Token Curated Registries
The Curation Protocol That Separates the Wheat from the Chaff
Author Aaron Foster / @Shyblugs
On the internet, as on the street, reputation is everything. Whether your digital identity comprises a mugshot or a 256 bit hexadecimal address, validation and verification are still a requisite.
Even on the decentralized, pseudonymous web, in which real world identities are optional, reputation still counts. The web 3.0 isn’t about concealing everyone under a cloak of invisibility; rather it’s about giving individuals the right to privacy. The freedom to choose which data they disclose to which platforms, rather than having it hoovered up by every app they install and website they join, to be stored in centralized silos that are a honeypot to hackers.
Developers of the decentralized web and the tokenized ecosystems that have sprung up to support it have devised a number of innovative ways to verify users and vouch for their legitimacy. Some crypto projects, for instance, are focused on ways in which web users can lever social proof to bolster their reputation. But when it comes to protecting vendors from consumers and vice-versa, a more elegant solution is required.
Enter the Token Curated Registry (TCR)
Essentially, this is a smart contract tasked with producing a list of items. The idea behind a TCR is quite simple: if there is value associated with being included on a list, people will be willing to pay to be included in it. Think of it as the nightclub bouncer wielding a clipboard to determine who gets in and who gets turned away.
adChain is one project that’s realized the potential of TCRs, writing in its white paper:
“Token holders have one concern, which is to flag fraudulent and low quality applicants to the pool and win votes to reject those applications...Voters who act rationally and perform good diligence will be rewarded. Less diligent voters on the losing side incur opportunity cost without upside for having locked their adToken uselessly over the duration of the voting period.”
TCRs have many applications but this application is an obvious strength, they’re an excellent mechanism for weeding out the good actors from the bad. A way of separating the wheat from the chaff. Several crypto projects are experimenting with TCRs, including us at BitPoint network. We’re creating a decentralized autonomous network of crypto tellers for secure face to face or online exchange of fiat and cryptoassets.
But how to solve the issue of trust? For BitPoint to become the global success we hope and intend it to be, total strangers need to transact in confidence. We needed to find a mechanism by which to curate a list of ‘verified tellers’ as well as an arbitration process for customers. Being decentralised and autonomous means we can or have one central authority mediating these relationships. It was this quest which led to us exploring and then adopting a Token Curated Registry for BitPoint0x.
BitPoint0x is a dual layer TCR for BitPoint tellers, this enables the network to autonomously certify its tellers are aligned with its values. Kleros sits on top providing an escrow and arbitration layer protecting consumers as a final resort.
Without a central authority, BitPoint0x rewards aligned tellers and makes cheating uneconomical. This means tellers aren’t going to take buyers’ funds and then disappear. With teller deposits held in escrow as a guarantee, this disincentives nefarious behavior. BitPoint0x will reward reputable sellers, who will feature prominently in BitPoint listings as well as certification enabling them to generate more business.
BitPoint0x removes the incentive for a teller to act dishonestly. Should this occur, however, the kleros arbitration will be called upon to mediate the dispute. The implementation of a Token Curation Registry that BitPoint0x will be using comprises a list of approved tellers with a balance of stable coins (DAI) as escrow, keybase ID for identity, and staked BPT tokens.
This framework is of great value to tellers because it signals to customers that they can be trusted to send a bank transfer to for example. The amount staked can be used to sort the list, placing tellers with a larger stake higher in the search results within their geographical region. They’ve got more to lose by acting dishonestly, which will serve as a suitable deterrent. In reality, the vast majority of tellers who will be interested in joining the BitPoint network will have no interest in trying to scam buyers.
Nevertheless, an autonomous system needs autonomy, fairness and transparancy for all. Cryptocurrency and the blockchain technology powering it are transformative inventions that have the potential to make the web – and thus the world – a better place for everyone. Any system that adds to the credibility of the crypto ecosystem, and which rewards fair players, is a welcome step towards making the space more inclusive, thereby attracting new entrants. Token Curated Registries are one way of helping to achieve that.
When Satoshi Nakamoto published his seminal Bitcoin white paper, it solved the Byzantine generals problem: the means of attaining consensus in a system between perfect strangers who have no reason to trust one another. TCRs, and indeed everything else that has come since in the blockchain world, build upon that breakthrough. Thanks to protocols such as Token Curation Registries, there’s now a means of verifying your credibility without needing to part with your passport, social security number, mother’s maiden name and most importantly no central authority.