“The internet was built without an identity layer. Decades of efforts to construct that layer have relied on some form of centralized provider… until now.
The critical difference in the decentralized identity revolution is that ownership of your online identities is no longer account-based and “provided” for you by a middleman. Instead, it is a digitally shared connection that all parties to the relationship commit to maintaining over time, reflecting the types of direct relationships we have in the real world.
Broadly speaking, there are three groups of Web3 digital identity players. They are Proof of Personhood (PoP) projects, verifiable credentials (VC), and most recently, soulbound tokens (SBT).
PoP projects are primarily leveraged towards establishing unique identity. In turn, this solves issues for when sybil attacks are especially problematic, such as universal basic income or quadratic fundraising.
SBTs can be simply thought of as a permanent and non-transferable token on a public blockchain. They can be issued in various forms — a scholastic achievement, a financial debt, an employment contract — by anyone, be it an individual, private company, university, commune, or government.
SBTs are an attempt to formalize that handshake on a public blockchain that the rest of the world can witness and verify. In doing so, it allows us to color a person’s identity with social context, opening up a world of coordination possibilities that until now wasn’t possible without a middleman. In essence, SBTs are a codification of social capital (i.e., reputation) into formal property ownership. By “baring our souls”, individuals can stake their reputation openly and prove the authenticity of who they say they are.
The grand vision behind SBTs is that there would exist an ecosystem of abundant SBTs so pervasive that a person’s wallet address can provide a reliable and comprehensive “digital identity”, in contrast to the unreliable self-issued credentials that we decorate our LinkedIn pages and job resumes with.
Soulbound tokens are not without their criticisms. The permanence and public nature of an SBT might incentivize certain forms of negative discrimination. For example, a racist employer might discount a potential employee because a peek into the jobseeker’s wallet shows proof of attendance at a Black Lives Matter event.
To mitigate this problem, SBT critics like McMullen much prefer the W3C-led format of “verifiable credentials” (VCs), sometimes confusingly referred to as attestations, badges, or claims. Like SBTs, VCs can be issued by anyone and can represent any bit of information. The key difference, however, is that it operates privately by applying zero-knowledge proof technology. In short, verifiable credentials work on a “selective disclosure” basis, unlike SBTs.
Many verifiable credential protocols in the Web3 space already exist and are market-tested. They build on the official web standards established by the W3C framework recently in July, and provide a decentralized way of establishing digital identity that is privacy-sensitive and does not require a central issuing agency.”
“Creators should be rewarded based on collection marketcap, not collection volume. There’s a clear incentive distortion that pays creators based on how much volatility and holder turnover they have, while they earn nothing from diamond-handed true believers. This explicitly encourages low-quality pump-and-dump free mints.
When a collection is dumping to zero because the community learned unsavory details about the founding team, it’s not right for that same unsavory founding team rake in additional secondary fees.
[Further], royalties are not enforceable. NFTs are decentralized bearer assets. Bearer asset means that the person holding it has ownership and full control, decentralized means that ownership/control cannot be revoked by a third party at a later date. It is impossible to enforce royalties onchain without introducing centralized control or breaking wallet-to-wallet transfers.
A couple options: (1) Creator holds a portion of supply; (2) Creator earns a share of sale profit rather than sale price; (3) Creator earns a rolling percentage of current project valuation through harberger taxes.“
“Human society in the 21st century is faced with numerous global-scale challenges and systemic risks. Our legacy institutions are not equipped to handle these issues, largely because individuals are focused on their own interests, and nations are focused on their own citizens, leading them down paths that help them but harm the overall system. These sorts of problems are known as “coordination failures.”
With the dawn of Web 3, there is an opportunity to build a better world for our generation and beyond. We can leverage the properties of Web 3 to design crypto-economic systems that are regenerative: systems that are resilient and sustainable, and align conflicting priorities toward the greater good.
To fight coordination failure on the environment and other issues, we need a coordination mechanism that is truly global in nature. Luckily, we may have found one: Decentralized blockchain networks allow us to create new incentives and mechanism designs that are borderless and direct. One way to reinforce coordination is to realign the economic incentives that support a system. By doing so, we create a systematic economic incentive for work to support that system.
ImpactDAOs, defined as any DAO (a decentralized autonomous organization) that creates net positive benefits for the ecosystems around it, are the scalable, atomic building blocks of the regenerative crypto-economic movement. With ImpactDAOs and the properties of Web 3, we can design a regenerative internet of value to enable the thriving of a diverse global citizenry. We can increase and ensure funding for the creation and maintenance of digital public goods. We can program our values into our money and make public goods financially sustainable.
With cryptocurrency very much in the headlines these days, some question whether it’s actually good for the world. While the headlines love big winners, crypto’s main benefit over time won’t be to billionaire investors. Its real promise is in creating new structures that drive new behaviors.
Regenerative crypto economics is already helping us build a sustainable funding system for digital-native public goods. In the coming decades, we expect to see economies, democracies and civic groups all over the world upgraded with similar coordination mechanisms.”
“RAI is a USD-denominated, floating exchange rate stablecoin that can only be minted using ETH collateral. What separates RAI from other $1 pegged stablecoins is that RAI doesn’t have a fixed $1 peg, instead it actively updates its own peg — called the redemption price — to oppose deviations of the market price from the redemption price.
RAI uses an onchain PI controller to set the rate of change of its redemption price — called the redemption rate — which is expressed as an annual interest rate. The sensitivity of the redemption rate to market price deviations is determined by the controller PI parameters, which we aim to tune such that RAI is able to autonomously maintain price stability in the face of a wide variety of scenarios and potential shocks.
Tuning PID controllers for dynamic real world systems takes time, we ran the controller in P-only mode for 1 year. After we settled on what seems to be a reasonable parameter for the P-term, we added the I-term in Feb 2022 as part of a 6-month planned experiment to evaluate its effects in prod.
As the last 18 months of RAI in production have demonstrated, RAI mostly works. The P-rate is simple way to balance RAI supply and demand, and with the addition of the I-rate, RAI can express directional rates even while at price equilibrium.”