Bringing Reputation On-Chain: Can Ethos Network Boost Trust and Credibility in Crypto?

In the realm of cryptocurrency, where scams and fraud are prevalent, one team is pioneering a new approach: introducing reputation on the blockchain. Ethos Network, a platform dedicated to establishing trust and credibility in the crypto industry, is gaining momentum as it addresses one of the sector’s most persistent issues—untrustworthy actors.

The brainchild of Trevor Thompson (known as Serpin Taxt) and Ben Walther, Ethos was conceived out of frustration with the widespread scams in the space.

“I used to be heavily involved in crypto trading, and I witnessed a lot of criminal activities, fraud, and scams that have become more evident in recent times,” Thompson shared with Decrypt. “I saw an opportunity to tackle some of those issues.”

The concept took shape after Thompson’s involvement with Friend.tech, a now-defunct social platform where users traded “keys” linked to Twitter accounts. While Friend.tech introduced the idea of connecting on-chain actions to social identity, it failed to address the crucial aspects of trust and credibility.

“Friend.tech wasn’t focused on solving reputation, but it served as a starting point,” Thompson explained. “What if we could link an individual’s on-chain activities to their personal identity and record that on the blockchain?”

Walther, Thompson’s co-founder and Ethos Labs CTO, has been combating fraud, scams, and cyberattacks since 2006 in his capacity as a security expert. Thompson approached Walther with his Ethos idea, sparking a collaboration between the two. Their partnership began when Walther purchased Thompson’s Friend.tech key and subsequently sold it for a 2x profit.

Subsequently, they secured a $1.75 million funding round led by 60 Web3 community angel investors, including 0xQuit, Dingaling, Sighduck, Dragos, 0xMakesy, and Zeneca.

From Concept to Reality

Launched in January, Ethos aims to establish a “proof of credibility” system that directly verifies trust through a vouching mechanism. Users can vouch for others by staking funds against their reputation, which can be withdrawn at any time.

The Ethos website succinctly explains: “Contribute and earn by building your reputation, backing others, or penalizing bad actors. Utilize the Ethos credibility score to gain insights into whom you can trust and whom to avoid.”

Participants on Ethos receive “credibility scores” based on their trustworthiness, similar to credit scores but centered on social reputation. The score is determined by the platform’s most active and reputable members.

“Friend.tech’s bonding curve complicated the data regarding trust relationships,” Thompson noted. “We aimed to create a system where trust is directly recorded and financially secured, without unnecessary financial risks.”

The platform has been likened to the Rate My Professors or Yelp for the crypto world. While Thompson agrees with the comparison, he sees Ethos as something more.

“Consider how you make purchasing decisions or choose healthcare providers today—reviews and reputation play a crucial role. In the crypto realm, we are all independent entities collaborating with one another, and trust is paramount. The ability to vouch adds significant credibility to this.”

One early critique of Ethos is the potential for a “circle jerk” effect, where users vouch for each other to inflate their credibility scores. Thompson acknowledges this concern but argues that it is a natural part of the process.

“Having users vouch for each other is the objective. The aim is to elevate the standard for reputation and distinguish credible individuals from bots and scammers,” he emphasized.

He addressed criticism of the “(3,3)” model, also known as “vouch for vouch,” in a recent post, highlighting that negative reviews and slashing mechanisms are in place to penalize malicious actors attempting to manipulate the system.

The slashing mechanism, inspired by proof-of-stake blockchain networks, enables users to propose reducing someone’s credibility score by staking their own reputation. If the majority agrees, the target loses credibility points.

“It serves as a method to hold individuals accountable and ensure the system’s fairness,” Thompson stated.

Building for the Future

With approximately 1,000 users and a team of six developers, Ethos is still in its early stages. The platform is currently invitation-only, a deliberate choice by the founders.

“We want to grow at a sustainable pace,” Thompson explained. “If we open it up to everyone immediately, there’s a risk of attracting a large number of users who may not remain engaged, leading to a lack of participation in the future. This is a common occurrence in Web3 during hype cycles.”

Looking ahead, the team is exploring features such as reviews built using zero-knowledge or ZK technology, enabling users to leave anonymous reviews while verifying their credibility. “This could enable individuals to share honest feedback without fear of repercussions,” Thompson added.

Moreover, the platform’s long-term vision extends beyond crypto. “Envision a world where reputation can be transferred and verified across various platforms—whether you’re hiring a freelance writer or engaging in a peer-to-peer transaction,” Thompson envisioned. “That’s the future we’re striving towards.”

As Ethos progresses, it faces the challenge of balancing transparency with integrity. However, the team’s mission is clear: to establish a system where reputation is transparent, verifiable, and stored on the blockchain. This is accomplished by “supporting reputation through financial security, making reputation inherently valuable and capable of being measured, rewarded, and utilized.”

“In reality, people are not yet considering the consequences of their actions,” Thompson remarked. “But as more data is stored on the blockchain, the truth will ultimately prevail.”

When questioned about the potential launch of a token by Ethos, Thompson provided an ambiguous response but assured that they are working on rewarding users in some capacity.

“I can disclose that our XP system is designed to guide us in the future on how we might reward users beyond just XP,” Thompson disclosed. “It aids us in understanding the appropriate incentive mechanisms and ensuring that individuals adhere to and balance those incentives.”

Token or not, in an environment where trust is often scarce, Ethos is banking on reputation—supported by blockchain technology—as the ultimate form of currency.

Edited by Andrew Hayward