Ethos Network: Reshaping the Crypto Reputation System

From invitation system, guarantee, proof, slashing mechanism to credibility measurement, a detailed explanation of the core design of Ethos reputation system.

Author: KarenZ, Foresight News

The crypto world is often compared to the "Wild West," filled with chaos and disorder. The trust issue has always been a key obstacle hindering the further popularization and maturity of the industry. Targeting this pain point, Ethos Network is committed to measuring reputation and credibility on the blockchain, creating a more trustworthy environment for the crypto ecosystem.

As Ethos says, in real-world society, reputation is everywhere - resumes determine job opportunities, ratings screen doctors, and five-star drivers get priority orders. However, the reputation system in the Crypto world is almost blank, lacking an easy-to-reference and clear reputation system, leading to high trust costs, zero cost for misconduct, and frequent fraud.

Ethos will fill this gap. Ethos's solution is an on-chain reputation protocol - generating a credibility score through decentralized mechanisms, like a "credit report" in the crypto world, but completely based on open protocols and on-chain records, driving the crypto ecosystem towards a more orderly and mature direction.

Core Design of Ethos

Through a series of innovative mechanisms and combining Social Proof of Stake (Social PoS), the Ethos protocol ensures the reliability, decentralization, and anti-Sybil attack capability of its reputation system. Here are its main functions and mechanisms:

I. Invitation System and Sybil Attack Protection

To ensure the network's resistance to Sybil attacks (avoiding manipulating the system by creating numerous fake identities), Ethos adopts a strict invitation system. Users must be invited by existing Ethos account holders to create their own Ethos Profile. This effectively limits the proliferation of malicious accounts.

The invitation mechanism also introduces a "reputation binding" design: the inviter and the invited form a binding relationship within 90 days of invitation, with the inviter receiving 20% of the invited user's credibility score, regardless of whether it increases or decreases. This means that if the invited user gains a high score through honest behavior, the inviter can share 20% of their score; conversely, if the invited user loses points due to malicious behavior, the inviter will also suffer corresponding losses. This mechanism incentivizes inviters to carefully choose who they invite, enhancing the network's overall credibility.

II. On-chain Credibility Score

The core function of Ethos is to generate a Credibility Score, a numerical indicator that quantifies a user's on-chain trust. The score is based on the following on-chain activities and social interactions:

• Review Mechanism: Only those with an Ethos Profile can leave comments, providing positive, neutral, or negative reviews for others. While a single review has limited impact, the cumulative effect of multiple reviews can significantly change a user's reputation score. For example, consistent positive reviews from high-credibility users can substantially improve the target user's credibility.

• Vouching Mechanism: Allows Ethos users to endorse other users by staking Ethereum (with support for other assets in the future), indicating trust in their reputation. Vouching directly affects the target user's credibility score. Key features of the vouching mechanism include:

1. Vouchers need to stake a certain amount of ETH. The higher the stake, the more positive the impact on the target user's credibility score.
2. The staked ETH will be locked as a financial endorsement of the vouchee's reputation.
3. Vouchers can withdraw their vouching at any time. If they discover misconduct by the vouchee, withdrawal will cause the target user's credibility score to drop.
4. When users A and B vouch for each other, the system identifies this as a mutual vouching relationship, with a more significant effect on both parties' credibility scores.

• Slashing: Aimed at deterring misconduct through a community-driven punishment mechanism. This mechanism is not yet online.

1. Any Ethos participant can act as a "reporter," offering a reward to validators to request manual verification.
2. Validators receive the same reward regardless of the voting outcome, which somewhat avoids bias.
3. If validators support the reporter's allegations, a portion of the reported user's staked funds will be deducted and awarded to the reporter. A single slash does not exceed 10% of the total Ethos stake. If the reporter's allegations are unfounded, they will be punished.
4. The slashed funds are directly deducted from the reported user's stake and transferred to the reporter. This is the only mechanism that can forcibly deduct funds without the staker's consent, but is designed to occur rarely (usually addressed through negative reviews or canceling vouching).
5. The punished reported user will not be penalized for the same type of report within 72 hours, providing a buffer and preventing malicious consecutive attacks.
6. Ethos users can also initiate "Social Slashings" that do not involve financial risks but affect participants' credibility scores.

