Stake Your Reputation Protocol (SYRP) — For a P2P Economy

Justin G. Smith, PhD & Gregory Kennedy-Salemi

SYRP is Wild Idea Research and Development Project — WIRD PBC

Introduction

The ‘Stake Your Reputation Protocol’, or SYRP, is a ‘social-validation’ protocol for processing peer-to-peer transactions, and persisting the state of those transactions across a network of loosely trusted nodes (members). SYRP provides a different perspective on the way to build and ensure some shared consensus about the order of, say a set of transactions. It is based on the premise that our networks of trust, reputation and reciprocity are critical to any functioning society, community, or business.

SYRP combines the concept of social capital as defined by Putnam (2000) and extended by Ostrom (2000), where social capital is typically defined in terms of the social networks people use to access social and economic resources. In a way it can be thought of as the amount of trust, reputation and position one holds in their private and professional world, which a person can use to their advantage, such as accessing new employment opportunities, or financing for a new business.

SYRP codifies the dynamics of social capital, as the foundational rule set for structuring market interactions. SYRP draws inspiration from the community of consensus algorithms such as Proof of Stake (PoS), and more recent developments in the use of directed acyclic graphs or DAGs (e.g. Hashgraph and Matrix). These developments have greatly accelerated the speed and efficiency of current blockchain and and distributed ledger technologies (DLTs), but none of them directly attempt to change the rules of the game.

To date, the emphasis has been on recreating the existing financial system, while changing the guard of power. SYRP attempts to institute an alternative value paradigm as the underlying logic and rule-set for driving and sustaining an alternative multi-dimensional, multi-valued and multi-purposed economy.

And each SYRP powered network can be represented as a security (asset), composed of the aggregate value (and risk) of the companies/agents participating in the market/network. Our hope is to provide an alternative validation model for running distributed systems based on social capital where trust and reputation represent a central differentiating characteristic, and one that we believe ‘should’ be instituted as a way to do business.

Why a new protocol?

The seeds for SYRP began more than 6 years ago while WIRD co-founder Gregory Kennedy-Salemi, was living in Vienna Austria. This is about the time he first heard about blockchain and its applications in the banking industry. “I was in the middle of producing a series of films for Dr. Jane Goodall and Zen Master Thich Nhat Hanh. And quickly became inspired, by their commitment to mindfulness, compassion, empathy, kindness and the interrelationship between all things.

Gregory in Uganda working for Dr. Jane Goodall with his Plum Village Smile Umbrella

Their ideas and living practice offered a different way of looking at the world and my place in it, and in that moment he saw a path (Ein Weg) for creating a new type of model for value exchange in modern society. SYRP was the beginning of this vision. Moreover, blockchain along with all of the new development in crypto-assets offered a way to structure a market based on an alternative value set.”

However, it wasn’t until 2016, while working with a group of colleagues in Austria (Monika Orlowska, Catalina Iglesias, Reinhard Mader, and Adele Siegl), that it became increasingly clear to Gregory that many were calling for a real change that people have been clamoring for years. From WTO 1999, and subsequent WTO, G-7 and G-20 protests have all been directed at the imbalance of power in and detrimental effects of prevailing economic thinking in the world.

However the advent of blockchain, and the number of crypto-currencies to date have yet to initiate the type of utopian vision the founders of Bitcoin and Ethereum had hoped for, and that is in part because neither of these platforms attempted to alter the rules of the game. SYRP is about changing those rules, and it is about affirming the value of relationships in business, governance, and even our everyday lives.

How does it work?

Rather than eliminate the role of trust or reputation in a marketplace, SYRP uses trust and reputation to drive and enable transactions. As a validation and verification model, SYRP works much like the real-world, where business transactions often rely on the pre-existence of trust, and trust is based on knowing who you are doing business with.

Business is still about relationships, and social capital is instrumental.

A majority of service professionals still develop new clients predominately by leveraging their social networks, while roughly 85% of new jobs openings are filled based on social networking (Investopedia).

The role of social capital and trust cannot be undervalued. Strong social cohesion and trust has found to be a critical factor in the ability of a community to recover from disaster events (Aldrich 2012).

Trust and social cohesion are often crucial factors for evaluating combat readiness, and is foundational to almost every meaningful social relation we can think of. And SYRP provides a way to codify the reputation of individual agents (local) as well as the network itself (the global).

For example, in situations where two parties are unknown, a trusted third-party can be essential for vouching for the two parties. SYRP enforces the necessity of a third-party verifier on all transactions before calling a system-state transition function. The third-party validator takes on a degree of risk by staking his/her reputation on a positive outcome by joining of these two actors

In other words, the third-party must expend some amount of social capital to connect the two unknown parties together.

