Reputation vs Tokens

Adam Levi
Adam Levi
Mar 25, 2019 · 8 min read
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Readers unfamiliar with Reputation in DAOstack should consider reading this explainer article.

Formalizing the differences

The most common thing encountered when we discuss Reputation vs. token-based voting is a misunderstanding of what a token is, which leads to an understandable confusion between the two. In some talks, we’ve even heard the unfamiliar term “Reputation tokens.” We believe that some of the confusion is related to the Augur project naming their token “REP,” and other cases of the word Reputation as used in the blockchain space. Let’s clarify what we mean by tokens and what Reputation is in DAOstack.

  • The owner can transfer the token to anyone else, without requesting permission.
  • Non-transferable: namely, an account to which some Reputation was allocated can neither transfer nor burn it.

Vote-buying

In token-based voting, vote-buying is considered a feature. Our Reputation-based systems try to prevent or limit vote-buying. Although it is not trivial to map how effective these measures are, we attempt to do so here.

Bribery

Th ere is another type of attack on decentralized governance that does not include buying voting power, but rather tries to bribe voters to vote in some direction. This type of attack is actually more effective on-chain, as an attacker can guarantee the bribe via a contract. One example is a contract that holds funds and reads the votes on a certain proposal after it is finished, then pays those who voted yes pro-rata. One might even consider a more brutal attack, using a contract that makes a proposal in a DAO for the DAO to give all its funds to this contract. If the proposal passes, the contract will split the funds between all the voters who voted for this proposal pro-rata. To make the attack even stronger, the contract can split the reward not just pro-rata but also with an ordering weight such that earlier voters get more.

Decentralized Governance

Reputation-based governance attempts to align long-term incentives. In token-based voting, one can buy tokens, vote, and sell the tokens, which dramatically shifts incentives. Token-voting can even be automated such that contracts auction their voting right for each proposal. Reputation, on the other hand, can only be earned in ways that the DAO has decided on, and is very hard to sell, as described above. Reputation-based voting, then, gives Reputation holders longer-term control over the direction of their DAO — they can freely choose what to incentivize with Reputation rewards.

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Researchers and developers can easily add new governance methods, such as token-locking or futarchy, as schemes within the Arc Platform, the modular smart contract library by DAOstack.

Learn More and Get Involved

DAOstack

DAOstack is designed to catalyze the future of…

Adam Levi

Written by

Adam Levi

Co-founder @DAOstack

DAOstack

DAOstack

DAOstack is designed to catalyze the future of collaboration. It's a platform for decentralized governance that enables collectives to self-organize around shared goals or values, easily and efficiently.

Adam Levi

Written by

Adam Levi

Co-founder @DAOstack

DAOstack

DAOstack

DAOstack is designed to catalyze the future of collaboration. It's a platform for decentralized governance that enables collectives to self-organize around shared goals or values, easily and efficiently.

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