Filled with references to DAO-on-DAO “vampire attacks” and phrases such as “nor do we assume that souls are not transferable between humans”, a whimsical paper on the future of Web3 by Eric Glen Weyl, Puja Ohlhaver and Ethereum co-founder Vitalik Buterin go all the way.
When it comes to these technologists, the world has no optimistic view of the future. “We’re either heading for a Peter Thiel-inspired anarcho-capitalist dystopia or a Chinese government-style top-down surveillance system,” Weyl told FT Alphaville. The “radically democratic” horizontality of Web3 constitutes a third potential path.
Yet the next ill-defined iteration of the internet needs a lot of work if it is to supplant what we already have, the trio write. Basically, the Web3 is still today “centered on the expression of transferable and financialized assets”. What it lacks is a way “to encode social relationships of trust.” In other words, pseudonyms are great, but they don’t inspire trust. “Persistent identities” are essential. Enter “soul-based tokens”, or SBT for short. (Ohlhaver recognizes that a rebranding may be necessary. )
As in World of Warcraft, where “soulbound” items are those that cannot be traded with other players, SBTs also represent non-transferable (and revocable) credentials. In theory, these would be issued by institutions such as universities, corporations, and foundations and then deposited in users’ wallets (aka “Souls”) as proof of past achievement. Or, as the newspaper put it:
Imagine a world where most participants have souls that store SBTs corresponding to a series of affiliations, memberships, and credentials. For example, a person may have a soul that stores SBTs representing degrees, work history, or hashes of their writings or artwork. In their simplest form, these SBTs can be “self-certified,” similar to how we share information about ourselves in our resumes. But the real power of this mechanism emerges when the SBTs held by one Soul can be emitted – or attested – by other Souls, who are counterparts to these relationships.
Once users can stake their reputation on the blockchain, the possibilities are endless. Forget decentralized finance. A true “decentralized society” – where “souls and communities come together bottom-up, as emergent properties of each other to produce plural network goods at different scales” – would finally be within reach.
However, grasping this damn thing is a whole different matter. “I don’t expect most people to buy into our long-term view,” Weyl said. “We have to give people a breadcrumb trail to follow. We want to get to a world where people emit SBTs, but they won’t because they want to build a radical future. This is not what will interest them right away.
So what could? An example appears at the beginning of the article:
An SBT ecosystem could unlock a bottom-up, censorship-resistant alternative to top-down commercial and “social” credit systems. SBTs that represent educational credentials, employment history, and rental agreements could serve as a persistent record of credit history, allowing souls to build a significant reputation to avoid collateral requirements and obtain a loan. . Loans and lines of credit could be represented as non-transferable but revocable SBTs, so that they are nested among other SBTs of a soul – a sort of elusive reputational guarantee – until they are refunded and then burned, or better yet, replaced with proof of refund.
What could go wrong? Uh, a lot, as it turns out. The authors admit that their bottom-up social credit system could be used to “automate the building of disadvantaged social groups or even target them for cyberattacks or physical attacks, enforce restrictive migration policies, or make predatory lending.”
But hey, what’s one more dystopia between friends?
DeSoc need not be perfect to pass the test of being acceptably non-dystopian; to be a paradigm worth exploring, it simply has to be better than the available alternatives. While DeSoc has possible dystopian scenarios to guard against, web2 and existing DeFi fall into patterns that are inevitably dystopian.
FTAV asked David Gérard, author of 50ft Blockchain Attack, what he thought of the prospect of a blockchain-based social credit system designed to facilitate unsecured lending. Suffice to say he was far from impressed.
Everything about soulbound paper is fractally wrong and evil. Even if all of this could work, it would be the worst idea ever. What Buterin wants to put in place here is a binding permanent record of all people, on the blockchain. It’s Black Mirror”Fifteen million meritsexcept he seriously thinks it’s a good idea.
Considered a tech startup, Ethereum is a huge success. This does not mean that any other idea of its creator deserves to be taken seriously, except as a threat.
Equally skeptical was Martin Walker, director of banking and financial services at the Center for Evidence-Based Management.
The simple answer is don’t use a blockchain or lend money to people who hide behind a pseudonym. It’s that simple.
It’s here that [Buterin’s] the lack of understanding of the real world enters into things. For example, unsecured loans (which obviously can go wrong) work because:
1. Banks go to great lengths to identify who they lend money to
2. Banks understand the borrowing history and other information about the potential borrower’s credit history.
3. Loan agreements (especially for large amounts) are very detailed and contain all kinds of terms and conditions. They specify the age of the debt, the type of information that the borrower must provide to the lender, the conditions on the amount of other debts that he can contract, etc.
What Buterin, Weyl and Ohlhaver did was come up with a complex solution to a problem they created, Walker said. Soul-based tokens, as smart as they are, do little to mitigate the risk of a loan going bad.
“I consider unsecured lending, while it can go wrong in many ways, to be potentially better than our current lending environment,” Weyl said. Extending credit on the blockchain isn’t what excites him or his co-authors, he added — it’s simply “an illustration for people very close to the existing ecosystem” of how SBTs could be used to do the “basic things they want to do”.
And yet, there remains a chance that less noble actors confuse the means with the end. The road to web3 will be paved with good intentions.