Recently, the discussion around @ethos_network has been quite high, but most bloggers' tweets are mainly introductions to related protocols and participation methods.

I won't write too much about repetitive content; today, let's talk about the problems Ethos may encounter and thoughts on future development.

Statement: No conflicts of interest, just purely expressing opinions, aiming to be a 'Wow, amazing' type of investor.

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Project introduction and market background.

In one sentence, introducing Ethos — an on-chain version of 'Dianping,' which improves/reduces the credibility of related users through comments, staking assets for guarantees, and initiating Slashes.

At first glance, people may wonder what this is and what can be played with? Personally, I think Ethos's recent rising attention is related to the current market environment.

In the past, the discourse power in the entire crypto market was largely concentrated among project parties, VCs, and MM, and as the bubble of overvaluation burst, the current market is in a phase of clearing. During this period, the discourse power of drivers/KOLs has gradually expanded, even surpassing some high-ecological roles.

If high-ecological roles establish high credibility based on various funding amounts, endorsements from well-known institutions/individuals, and investment achievements, then drivers/KOLs rely more on on-chain performance, article content, and word of mouth to build their own credibility.

The current KOL market is very mixed because the threshold is low, and anyone can be a KOL. This has filled the already restless crypto market with a lot of noise, along with various drama events. This makes it difficult for newcomers to discern the good from the bad.

Therefore, Ethos has gained considerable attention recently with the increasing discussion about KOL.

However, what Ethos actually wants to solve goes beyond this; its core goal is to address on-chain fraud issues. Every year, there are many instances of rug pulls, fraud, insider trading, and other events.

Interestingly, the crypto circle has no memory; there are always people who will repeatedly fall for the same tricks, leading to losses. This has even given rise to a specialized track for KOLs to dig up black histories.

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The development dilemma of Ethos.

Let’s start with something positive so that everyone doesn’t mistakenly think I’m just pure FUD 😂.

➣ Team: The three co-founders of the team mainly worked on some 0-1 incubation projects in the past, with @0x5f_eth being an old OG in the industry.

For specifics, refer to @Alvin0617's article (just a side note, projects from the creator of Punk avatars generally have better quality).

https://x.com/Alvin0617/status/1913984336074064266

➣ Financing: Only one round of $1.75 million in angel funding has been conducted, with a total of 59 angel investors and no VC institutions.

➣ Emphasize community: @0x5f_eth actively listens to community opinions; as a German white person, he personally created the Ethos Twitter Chinese community and planned a series of AMAs to answer community members' questions.

This financing is very targeted; all angel investors are experienced on-chain players, and no VC funding is sought. This indirectly indicates that the team wants to realize their product vision under minimal external pressure.

Back to the topic, Ethos wants to build an on-chain credibility protocol, which cannot avoid people, and people cannot avoid human nature.

In my view, human nature can be considered one of the most complex things in the world; no two people are exactly the same. Based on this, protocols built on such a foundation encounter far more problems than other types of products.

The problems I can currently think of are:

➣ In the end, credibility protocols can easily degenerate into an SEO product.

This can be seen from traditional products like Dianping and Meituan, which initially aimed to solve users' problems of not knowing what is good or bad in new places.

Can it really be said that products with high scores are that good? Are products with medium to low scores really that bad? Everyone who uses them regularly has their own experience.

Most of the comments here are guiding, such as common check-in evaluations for drinks; on Ethos, it could be that everyone gives me good reviews, and I personally incentivize you.

➣ The motivation and difficulty of identifying malicious Slashes.

Credibility evaluation is inherently subjective; determining the 'legitimacy' of a Slash requires sufficient context and evidence, and the costs to both parties are extremely unequal.

In most cases, the cost of malicious Slashes is very low; sometimes it may just take a few ambiguous words and some stirring up of emotions to spark huge discussions. In contrast, those who are maliciously slashed need to provide substantial proof to justify themselves, even falling into the 'self-proof trap.'

➣ User participation willingness and long-term sustainability.

For the credibility mechanism, most people are unwilling to spend time commenting or Slash or even spend money to guarantee others, which can easily lead to insufficient credibility score data, resulting in inaccurate or easily manipulated scores.

