How OpenCred Makes Trust Tangible via Tokenization

29 Apr 2024

In this session of our "Behind the Startup" series, we sit down with Zad, the visionary founder of OpenCred, to explore the revolutionary concept of tokenizing trust in the Web3 environment. As a Stanford-certified expert in blockchain and cryptography, Zad discusses the inception of OpenCred, its unique approach to digital identity through eSFT tokens, and its ambitious mission to reshape social and economic interactions online.

Ishan Pandey: Hi Zad, great to have you here for our "Innovators in Web3" series. Can you tell us about your background and what led you to create OpenCred?

Zad: As a postgraduate in Blockchain Strategy and Stanford-certified cryptography expert, I have spent years conducting cutting-edge research in asset tokenization, DID, and cybersecurity. Trust is actually one of the most difficult things to measure and quantify, no matter “IRL” or online. Now with blockchain and tokens we finally have the tools to tackle this problem in a novel way. I founded OpenCred to bring tokenized trust to the Web3 industry, unleash the hidden potential that lies in social relationships, and eventually enable the establishment of a decentralized society.

Ishan Pandey: Could you start by explaining what OpenCred is and what specific gap in the Web3 space it aims to fill?

Zad: OpenCred is a decentralized Web3 credit protocol that applies a new token standard called “eSFT” to tokenize trust relationships into tangible and quantifiable economic assets. Our vision is to empower users to monetize their online activity while guaranteeing data privacy and ownership. By providing a blockchain-based solution for establishing and measuring trust relationships, OpenCred fills a crucial gap in the Web3 ecosystem: enabling trustworthy interactions and collaboration without relying on centralized intermediaries or KYC.

Ishan Pandey: In the deck, you mention that OpenCred introduces a groundbreaking trust value (credit) quantification for Web3. Can you elaborate on how this works and why it's important?

Zad: OpenCred aggregates both on-chain (e.g., DeFi TVL, smart contract interactions) and off-chain data (e.g., social media followers and interactions) to tokenize trust in the form of CRED tokens. This means users can increase their personal trust value by increasing their online activity and footprint. Each CRED is unique to the user and contains a number of fungible Score Tokens (ST) that determine the value of a user’s CRED. By thus providing a measurable and objective way to assess trustworthiness, OpenCred enables secure, traceable, and efficient trust-based interactions in various Web3 applications, such as social media, e-commerce, DeFi, and gaming. This groundbreaking mechanism is crucial for fostering a trustworthy environment in the digital space and enabling countless new use cases in many areas from B2B to B2C to C2B to C2C.

Ishan Pandey: The CRED token seems to be a key component of the OpenCred ecosystem. Can you explain its dual nature as a semi-fungible token and how it represents both identity and trustworthiness? And how does this design benefit users of your platform?

Zad: CRED tokens are a groundbreaking innovation of OpenCred, creating a new token standard we call embedded semi-fungible token (eSFT) that combines both non-fungible (unique) and fungible (interchangeable) properties. The non-fungible part of the token represents a user's unique identity within the OpenCred protocol, ensuring that each user has a distinct and verifiable presence. On the other hand, the fungible part of the token quantifies the user's trustworthiness, which is determined by their interactions (on-chain & off-chain) and the amount of CRED tokens they receive from others. This design benefits users by empowering them to monetize their online activity and social relationships. Moreover, by tokenizing trust and making it quantifiable and tangible, we are creating a new kind of asset that simply has not existed before, thereby creating huge value.

Ishan Pandey: How does sending CRED between users facilitate the building of a trustable and quantifiable social graph in Web3?

Zad: When a user sends CRED tokens to another user, they are essentially establishing a trust relationship that is recorded on the blockchain. This transaction signifies that the sender trusts the recipient to a certain degree, based on their interactions, reputation, or other factors. As users continue to interact and send CRED tokens to each other, a dynamic, evolving on-chain social graph emerges. The social graph is quantifiable and traceable. This quantification of trust enables users to make informed decisions when interacting with others, as they can assess the trustworthiness of potential collaborators, partners, or service providers based on their position in the social graph.

Ishan Pandey: With OpenCred positioning itself as a provider of "Trust as a Service," how do you ensure the reliability and security of the trust metrics generated by your protocol?

Zad: There is a clear friction between incentivizing users on the one hand and ensuring the authenticity of trust relationships on the other hand. We are aware of this and will tackle this problem in multiple ways. First of all, we will connect the sending of CRED with some actions such as “follow”, “like”, etc., so that the transfer of CRED corresponds with the establishment of a meaningful trust relationship. Secondly, we will implement punishments for sybil attackers and other malicious behavior. Additionally, OpenCred implements a multi-layered governance model that involves community participation and decentralized decision-making. This approach helps to maintain the integrity and fairness of the trust metrics, as the community can collectively monitor and flag any suspicious activities or attempts to manipulate trust scores. To further enhance the reliability of trust metrics, OpenCred incorporates a reputation staking mechanism, where users are required to stake a portion of our governance tokens to participate in trust-building activities. OpenCred places a strong emphasis on user education and awareness. By providing clear guidelines, tutorials, and best practices for using the trust protocol.

Ishan Pandey: How do you plan to drive adoption and grow the OpenCred ecosystem, particularly in terms of attracting both users and developers?

Zad: OpenCred actively seeks partnerships and collaborations with established Web3 projects across various sectors, such as social media, e-commerce, gaming, and decentralized finance (DeFi). We currently have established partnerships with over 10 Web3 projects with close to 1 million daily active users ready to onboard our protocol once it is live. To attract developers, OpenCred will provide a range of tools, SDKs, and documentation to facilitate the integration of its trust protocol into various applications. The protocol will offer developer grants, hackathons, and bounty programs to incentivize the creation of innovative trust-based solutions.

By fostering a vibrant developer community and providing the necessary resources and support, OpenCred aims to accelerate the development of a diverse range of dApps that leverage its trust infrastructure. OpenCred's tokenomics model is designed to incentivize user participation and ecosystem growth. The governance token serves as the primary means of interaction within the OpenCred ecosystem, used for establishing trust relationships, staking, and accessing trust-based services. The protocol will implement a reward system that incentivizes users to actively participate in trust-building activities, such as providing accurate trust assessments, staking tokens, and contributing to the network's security. These incentives will drive user adoption and encourage long-term engagement with the OpenCred ecosystem.

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Vested Interest Disclosure: This author is an independent contributor publishing via our business blogging program. HackerNoon has reviewed the report for quality, but the claims herein belong to the author. #DYOR.