Pay&Rate Reputation System

[GENERAL] Summarize your solution to the problem.

A Pay&Rate reputation system for marketplaces in Cardano, which features open-source, community-driven, decentralized, immutable, transparent, highly scalable, marketplace-independent, and secure.

[GENERAL] Summarize your relevant experience.

I have a PhD degree in Information Security with research focus on designing and analysis of reputation systems.

I am a Plutus Pioneer Program first cohort pioneer.

I am also an intern from MLabs focusing on smart contract testing and auditing.

[IMPACT] Please describe your proposed solution.

The proposed Pay&Rate reputation system consists of four components:

1. Pay&Rate smart contracts,
2. Governance smart contracts,
3. Governance DAO,
4. Governance treasure.

A Pay&Rate smart contract is a validator script that support payments and maintains the ratings, reviews, and reputation score regarding a seller with respect to a specific service or product that he/she sells. A prospective buyer can retrieve the latest reputation score of the seller with respect to the service or product by querying the reputation smart contract. When a buyer makes a payment, the buyer will receive a rating token from the reputation smart contract. Subsequently the buyer can provide a new rating and review to the reputation smart contract using the rating token. The reputation score of the seller will get updated accordingly.

A seller who sells different types of products or services may have multiple reputation smart contracts. Each corresponds to one type of products or services. This allows a seller has different reputation scores with respect to the different types of products or services he/she sells. It well reflects the reality the quality of service (QoS) of the same seller with respect to different types of products may vary.

Multiple sellers will have multiple reputation smart contracts. Each seller will have his/her own reputation smart contract(s).

The creation and update of reputation smart contracts is the task of governance smart contracts. Every Pay&Rate smart contract has to be created first. A seller may create a Pay&Rate contract by interacting with a governance smart contract via the Governance DAO’s website. During the creation phase, the seller needs specify the type of product or service that he/she sells and a public key hash that he/she owns. Once the Pay&Rate smart contract is created, the seller can start to establish his/her reputation score by asking buyers to provide ratings and reviews to the Pay&Rate smart contract.

The governance smart contract is also responsible for update of existing Pay&Rate smart contracts. When a new version of Pay&Rate smart contract is available, it will be released to governance smart contracts. Then existing smart contracts will get updated automatically in the next transaction since the Pay&Rate smart contract will check for update from the governance smart contract in every transaction.

The governance smart contract is controlled and operated by the governance DAO.

The governance DAO is operated in a fully decentralized and transparent manner. No single entity, including the founders, has privileged power. The governance DAO is also fully open for anyone to join, contribute and benefit accordingly. The responsibilities of the governance DAO include:

• defining the business requirements of the reputation system;
• developing the Pay&Rate smart contract;
• developing the governance smart contract;
• operating the governance smart contract;
• management of the governance treasury.

Governance treasury is where all the system assets are kept and where all revenues generated from all the reputation smart contracts are streamed to. Governance treasury is not controlled by any single entity but the Governance DAO as the collective whole. Governance Treasure is also the funding source for all the activities take place in the governance DAO.

[IMPACT] Please describe how your proposed solution will address the Challenge that you have submitted it in.

By leveraging the Cardano smart contract and the eUTxO model, we propose a novel native Cardano Pay&Rate reputation system for marketplaces in Cardano eco-system. Compared with the reputation systems commonly seen in web 2.0 online marketplaces, our proposed Pay&Rate reputation system features open-source, community-driven, decentralized, immutable, transparent, highly scalable, marketplace-independent, and secure as follows:

