New Working Draft Release: Soulbound Tokens (SBTs) Part 2: Integrating Contextual Metadata in Smart Contracts for Plural-Polycentric Reputation-Based Economics

Hi BGIN Co-Chairs, Members and External Contributors,

I am excited to announce our latest soulbound token focused working draft: “BGIN_WD_SR013_ Soulbound Tokens (SBTs) Part 2: Integrating Contextual Metadata in Smart Contracts for Plural-Polycentric Reputation-Based Economics.”.

Open Google Document Link - BGIN_WD_SR013_ Soulbound Tokens (SBTs) Part 2: Integrating Contextual Metadata in Smart Contracts for Plural-Polycentric Reputation-Based Economics - Google Docs

Current Status

  1. Draft introduction is complete (leave comments & feedback)
  2. Draft paper structure established (leave comments & feedback)
  3. Draft title completed - Encoding Trust: Integrating Contextual Metadata in Smart Contracts for Plural-Polycentric Reputation-Based Economics; the other option is to switch ‘Economics’ with ‘Applications’, but found ‘Economics’ to be broader and all encompassing. (leave comments & feedback)

Previous Work
This paper builds on our previous work, with “BGIN_WD_SR008_Soulbound Tokens (SBTs) Study Report Part 1: Building and Embracing a New Social Identity Layer?”

Open Google Document Link - BGIN_WD_SR008_ Soulbound Tokens (SBTs) Part 1 - Google Docs

Paper Background & Alternative Future Works
As most would know SBT Part 2 hasn’t made any headway since the publishing of Part 1 in early February 2023. I own this responsibility and have as the title of this post should indicate the necessary movements to progress BGINs essential research on Soulbound Tokens. The momentum is still there, and we need to capitalise on this. During Block #8 in Croatia we formulated a variety of potential future works on Soulbound tokens which included:

  1. Soulbound Governance Tokens: Non-transferable Governance for Honest and Fair Participation.
  2. Soulbound Tokens: An In-depth Exploration of ‘Soul’ Relevant Ethereum Improvement Proposals
  3. Viable Reputation Economic Models for Scalable Soulbound Tokens
  4. Analysis of ‘Soul’ related qualities in historical literature
  5. Context Driven Exploration of Communal Use-Cases of Soulbound Tokens
  6. Feasible Commercial Models for Reputation-Holding Non-Transferable Tokens
  7. Lifecycle Management, of Expirable Tokens on Immutable Permissionless Networks.
  8. A Comparative Analysis of SBT & NFT Applications for Communal Participation
  9. Plural Polycentric Soulbound Tokens for CBDC & DeFi Bi-Lateral Compatibility

Open Google Slides Link - 230506 BGIN | Block#8 SBT Future Works - Google Slides

Three Major Topics of SBT Paper 2
After much consideration, I’ve decided to dive into (3) major topics:

  1. Reputation Economics (fundamental to understand and encode value incentives to adopt, transfer and manage SBT lifecycle)
  2. Metadata Design (consideration on essential meta data to embed/standardise across a number of SBTs)
  3. Soulbound Governance Token (a concept coined in SBT Part 1, this paper will expand into the application of our theory - potentially for an ERC-EIP)

As we continue to explore the potential theory and application of Soulbound Tokens, your insights and contributions will be invaluable. I am are currently seeking feedback, suggestions, and collaborative efforts to refine and enhance this draft. Your participation can significantly shape the trajectory of this pioneering work.

Anticipated Next Steps
The draft is accessible via this link I encourage you to review it and share your thoughts on this forum thread and leave comments/suggestions/edits throughout the draft paper Google Document.

Looking ahead, I plan to present the paper at the upcoming IKP working group meeting. This will be a great opportunity for further discussion and feedback, offering a platform for in-depth exploration of the concepts, applications and paper structure proposed in the draft.

Expertise and input are crucial for the progress of this research and enable further study into a space we all find so interesting and essential to push forward.

Thank you for your ongoing support and engagement.

Best regards,
Joseph Beverley



Thank you!!

1 Like

WD Update #2 - 131222

Today @Amanda_Wick and I caught up with NYU Economics Professor, Luis Cabral to discuss SBT Part 2 and the reputation economic theory we’re looking to explore further.

Key areas we discussed:

  1. Repeated game theory
    1.1 Used alternative terminology to ‘infinite’ games, to instead use ‘indefinite’ games as the game is meant to have no-end rather than persist infinitely
    1.2 The focus on ‘equilibrium’ mechanisms. Although this was not further explored in the conversation, my understanding of this focus was to avoid an imbalance of incentives resulting in unfair or exploitable transfer of value resulting in the collapse of incentives and ultimately the game - making the game finite.
    1.3 Discussed Finite Game Theory, and the issues that come with the territory. Key theory to explore further is ‘Last Period Problem’ in Finite Games. Whereby the end of the game is achieved and the player that reaches this point arbitrary takes advantage or breaks game mechanics because of the lack of new challenges(ers).
  2. [?] Equilibrium incentives (not financial assets) - need to confirm in follow up email
    2.1 Potentially Nash Equilibrium
  3. Delineating between reputation & trust
    3.1 Reputation is the belief of my ability
    3.2 Trust is the belief of what I will do
  4. Analysis of merchant behaviour - how ‘trusted’ or ‘recognisable’ brands price deviation for medical masks during covid were significantly less than new ‘overnight’ brands, which had the greater proclivity to increase prices materially for the same masks.
  5. Recommended we look further into ‘Repeated Games Played by Automata’, nuanced game theory that was explored in the 80s & 90s, but has had very little new theory applied in the last several decades. This was primarily because of the asymmetry between positive and normative theory, being that Automata has limited functionality and can have these applied easily, where as applying automata principles to humans is superficial and instead a normative theory would make more sense because of human dynamism.
  6. Luis recommended we look into ‘Highest Reputation Value’ at inception. How would applying the highest positive reputation function in a pseudonymous environment. We believe this may be asymmetric to blockchain, but equally should explore the principles to better understand how to apply levels of adverse selection and the attributes that would go toward informing a recipient of anothers reputation
    6.1 Look into finding an appropriate ‘self-selection coefficient’ for the adverse selection or have a ‘fly by night syndrome’ where by users void of reputation are able to take advantage of the system, effectively leading to the end game problem we explored in the ‘Five Variables of Reputation Economics’ in SBT part 1
  7. Look into economic theory of criminal cartels, as the reputation economics are clear, as for every action there is generally a reputation-based outcome. This could be helpful to use in blockchain based reputation.

Key concepts:

  1. Repeated Game Theory (infinite & indefinite)
  2. Last Period Problem
  3. Equilibrium Incentives
  4. Repeated Games played by Automata
  5. Merchant behaviour on trust & reputation
  6. Self-Selection Coefficient
  7. Fly by Night Syndrome
  8. The Social Cost of Cheap Pseudonyms
  9. Nash Equilibrium

Further people to speak with:

  1. Hanna Halaburda, Associate Professor of Technology, Operations, and Statistics at NYU [works on tokenomics & blockchain at NYU]
  2. Adam Brandenburger, J.P. Valles Professor at NYU [Much harder to get in contact with]
  3. Ariel Rubinstein, Professor of Economics at Tel Aviv University

Recommended reading:

  1. Glen Ellison, Learning, Local Interaction, and Coordination [Learning, Local Interaction, and Coordination on JSTOR]
  2. Eric J. Friedman∗Paul Resnick, The Social Cost of Cheap Pseudonyms []
  3. Ariel Rubinstien, Finite Automata Play the Repeated Prisoner’s Dilemma