Trust Layer on Stellar

With the adoption of blockchain for general economic transactions we are starting to rediscover problems that our modern economic system has long resolved. Problems that if left unaddressed can become significant roadblocks in wider adoption of the technology.

In most of the developed world when businesses fail to deliver, parties involved in that transaction have ways to seek compensation.  The global banking system, with all its imperfections, provides a significant level of protection to its customers for when things go wrong – establishing a base level of trust between transacting parties in the economy.

Blockchains as they exist today do not provide any protection to the consumer and often place significant emphasis on the concept of anonymity, promoting a situation where parties do not have information about who they are transacting with.

To understand this problem, we have to look at a transaction between two individuals. One wants to buy a product and another offers to sell and ship it. After payment is complete, the product may never be shipped and the reverse can be true. Because blockchain transactions are not reversible most of the time, and wallets are disposable, there is an incentive to take advantage of trust.

There are a number of ways to resolve this problem, however most approaches require revealing one’s identity or involving third parties.

We propose solving this problem by creating a Trust Layer structured in a way that makes it costly to break commitments to others and incentivizes honest behavior by participating parties, while solving many other challenges inherent with anonymous wallets like spam and various forms of automated manipulation.

To do this we must establish a level of trust between parties in any transaction and incentivize them to complete the transaction as agreed without revealing their identities or involving third parties.

This is accomplished by introducing the concept of trust.
Trust is established by tracking commitments of a wallet that cannot be broken in the near future as proof that a given party will not abandon the wallet and that there is high probability that any new commitment will be honored.

Commitment can therefore be seen as an asset worth money that is locked and not accessible in the near future.

This concept is similar to using a home mortgage agreement, phone bill, electricity bill or other relevant commitments as proof that one lives at a given address. We may never be 100% sure, but the more data one provides the more confident businesses and organizations can be that an individual actually lives in that specific home.

Combining this concept of trust with additional metrics and feedback, in the form of comments from other users and businesses, we can establish a base level of trust and negative consequences for not keeping commitments that wallet takes on.

How does it work?

Join the network 

To join a Trust Network a wallet needs to create a Claimable Balance using the Trust Network’s native token (TIDE). This is a simple contract that creates a conditional pending transaction that will remain pending for 6 months. This transaction identifies the account as being on the network and TTN begins collecting data for that wallet.

This need for locking TIDE to join the network establishes a “cost of entry”, a barrier that everyone needs to cross to join and  is the first step in deterring spam.

In order to stay on the network, the wallet must maintain this pending transaction. The longer this transaction is maintained the more initial trust it establishes.

If it is claimed the wallet will leave the network.

Establish Base Trust

Once in the network the next step is to establish trust.
Trust is established by locking value in the form of TTN approved assets, yield generating assets fill this role perfectly as they can pay yield to the user while they are locked and provide a trust rating.
Trust building on TTN can therefore offer stable long-term funding to many Defi projects on Stellar and beyond. Supporting liquidity, lending and exchange markets.
Trust is derived from the value of the locked asset, duration for which it was locked, as well as how long it remains locked. This is translated into a trust rating.
Trust simply tells us how likely this wallet is to be abandoned by its user, as well as creating another significant barrier to spam and automated manipulation.

Maintain Reputation 

After the wallet is on the network and obtains a trust rating, it begins to gather a reputation score using our feedback mechanism.

This score is aimed to reflect its past behavior and predict likelihood of breaking new commitments in future.

A comment system on the chain provides a basis for this score. Comments will have a cost in the form of TIDE token, here we again employ claimable balances to allow recycling of TIDE token once comments have desired effect and to create cost to any potential comment abuse.
The comment system will initially  be one of the most flexible and adaptive systems on TTN and it will take significant work to establish a balanced system that keeps abuse to a minimum.  We recognize this challenge and will implement layers to help overcome it, including adjusting weight of feedback by weight of trust and reputation of the wallet and establishing a ratio between positive feedback and negative feedback; where only negative rating wallets will lose reputation and the ability to affect the reputation of others. By linking the reputation of the user to the quality of their feedback as seen by others, it is possible to build a self-balancing system that keeps abuse at low levels.

Gather Praise 

To facilitate moderation of TTN participants, a praise rank will be calculated for helping to provide feedback on comments and activities of the network participants.

Network participation will include onboarding wallets into the network as well as helping them establish trust or doing so for them.

Rating and flagging comments TTN users create and many other moderation functions will be part of this mechanism. Users that participate in these activities will receive TIDE rewards.

Token Rating System

TTN will also allow tokens to join at a project level, by bringing an asset issuer account into the network.

Tokens have a much higher TIDE entry cost to create a barrier to entry and prevent abuse, while helping to establish credibility for projects willing to participate in the TTN network in this way.

A robust rating system will allow users to support tokens with their wallet’s reputation.

There are two components to a token rating, one is passive the other is active.

Passive Rating comes from its actual users, this means when highly trusted and rated wallets hold a token it gains higher rating from this wallet. However there is also a reverse effect. Highly rated wallets holding very low rated token will have a negative effect on the wallet’s reputation as well, preventing “boosting” of tokens.

In general, users will not be affected by tokens they hold; but holding unknown low rated tokens will have some negative impact on their wallets TTN rating.
Careful balance will be established to make wallet holders cognizant of the rating for tokens they hold, but not so much that they need to actively manage this process all the time.

Active Rating involves action by the wallet to support the token – essentially, a vote.

Weights of the vote are affected by each wallet’s reputation, but the number of people with high trust is more important than how high the trust level of one specific wallet might be. Voting power diminishes when attempting to vote on too many assets.

TTN is all about interpretation

One can think of TIDE token as a network connecting wallets to other wallets, tokens and comments. This creates a layer that is orders of magnitude smaller and easier to analyze than a general transaction log; it is also much more expensive to spam because claimable balances are many times more expensive than transactions on Stellar.

TIDE token simply creates the connection or beacon that reads “this is important” and we can then quickly read and process these. This allows us to both calculate ratings and make this data available to anyone who wants to use it.
Anyone worried that parts of the TTN may get abused should keep in mind that scoring is simply an analysis of the TTN network data – so as we see issues and abuse this scoring system can evolve without the need for changes in the underlying TIDE token connections. We can rapidly improve the rating system to counter abuse, because the trust rating is our interpretation of the data.
We also invite other parties to gather, process and make TTN data available; or use our feeds to make different models for the end user in ways they think will be beneficial.

People may find many other ways to establish connections and we want to create a community around TTN where we implement great ideas into the architecture and TTN API.

Use Cases

All applications and projects face challenges dealing with abuse by automated systems or BOTs. TTN offers a simple way to screen against these activities with TTN API, setting standards for who they want to accept and allowing developers to ignore everyone else if they wish.

The average user will be able to screen assets and wallets to reduce risk, providing a level of control and knowledge of projects previously only available to expert users of the Stellar network.

Distribution of TIDE token

The original design for distribution of TIDE token centered around the voting system within Aquarius. Wallets were able to use AQUA token to vote for TIDE Liquidity Pairs and receive some tokens as compensation for doing so. A number of things have changed since then and, as outlined above, distribution of TIDE will gradually transition to reward TTN participants, liquidity providers and potentially as a way to support projects that integrate with the network.
General distribution guidelines will remain the same – no more than 26,200 TIDE tokens will be distributed per day and the project team is given 1200 TIDE per day to cover costs. Full distribution of the token at this rate will take 10 years.

Refer to TIDE distribution page for details.