If some incentive mechanisms are designed in the protocol, there can be significant inconsistencies in participation motivation among different users. When incentives are high, everyone actively participates; when incentives are low, willingness to participate drops significantly.

At the same time, ordinary users may be reluctant to comment or Slash unless there is a strong emotional drive (positive or negative), leading to sample bias in credibility scores. High-credibility users may become the primary targets of Slash attacks, as lowering their scores can provide relative competitive advantages to the attackers.

➣ Differences in regional culture.

This point is inspired by a comment from @Airdrop_Guard; in the East, especially in Chinese-speaking regions, there is a strong admiration for harmony.

So generally, people tend to praise more and criticize less. Even if they think someone is not good, they would only choose to stay away and not express related evaluations, let alone Slash.

In contrast, the West tends to be more expressive. Therefore, this can lead to significant differences in credibility samples across different regions.

➣ How to organically combine protocol tokens with business.

I won't say much about this; everyone understands, haha. I think this is also one of the key points that can solve the aforementioned problems.

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Currently, Ethos operates on an invitation basis, which is understandable to control the number and quality of participants in the early stages, as early sample data is very important. However, this approach is difficult to sustain in the long run, and it will certainly need to be opened up later.

Once it is opened up, the aforementioned problems are inevitable. However, I believe these issues are not unsolvable and that there is still potential to find a balance.

Here are some of my own thoughts🤔, which may not necessarily be correct, but I hope they can help @0x5f_eth @benwalther256 @0xNoWater.

1️⃣ Regarding the issue of malicious Slashes, one can:

➣ Require users who initiate a Slash to stake a certain amount of protocol tokens (e.g., ETHOS tokens). The staked amount is proportional to the severity of the Slash (the extent of reduction in credibility scores).

If a Slash is determined to be malicious (e.g., through dispute arbitration or community voting), the staked tokens will be confiscated and distributed to the victims or destroyed.

➣ Detect abnormal Slash behaviors through data analysis (after all, most people generally have many friends and few enemies).

For example, slashing the same target multiple times within a short period from the same account, or multiple accounts slashing collaboratively (suspected witch attacks).

If anomalies are detected, automatically limit their Slash permissions or reduce the impact of their Slashes.

2️⃣ Regarding the incentive mechanism, one can:

➣ Design a dynamic reward and punishment mechanism.

Dynamically adjust rewards based on the 'quality' of user evaluations. For example, if comments or Slashes are validated by the community (confirmed by voting or subsequent events), users receive token rewards; if deemed malicious or of low quality, some credibility points/staked tokens will be deducted, as well as part of the guarantors' credibility points/guarantee funds.

➣ Design tiered participation methods based on user credibility scores.

Design multi-level participation methods for users with different credibility scores, reducing the participation cost for ordinary users while maintaining a high threshold for high-impact operations, such as:

  • Low threshold: ordinary comments do not require staking, only a small amount of gas fees, and have a small impact on credibility scores (±1 point).

  • High threshold: slashing or high-weight comments require staking tokens and have a significant impact on credibility scores (±10 points).

➣ Reverse incentives to counter malicious Slash behaviors.

Reward users for discovering and reporting malicious behaviors (such as score manipulation or malicious Slashes). If the report is successful, the reporter receives part of the confiscated staked tokens.

➣ Introduce leaderboard and badge achievement mechanisms.

Leaderboards should already be implemented; the badge achievement mechanism can stimulate users' desire to participate and can add some additional empowerment, creating more expectations and high playability.

For example, accumulating 100 valid comments could earn a 'Credibility Pioneer' NFT badge, enhancing users' sense of achievement.

3️⃣ Regarding cultural differences, one can:

➣ Diversified scoring groups.

Group ratings according to user background (e.g., community, language, type of on-chain activities). Evaluation behaviors within the same group have a greater impact than those in other groups.

For example, evaluations from DeFi users have a greater impact on the related credibility of other DeFi users/protocols, and the same applies to the NFT community.

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In conclusion, I personally still have high hopes for Ethos from multiple perspectives. Although the current narrative of the on-chain 'Dianping' is not that sexy.

However, it is genuinely addressing some practical issues. I will strive to get an invitation code to experience it personally and keep track of subsequent product developments.

We should believe that Punk OG will not disappoint us, haha.