Ethos - Crypto's Social Accountability Layer: What You Need to Know
Verifying Trust, Reputation Marketplace, & More
Ethos aims to verify user reputations in crypto, maximizing trust verification instead of hiding beneath the trustless and decentralized nature of crypto. Trust has ironically been one of the most glaring problems in crypto, with ~$100B+ in misappropriated funds lost.
While CEXs, funds, and custodians have been responsible for most of the fraud in crypto, a lack of trust at the protocol and user level is still significant. Ethos tackles the problem of trust at the individual and project level, allowing users to rate projects or even wallets associated with individuals according to their experiences.
In today’s edition, we’ll discuss Ethos, the protocol that aims to verify user reputations in crypto, maximizing trust verification.
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Background on Ethos Network
Ethos provides an outlet for gauging reputations with onchain addresses before interacting with them, whether they may be individual wallets, smart contracts, or specific tokens. From here, user-facing tools such as browser wallet extensions and applications can integrate the Ethos credibility database, allowing for more personalized decision-making for users.
The way in which Ethos goes about achieving its goals of providing credibility scores is by operating its own PoS layer. Users can review other users and vouch for them by staking a certain amount of $ETH to the user in order to signal trust. Just like in PoS, slashing can occur via a voting mechanism, taking some of the $ETH staked with a user. Some of this $ETH can also be rewarded to a whistleblower who iniates the slashing process.
The Ethos app itself resembles a Web3 social platform, allowing users to scroll to read reviews of other users and leave reviews of their own. The app itself is not the main drawing point of Ethos, it is the data collected on users and wallets that join the Ethos ecosystem, establishing a level of accountability between each other.
The Ethos protocol has the potential to be used in many ways. The Ethos team went ahead and launched Ethos markets, allowing users to bet on user credibility, sort of similar to prediction markets. One can imagine a future where P2P or other types of lending can maximize capital efficiency by changing practices on a per-user basis, using Ethos as a make-shift credit score.
The founding team behind Ethos stems from Atlassian’s data protection group. In July, the team raised a modest $1.75M pre-seed round last year from angel investors. This provided the initial resources to get off the ground, expand the team to 6 members, and put out a product.
Ethos Network is built on Base, which has become a hub for social platforms, also hosting Farcaster, friend.tech, Zora, and other protocols. Expanding to Solana could be a big unlock for Ethos. The nature of the Solana ecosystem and the ‘trenches’ are a good fit for the service that Ethos provides. Time.fun, which enables the tokenization and trading of KOLs’ time, has seen a lot of growth after deploying on Solana, after initially launching on Base.
Overall, there are many problems inherent to crypto, and trust is one of them. Trust has ironically been the most glaring problem in the space, with ~$100B+ in misappropriated funds lost. At all of the most important points of crypto lies trust, whether it be on or offboarding, protocols raising funds, or users simply storing funds on a CEX.
High-level vectors where trust could potentially be abused are seen by many as the responsibility of global regulators, as these parties have real entities and are subject to legal repercussions for their actions. When it comes to projects and individuals, however, there is much more room for fraud to run rampant. Whether it’s Richard Heart, Hayden Davis,
Ethos can help to prevent these sorts of mishaps and operations, helping the entire industry to self-regulate in areas that are mostly under the radar of global enforcement agencies.
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