On-Chain Meritocracy
March 10th, 2022

Author: Jarrod Dicker

Editor/Graphics: Tina

Throughout the history of the web, a major way data has been used is to monetize, and subsidize, the experiences we engage in. In exchange, those services for users are cheaper and, in many cases, free. Data provides these services the feedback loop needed to make these products better and more personalized. Instead of waiting for user feedback reactively, systems capture user behaviors proactively to provide a better service, performance, and experience.

In web3, the promise is that a user can retain ownership and control over their data. The dominant narrative goes: “The gatekeepers of web2 have taken your data and used it against you! Now it’s time to fight back!” Such argument from web3 enthusiasts is met with A LOT of resistance as data effectively becomes a currency that can be leveraged by a user for select experiences. This, deservingly, is hit with two main provocations —

  1. Data is worth a lot less than you think
  2. The network effect of data can only be achieved at scale

Beyond the web3 sentiment of data becoming valuable, this push often coincides with the belief that not only should data now be strictly in one's control and unlock utility, but it should also be something worth getting paid for. This hits our existing experiences and internet evolution head-on — if we exchange data for the services we get to enjoy today, forfeiting that can impact experiences, programming, and influencing what you as a user may find interesting. It can make products more expensive. It can slow the pace and evolution of existing products. And more so, it chops the legs of distribution, which while being explored by way of tokens, is nowhere near compatible with top-of-funnel mechanisms today.  So knowing this, what role does data play in the new web3 ecosystem that can not only reroute its value but also drive the promise and mechanics of decentralized, community-owned networks?

Oftentimes the best way to solve a problem is to do it indirectly. To earn more value is likely not a linear path. In this case, web3 data may not be compensated. But it will be accredited.

Web3 has the opportunity to build systems that are less about what you say and more about what you do. When users interact with Web3 apps, the act of signing or approving a transaction becomes much more intentional. Data becomes a core part of the users’ relationship with the platform, versus the platform’s relationship with the user. This changes the role of how data is used and collected, thus changing the way it will also be valued. Through this lens, the incentives for data in web3 are being actively experimented with throughout the entire ecosystem in various pockets of Defi, DAOs, NFTs & other acronyms. For example, on RabbitHole, data accrued can be used to reflect your skills throughout web3 for both professional and personal gains.  While we should encourage all research, including the ability to transact, the one that gets me most excited is how incentives can accumulate to an individual’s online reputation. In this scenario, the value isn’t about data captured by platforms but data earned by individuals.

In 2018, I wrote about what this decentralized reputation could look like in the form of a creator. While the piece looked at how the media business should evolve based on this transition, the sentiment of the creator, contributor, or participant all are the same —

“Currently, there have been platforms that enable coordination and allocation of intrinsic or extrinsic “capital” to achieve a shared goal. With blockchain-based networks, we want to incentivize participants towards some predictable outcome that is beneficial for every network participant. It’s not just about the group, but also about the network participent themself.

“What’s most exciting about this next era of permissionless innovation is that it’s no longer dependent on a central authority. It’s not dependent on the host, network, publisher or platform. This era of reputation is not built and dictated by a set standard of link share clubs or opaque algorithms. It’s adjustable, adaptable, managed and maintained by your preferences. We no longer need to be strictly driven by how a single platform categorizes, aggregates, and rewards. We can rely on each other to index this information now in a way that benefits all of the participants.”

Three years later, we still aren’t there yet but we are definitely edging closer. Protocols are being built to ingest this information and the platform is being used to display it for use.  Spending the last few years trying to more deeply understand how data plays in this space will lead to more products, protocols, and outcomes of how this new world will unfold. One result is how we are now seeing an individual’s desire for data being used as a motivator. The more you do, the more you earn. Your contributions both positive and negative are reflected in your behaviors, thereby creating a clearer picture of who you and others are on the web. Some early versions of this can be seen through airdrops, which reward users based on some algorithm that tracks contribution history. In order to build long-term sustainable incentive systems, the reward mechanism needs to evolve much further.

Instead of just looking at data as a way to transact, it starts to become a function of validation and reputation whereas the individual is able to strengthen their credentials through tasks and contributions. This unlocks entirely new incentive mechanics, where platforms drive participation through a person’s willingness to earn. These can be functions of onboarding or supporting protocols and platforms, but for the individual, it becomes a way for them to gain benefits throughout participation in the ecosystem. Accruing reputation can lead to better jobs, better compensation, and even more so, a clearer perspective as to who you are working alongside and with. It starts to put the value of data on unlocking experiences over just the relationship with content and information.

How will this play out? We’re seeing it in real-time. At a moment of web3 acceleration, we’re in yet another experiment to understand how incentives can be more meritocratic and fair. As we saw with the NFT boom and the countless Discord servers filled with “wen token” speculators — we’re nowhere close yet. Reputation still plays a minuscule role in obtaining access to opportunities, and most access is still gated by one’s wallet value and ability to get in early.

As more founders and their companies begin to emerge focused on this challenge, I’m excited to see how efforts can move the other way — your contributions and participation are how you earn and accumulate value. We want to build a world where leverage is earned not just through capital, but through high fidelity, verifiable data that captures genuine contribution to the space. The additional data captured isn’t simply to improve upon experiences and services captured by a monolithic platform, but viewable across the ecosystem to facilitate more transactions and collaborations. Only then, we can structure a healthier, more collaborative ecosystem across the web — one that truly puts individual rights front and center. This is the leverage used to build more opportunities for individuals themselves, and structure healthier, more collaborative ecosystems across the web.

The future of work is coming, and we are all its contributors.

If these are questions you’d also like to explore, we invite you to become a contributor to the Station protocol or to participate in our research efforts through Newstand, Station’s publication focused on exploring the possibility of work in an era of hyper connectivity and fluidity.

Station Newstand is open 24/7. We’re inviting writers, artists, and researchers across all disciplines to push forward radical imagination around the future of work unlocked by crypto. To apply, simply connect your wallet to Rinkeby Testnet, create a profile, and attach a link to your writing sample.

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