The online world has become a murky place, with the rise of automated content and anonymous profiles making it difficult to gauge who has good intentions. While some web2.0 companies have implemented rating systems, these are few in the web3 landscape.
Karma3 Labs is on a mission to change that narrative with their decentralized reputation protocol, OpenRank. The startup has secured $4.5 million in funding, with Galaxy and IDEO CoLab Ventures leading the round. Other investors include Spartan, SevenX, HashKey, Flybridge, Delta Fund, Draper Dragon, and Compa Capital. According to founder and CEO Sahil Dewan, this is the first capital raise for the protocol.
Speaking exclusively to TechCrunch, Dewan shared, “We are really obsessed with solving trust and safety issues for crypto.” He explained how the recent crypto bull market and subsequent DeFi and NFT mania drew in many newcomers, but also led to an increase in scams.” There is currently no reputation system in the decentralized world of web3, making it challenging to determine who to trust and depend on.
- Since the inception of the internet, there have been peer-to-peer environments that enable businesses and individuals to publish and purchase goods. However, centralization gives these businesses an edge by allowing them to take value from users, dictate the rules, and control the data. This creates a transactional relationship that benefits the centralized party over the users.
- Decentralization of ratings and reputation systems is crucial in preventing a single entity from owning and manipulating reputation scores. OpenRank aims to enable developers and web3 protocols to launch consumer apps, communities, and marketplaces with open rankings and recommendations, without relying on a centralized entity.
Through the OpenRank protocol, any developer can utilize “Reputation Graphs” for ratings, rankings, or recommendations within their applications or communities. This means developers, consumer apps, and marketplaces can integrate specific rankings and recommendations while also leveraging ratings and reputations from other ecosystems and communities.
OpenRank’s founder, Sahil Dewan, shared, “We wanted to create a protocol and generalized system, not as a source of trust, but for anyone to come and build reputation systems.” This approach could lay the foundation for peer-to-peer interactions and community ownership of ratings online.
The protocol also plans to implement resistant mechanisms to prevent fraudulent activities like wash trading or malicious links, thus ensuring the reliability of its rankings.
Dewan also highlighted how ratings can help reduce the cost of on-chain searches and discovery within the crypto ecosystem. Without ratings, users may struggle to identify trustworthy entities and engage with them. These rankings can also be tailored to individual preferences, making recommendations more relevant for different audiences.
“Today, big companies like Google and Amazon control the rankings and recommendations users see. But in the future, third-party developers will have a market to create new ranking systems, giving users more control over the content they see,” explained Dewan. “Our goal is to create a self-serve model for OpenRank, so any developer can easily implement their own rankings without needing permission or having to do extensive work on data and computing.”
In the short term, the startup plans to continue partnering with launch partners and opening up its protocol for people to find, buy, and vote for trustworthy entities on-chain. Moving forward, OpenRank hopes to become available to all third-party developers who want to implement a ranking and reputation system.
