Heal for profit - incentives model for a decentralized identity system.
Incentives model candidate for decentralized identity system Upala.
If you’ve missed previous episodes. We are developing an identity proof system Upala. Its purpose is to distinguish people from bots and clones (people with multiple IDs). One person — one ID. It is a huge goal. To get there we started a series of posts, showing our thinking process. We will then transform these posts into whitepaper.
Greetings human! At Upala, we believe there is a way to create a self-sustainable decentralized identity system. We believe there is a way to do without an external source of money. There is so much of value locked in knowing that every user in your database is unique! It makes sense to monetize this information.
There are several ways we can imagine:
- The product is a blockchain (or a side chain). Every node is a real person. Staking is simplified or made cheaper. The system earns through transaction fees. Uniqueness is a byproduct. It is free both for users and services.
- The product is a bank. A finance system with social responsibility. Lenders and borrowers interact and pay commission to the system. Inspired microfinance ideas by Muhammad Yunus. Uniqueness is a byproduct here too.
- The most obvious product is the uniqueness information itself. Here either a service buys proof of uniqueness or a user buys access to the system (or both parties pay).
The blockchain and the bank solutions require a measured uniqueness probability to build security assumptions. We cannot figure out yet how to do it. The best we know is how to provide a person’s reputation score (which is not a true probability). I do hope we will invent a suitable Sybil-protection mechanism in the future. For now, I would like to give a high-level overview of a system where uniqueness information itself is the product.
In short. Users are rewarded with Reputation token for any action healing the system. Reputation is not transferable. Instead Reputation is converted into Interaction token and traded at an exchange. Services buy Interaction tokens and pay with it for using Upala.
Value generation. Reputation token.
The value of Upala is generated when human uniqueness is confirmed. In our random handshakes anti-Sybil mechanism (RHASM), uniqueness is confirmed when people meet each other in random pairs. They both gain reputation. Let’s turn this reputation into Reputation token.
In RHASM a certain reputation threshold is needed to be considered a human. When people start earning reputation above this level, it turns out they are working for the benefits of the system. They bring more people in, they reconfirm each other and hunt down bots. This activity strengthens and heals the system and should be rewarded. They do earn Reputation token, but they also need a way to sell an excess of it.
But we cannot allow to transfer or sell reputation. Someone would transfer it to bots. We need to sell it in some other form. We need another token, a transferable one.
Healing actions earn reputation. Reputation is spent (burned) by a user when interacting with a service (spam prevention).
Value Capture. Interaction token.
The beneficiaries of uniqueness proof are all (honest) people. Nobody wants bots. But it is services who is gonna get the most value out of uniqueness. They can earn more if their audience is of better quality. Whether it is a social network, news or voting service they all want somebody to filter their bots out to provide a better service. We are all beneficiaries, but let services be the customers. Let’s introduce Interaction token for them.
Interaction token is spent (burned) by a service when a user is interacting with it.
Exchange. Selling reputation.
Now we need a way to generate Interaction tokens. Let’s allow the exchange of Reputation for Interaction.
Anyone can convert their excess Reputation to Interaction tokens and sell them to services through exchanges. No way to convert it back, no way to transfer Reputation.
Summing up. Users heal the network, they earn Reputation, exchange it for Interaction token or for actual interaction with a service. Services buy Interaction tokens from users. Meaning they buy a form of Reputation. Meaning services pay users for healing the network.
Governance
We can also introduce a governance model, which will require both Reputation and Interaction tokens to participate in decision-making process.
Conclusion
Incentives are aligned with interests.
The model is pluggable to any anti-Sybil mechanism where users need to be rewarded for “healing” actions.
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