After Run Notes, slightly edited and ordered with ChatGPT
When I say I am interested in prediction markets, I probably use this term a bit more loosely than others. Last year, I had the joy of working behind the scenes with the team at Karma3Labs, who took me deep down into the Web of Trust, Eigentrust and Reputation Graph world.
What I learned is that EOAs or wallets with "reputation," however you might define it, become increasingly interesting. Building on onchain activity, you can start to bring order to feeds by showing more content from highly reputable people. Cool, but, in all honesty, this was not what really made me think, "Oh, shit."
As I was just posting random thoughts to all my social feeds to harvest initial reactionss and feeding, and getting really excited about prediction markets, I started to realize that there is something truly fascinating when you bring together address-owned reputation, prediction market mechanics, and on-chain activities through community notes.
It actually started with a very personal user need. I needed to find an Airbnb for work travel to San Francisco. As I was browsing around, I couldn't help but wonder why the list wouldn't show me which of those houses and apartments had been booked by my extended community in the past. I know so many people who traveled there, stayed there, and a good number probably stayed in some of those Airbnbs. So, show me the places my friends of friends stayed in San Francisco, ordered by their rating, but show me the review they left. What do they suggest? That's actually all I wanted to know. But I couldn't, and that's why an open social graph and open, verifiable on-chain data is our ultimate a superpower. If the platform had been built on that, it could have been possible just do that permissionlessly. So, social discovery combined with on-chain activity is really neat. Check.
But as I further explored this thought, I got lost at the prediction market intersection and went a bit deeper down that rabbit hole. So far, we have used prediction markets mainly to predict the outcome of future events. For better or worse, despite the lot of crypto, web3, or whatever lingo we use this year, we are still in the gambling casino resort days, betting on the infrastructure work horse tokens for lofty returns. But I feel there is something much more alluring there when I look beyond the social pond to Elon's empire at X.
I have a complicated relationship with that platform, but I generally encourage anyone to dive deeper into community notes. It’s some of Twitters best work and thinking. They are a signal of what will come for all of us in permissionless markets/protocols.
Right now, they are not fully community-powered as much as I know, but that's where I am getting super excited about prediction markets, on-chain reputation, and community notes. Suddenly, facts and comments get weight by who supports them, or calls them out, or, more importantly, adds valuable context to them. Our attention span is getting shorter and shorter, and operating in a permissionless environment means we are getting more spam and scams, and we need community-powered ways to endorse and report. This will help to make them more stable and relevant.
I post a highly controversial fact that is false, someone will and should call me out on this, but since I do maybe one day (hit like, subscribe or mint this piece from me) have a decent following, how can we make sure that this gets flagged in a permissionless environment? Well, by giving comments, and/or community notes weight through reputation, anyone that supports that comment, calling me out, makes that post more visible.
Similarly, if I were to make a future prediction about something happening, your action will reflect back on you. I have a really big hunch that we are going to see new interactions like "true" or "wrong" appear on our feeds.
These actions, if captured on-chain, will just flow back into your reputation itself. It's not bulletproof, but it's the first and best community indicator we can have. Imagine this on a DAO vote, on an RPGF proposal, etc.
So, when I think about the future of permissionless social, I truly look forward to these new types of community-owned moderation. Where maybe each post has a way to permissionlessly report it, and depending on your on-chain history of actions, interactions, and transactions, your report will flag it immediately for the rest of the community. (There is an issue, though, if you have no credit score, and it makes it harder if you operate through multiple identities, but that's another post.)
The last thing I want to make clear is that I don't think, or at least hope, we will end up with one algorithm to rule us all. The fact that all data is open and verifiable means anyone can come up with a competing algorithm that defines reputation differently. This matters in multiple ways: clients can make their own, make it their secret sauce, or allow for competing ones, or make it a combination of various ones, etc.
So, when I think about the Web of Trust, Prediction Markets, Community Notes, On-Chain Data, Attestations, Trust, and Impact Metrics (for App Stores or votes like RPGF), then I think we are really just at the very early start of what is coming, but it will happen soon.
