Hey there fellow adventurers in the realm of decentralized innovation! Today, I'm here to share my journey of the past month as one of 6 fellows of the ArbitrumDAO Co.Lab. It was a journey through the twists and turns of finding out how to establish trust and evaluating potential within online environments and decentralized ecosystems. So buckle up and let's dive into the nitty-gritty of my exploration.

Context of my research:

What brought me into Web3 a few years ago was already the question, how to build a protocol to improve trustworthiness in online environments. Within the fellowship I am investigating in particular the challenges that Decentralized Innovation Funds face in trying to improve funding outcomes and to foster valuable community contributions.

I came up with this problem:

Reputation is a complex topic with countless exciting use cases. The task of formulating a narrow problem statement was therefore a challenge in itself. Which persona, which use case, which aspect of the user journey should I focus on at the beginning? Since I already had a lot of experience with decentralized innovation funds and have even received grants and projects related to reputation, it was only logical to focus first on the program managers and governance leaders of such initiatives.

The result was the following initial problem statement:

I am a Product Owner of a Decentralised Innovation Fund, I am trying to establish the best systems in order to fund and support the best proposals to grow the ecosystem, but it is hard to evaluate the feasibility and potential success of projects, because the decentralized nature of the environment makes it difficult to know what teams and proposals are trustworthy, which makes me feel overwhelmed and frustrated.

I spoke to these people and asked these questions:

My research interviews were mainly with program managers and governance leads from Decentralized Innovation Funds, but also with governance leads from DAOs and two CEOs from two different but somewhat related use cases (medical research and journalism).

I divided the conversation into 3 thematic blocks:

• Reveal their main goals, but also the frustrations that plague their ecosystem and shed light on what upsets token holders.
• Explore the complicated dance of recognizing and validating "good" behavior, establishing criteria for promising proposals, tracking the use of funds, and evaluating expertise.
• Deep dive into the world of reputation systems: How can it build trust, combat fraud, and ensure fairness while overcoming implementation hurdles and guarding against bias and manipulation.

What I learned about my customer:

What was interesting to observe is that the terms reputation and reputation protocols have different meanings for different people. For some it's all about fraud protection, for others it's about finding ways to reward contribution and for others it's about reviewing and validating past activities. Caution is therefore required when using the term, as it must be set in the right context.

The typical program manager has their own vision of what a best-in-class decentralized innovation fund looks like and it is almost a passion to find innovative ways to ensure the best outcomes. Most of them go their own way first. But many are starting to pay more and more attention to what others are doing, because it is a very challenging topic overall. This means that we are moving in a very fast and experimental space.

A reputation system that independently shows who has proven to be beneficial for the ecosystem is firstly just a by-product for everyone striving to build a dynamic and innovative ecosystem. But a very necessary one, because without it, the main goal cannot be achieved.

What I learned about reputation:

The importance of reputation is evident in various aspects of building healthy communities and incentivizing positive behavior. All participants say that it helps to recognize impactful contributions, power users or the quality of proposals and teams. Reputation also ensures the integrity of research. It plays a role in governance systems by providing more opportunities for small token holders and long-term contributors. Reputation helps to understand the reliability of content and supports the selection of the right content as data production increases through AI.