoc system is designed to detect a fake Soul based on its lack of a rich and diversified collection of SBTs. If a fake Soul is found, it will automatically be filtered out.
Another solution DeSoc has is to increase the voting power of Souls that possess more reputable SBTs in various areas, including education and career.
How to Recover Lost Souls
In case someone lost access to a Soul, does it mean that the wallet, along with the SBT tokens that come with it, is lost forever? Fortunately, no.
DeSoc has devised a way on how Soul holders can recover their lost wallets and certificates. And to give you a hint, this recovery method doesn’t involve mnemonic key phrases similar to web3 wallets today, nor does it require multi-signature mechanisms.
This alternative way is called “Community Recovery,” which taps a person’s social network to recover a lost Soul. Note that it remains a theoretical method, meaning it is not deployed yet on the ground.
Its concept is similar to the Social Recovery method, where a person selects a series of trusted guardians and gives them the authority to change a wallet’s passcode in case it is lost.
The Community Recovery, somehow, works in the same way and believes that the ideal guardians for a Soul owner must come from its affiliated communities. Or communities where an owner has developed close relationships.
Conclusion
The blockchain space already has DeFi and NFTs. DeSoc might actually be the next big thing as soon as builders launch cool projects around the concept. However, the fact that it isn’t primarily money-driven means it might introduce a new dynamic to the space, as people would probably react differently.
Will it generate the same level of FOMO? Probably not. But it’s exciting to anticipate what other new things it could bring.
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