This expense provides a built-in control for managing the growth of the network. This is also one of the fundamental differences of SYRP compared to other consensus protocols, in that agents give their reputation to new agents.

In a sense, new (trusted) members on the network are ‘paid’ to participate. For example, the reputation of actor A must be given to any new actors A invites to the network. Say A invites two new actors to the network, B and C, essentially allowing B and C to connect.

Credits: Justin G. Smith, PhD

Note: the arrows in the figure above represent the directionality of trust, it does not hold that ‘trusted’ agents reciprocate trust.

Now that B and C are connected, they still need actor A to serve as a third-party ‘witness’ to validate transactions between them. Let’s say, B wants to initiate a transaction with C, then B will have to expend some of its ‘social capital’ by transferring a quantity of reputation to A in order to validate the transaction or message. In this case, A acts as a witness, and gets ‘paid’ to validate the transaction via some predetermined quantity.

Credits: Justin G. Smith, PhD

The minimal validation structure forms a 2-dimensional simplex with 3 connected vertices (agents) needed to process and validate the transaction between B and C.


Credits: Justin G. Smith, PhD

This of course is a topic for later discussion, but one that will be essential for describing and understanding the social dynamics in multi-valued marketplaces. But essentially, by using a topological representation of the network and the interactions between agents, we gain an amazing power for defining the sequence of things given their global structure and local behavior, and it offers a way for mapping larger chains of agents, particularly use-cases where there are multiple senders, receivers, and validators.

SYRP helps handle these roles by making their function explicit and defining the ways the roles determine, and are determined by the direction of a transaction. This structure can be extended in a number of ways, which make this approach particularly valuable when considering transactions that involve multiple parties and require significant ‘trust’ to complete the validation process. This allows for altering the validation scheme by adding additional validators (but we’ll save that discussion for another article).

Overall, by giving new participants a reputation, an agent provides new members with the ‘gas’ (or rep) to send and receive transactions over the network. Alternatively, there is an incentive to grow the network because an agent’s reputation is driven in part by the number of transactions an agent verifies. While conversely, there is a counter-incentive to grow the network in a conservative manner in order to avoid financial loss. When agents behave badly on the system, either through double-spend, impersonating other agents, etc. there is an error cost that is computed, but unlike a valid transaction where reputation is exchanged, in the case of malicious behavior, reputation simply vanishes from the agent and the entire system.

Because this feedback loop operates at the local and global level, it provides a type of control where a network lacking a given threshold of trust could become inoperable. The whole system becomes severely constrained and can theoretically cease to function completely, much like the real world — when a society no longer trusts one another, that society will cease…

SYRP + Holochain — for a truly decentralized marketplace

The development of SYRP was initiated within the context of blockchain solutions to distributed systems, and while SYRP is designed to play well with existing blockchains, SYRP is by definition an agent-centric model that might be perceived as antithetical to the more data-centric blockchain model. However, the recent launch of the Holochain platform offers a window into the potential for SYRP (see: Holochain white paper), and other values-centric protocols to drive a new types of marketplace (or traditional types of markets using a digital accounting system).

At the most basic level, Holochain is a framework for building agent-centric peer-to-peer applications. Instead of operating from a centralized server, or ledger, Holochain produces a sophisticated peer-to-peer network customized for your particular application. Holochain implements a private ledger that uses hash-chains to signal state-changes of an agent, given an application’s rules, only relevant transactions are published to a distributed hash table (DHT) consisting of the relevant hash-chains related to an agent their market transactions.

Holochain — Think outside the Blocks

The chaining of cryptographic hashes at the agent level, and only exposing/publishing relevant fragments to the DHT enables a great deal of traceability without having to manage a complete global record of all transactions of every user. This alone offers a significant improvement in scalability and computing.

It also offers an amazing degree of flexibility to define the rules or DNA of your system. And because Holochain is designed this way, SYRP can fit seamlessly within the Holo architecture and offer a clearly defined validation scheme that extends Holo’s reputational model in subtle, but significant ways.

In the coming months, we will be integrating SYRP and Holochain’s refactored Rust-based platform to run and operate a new type of social network, and marketplace, called WeirdWorld.

Justin G. Smith, PhD LinkedIn
Gregory Kennedy (Salemi) LinkedIn

Putnam, R. D. (2000). Bowling alone: America’s declining social capital. In Culture and politics (pp. 223–234). Palgrave Macmillan, New York.

Ostrom, E. (2000). Social capital: a fad or a fundamental concept. Social capital: A multifaceted perspective, 172(173), 195–198