1. Open-source. All the code in the proposed reputation system will be open sourced from Day One. It creates full transparency to build users trust in the code of the proposed Pay&Rate reputation system. In addition, it welcomes contribution from anyone who is interested.
2. Community-driven. Web 2.0 online marketplaces usually have their own native reputation systems. The organization that operates the marketplace operates its reputation system. On the contrary, our proposed Pay&Rate reputation system is not controlled and operated by a single centralized entity but by its entire governance community collectively in a form of a Decentralized Autonomous Organization (DAO). The governance DAO will be fully open for anyone to join, contribute and benefit accordingly. It will also be operated in a fully decentralized and transparent manner to build people’s trust in the governance DAO.  
3. Decentralized, immutable, and transparent. In reputation systems used in web 2.0 online marketplaces, ratings and reviews provided by buyers are kept in a centralized fashion. They are hence vulnerable to manipulation (e.g., adding, modifying or deleting ratings or reviews). On the contrary, ratings and reviews in our proposed Pay&Rate reputation are permanently kept in a decentralized, immutable, and transparent manner on the Cardano blockchain. It prevents ratings and reviews from accidental and malicious manipulation. It guarantees the integrity and availability, and thus ensures the reliability of reputation scores calculated from the ratings and reviews. As a result, it builds users’ trust in the reputation scores produced by the Pay&Rate reputation system.
4. Highly scalable. By leveraging the eUTxO model, the Pay&Rate reputation system is also highly scalable. The reputation score of an entity is managed by a smart contract. The reputation scores of multiple entities are managed by multiple smart contracts. Each smart contract can be queried and updated independently. This design enables the query and update of the reputation scores of multiple entities to be executed in parallel, which makes the proposed Pay&Rate reputation system highly scalable.  
5. Marketplace independent. Current reputation systems in web 2.0 online marketplaces work in silos. Typically, each marketplace has its own native reputation system. This prevents a seller from leveraging the reputation score accumulated from one marketplace in another. If the seller wants to sell in another marketplace, it has to re-establish his/her reputation in the new marketplace from the scratch. It greatly hinders sellers from changing marketplaces or joining new ones. Our proposed Pay&Rate reputation system is independent from any marketplaces. The reputation scores accumulated from any marketplaces can be leveraged in any other marketplaces.
6. Secure. Current reputation systems in web 2.0 online marketplaces are exploited by malicious behavior such as sybil attacks and fake reviews. Unsurprisingly, the economy for fake reviews flourishes. Driven by profit, sellers buy positive reviews for themselves (ballot-box stuffing attack) or negative reviews for their competitors (bad-mouthing attack) to artificially influence their reputation scores. Our proposed Pay&Rate reputation system is secure against both ballot-box stuffing attack and bad-mouthing attack. Ballot-box stuffing attacks are remediated by a detection mechanism operated by the governance DAO. Bad-mouthing attacks are prevented by the Pay&Rate reputation smart contract.

[IMPACT] What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?

The major risk is a lack of adoption from marketplaces. This risk will be mitigated by incorporating an incentive mechanism into the governance DAO tokenomics that incentivizes marketplaces in the Cardano eco-system to adopt the Pay&Rate reputation system.

[FEASIBILITY] Please provide a detailed plan, including timeline and key milestones for delivering your proposal.

We plan to deliver the solution in 2 phases:

Phase 1: User-facing components development. This proposal focuses on this phase only. The funding we are seeking only covers this phase. Phase 1 includes development of the following components:

• Pay&Rate smart contract and corresponding off-chain code that allow marketplaces to interact with the on-chain Pay&Rate smart contracts. [3 months].
• Governance smart contract and corresponding off-chain code. [3 months].
• A website that allows sellers to create and initialize Pay&Rate smart contracts using the governance smart contract. [2 months].

Phase 2: System governance components development. This phase is out of the scope of this proposal. We are not seeking funding from Project Catalyst in this round for implementing this phase. It is described in this proposal to provide a full picture about the proposed reputation system. Phase 2 includes the following tasks:

• Designing governance DAO tokenomics and an incentive mechanism that incentivize contribution to the Pay&Rate reputation system.
• Developing governance treasure smart contract and minting and keeping governance DAO tokens in the governance treasure smart contract.
• Developing and testing of governance DAO management smart contract and the corresponding off-chain code.
• Creating an open collaboration platform that allows anyone to contribute to the governance DAO development and operation.
• Creating a website allowing governance DAO members to interact with the governance DAO management smart contract, to participate in the governance DAO management;
• Creating a ballot-box stuffing attack detection system.