• Attest Mechanism: Allows participants to link other digital identities, social network profiles, and on-chain wallets, reflecting authority, reputation, and influence from other channels. Attestation itself is free, with users only paying Gas fees. Verified accounts and wallets are permanently recorded on-chain. If a user makes a fraudulent attestation (such as linking a social account that doesn't belong to them), they will face severe penalties:

1. Financial Penalty: Staked ETH (if any) may be confiscated.
2. Social Penalty: Significant drop in credibility score, potentially triggering social slashing.

III. Ethos Profile Display

User Profiles can provide transparent, verifiable trust references for the community and other dApps. Users can remain anonymous or use pseudonyms without exposing their real identity. The Ethos Profile includes a credibility center and credibility score, integrating data from attestation, vouching, reviews, and slashing mechanisms. The Profile's credibility center displays a summary of credibility clues from the Ethos protocol or associated wallet on-chain activities, highlighting the most influential Ethos elements, such as large vouches, notable reviews, and major financial asset holdings.

IV. How is the Credibility Score Calculated?

By analyzing social interaction data generated by these mechanisms, Ethos will generate a numerical Credibility Score, displayed in the Ethos Profile.

Regarding the credibility score calculation method, the scoring algorithm comprehensively considers multiple weighted indicators covering various on-chain actions. For example, guarantee-related indicators include the number of guarantees, mutual guarantee situations, guarantee amounts, mutual guarantee duration, and default conditions; as well as the credibility scores of commenters or guarantors, users' average ratings contributed on Ethos, account proof duration, etc. The indicators' weights are not linear, and the indicators and weights will be adjusted and modified based on credibility consensus to ensure scientific accuracy and adaptability.

In terms of score range and levels, the score range is 0 - 2800, divided into 5 levels. 0 - 799 points represent unreliable; 800 - 1199 points indicate suspicious; 1200 - 1599 points are neutral; 1600 - 1999 points are of good reputation; 2000 - 2800 points are excellent. All wallets and proofs have an initial default score of 1200 points (neutral).

In terms of governance, considering the importance of credibility scores, Ethos Labs plans to transfer the control of the scoring algorithm to participants to avoid the drawbacks of centralized influence.

Ethos Reputation Market

Ethos has also launched a reputation market called "Ethos Market". Ethos Market allows users to speculate on the reputation of individuals, companies, DAOs, and even AI entities by buying and selling "trust tickets" and "distrust tickets". Each market is bound to an Ethos Profile (associated with an Ethereum wallet), reflecting the real-time reputation score of the target object.

The initial state is 50% trust vs. 50% distrust, with prices dynamically adjusted based on buying and selling. Buying "trust tickets" can raise the target user's trust score while lowering the price of distrust tickets, and vice versa. Since reputation cannot be definitively determined at a single moment and the market continues to fluctuate, Ethos Market adopts a perpetual market design.

For predictive market pricing and liquidity, Ethos Market is based on an AMM smart contract, using the standard Logarithmic Market Scoring Rule (LMSR) algorithm to price two opposing positions. This is the same pricing algorithm used by Polymarket.

Summary

Ethos aims to make reputation a default element in the crypto economy, binding human values with on-chain behaviors through a "social proof-of-stake" mechanism, incentivizing users to demonstrate honest behavior while punishing malicious actors, thereby promoting the crypto world towards a healthier and more orderly direction. Additionally, the Ethos protocol can be integrated into wallet plugins, dApps, and become a universal reputation layer for the crypto world, rather than a single application.

Ethos's innovative mechanisms and concepts bring new hope to solving current industry trust issues. However, Ethos also faces multiple challenges: invitation-based restrictions on user growth, the need to ensure fairness in scoring algorithms, and immature community governance.

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