[FEASIBILITY] Please provide a detailed budget breakdown.

• Pay&Rate smart contract and corresponding off-chain code that allow marketplaces to interact with the on-chain reputation smart contracts. [9000 USD].
• Governance smart contract and corresponding off-chain code. [9000 USD].
• A website that allows sellers to create and initialize Pay&Rate smart contracts using the governance smart contract. [4800 USD].

[FEASIBILITY] Please provide details of the people who will work on the project.

During Phase 1 of the project a team of two, one Plutus developer and one web developer, is sufficient for development and deployment.

[FEASIBILITY] If you are funded, will you return to Catalyst in a later round for further funding? Please explain why / why not.

If we are funded, the Phase 1 can be successfully development and deployed. Upon completion of Phase 1, we plan to self-fund Phase 2 development leveraging the governance DAO tokenomics and the incentive mechanism embedded into the tokenomics. So we will not rely on Catalyst for future development. However, a future governance DAO member who is elected to develop a component of Phase 2 may decide apply for funding from Catalyst for the component.

[FEASIBILITY] Are you or any member of your team working on any other proposals in this Fund9?

[FEASIBILITY] Are you or your team working on any other proposals from previous Funds?

[AUDITABILITY] Please describe what you will measure to track your project's progress, and how will you measure these?

We will measure the level of progress on Phase 1 by measuring the level of progress in percentile on the following tasks:

1. Development and test of the Pay&Rate smart contract;
2. Development and test of the corresponding off-chain code that allows marketplaces to interact with the on-chain Pay&Rate smart contracts;
3. Development and test of the governance smart contract;
4. Development and test of the corresponding off-chain code that allows sellers to create and initialize reputation smart contracts using the governance smart contract;
5. Development and test of the website that sellers can use the governance smart contract to create and initialize reputation smart contracts.
6. Deployment of the website.

We will also measure the level of adoption by:

1. The number of marketplaces adopting the Pay&Rate reputation system.
2. The number of reputation smart contracts created.
3. The average number of ratings and reviews reported to reputation smart contracts.

[AUDITABILITY] What does success for this project look like?

After the completion of Phase 1, success means:

1. A working website is available so that sellers can create and initialize Pay&Rate smart contracts using the governance smart contract.
2. Working Pay&Rate smart contracts are running on Cardano mainnet.
3. At least 1 marketplace adopts this Pay&Rate reputation system within 3 months after the completion of Phase 1.

After the completion of Phase 2, success means:

1. A well-design governance DAO tokenomics and incentive mechanism are integrated into the operation of the governance DAO.
2. A working governance treasure smart contract is running on Cardano mainnet holding governance DAO tokens.
3. A working governance DAO management smart contract is running on Cardano mainnet that controls the governance treasure smart contract and the governance smart contracts that initialize Pay&Rate reputation smart contracts.
4. A working ballet-box stuffing attack detection system whose output is made available to Pay&Rate reputation smart contracts.
5. An open collaboration platform is available to allow anyone to contribute to the governance DAO development and operation.
6. A working website is available to allow governance DAO members to interact with the governance DAO management smart contract, to participate in the governance DAO management.
7. At least 20 active governance DAO members 3 months after completion of Phase 2.
8. At least 100 active governance DAO members 12 months after completion of Phase 2.
9. At least 5 marketplaces adopt this Pay&Rate reputation systems 12 months after completion of Phase 2.
10. At least 30% of marketplaces in the Cardano eco-system adopt this Pay&Rate reputation system 2 years after completion of Phase 2.
11. At least 50% of marketplaces in the Cardano eco-system adopt this Pay&Rate reputation system 3 years after completion of Phase 2.
12. The governance DAO operation expenditure and revenue breaks even 3 years after completion of Phase 2 and subsequently becomes financially self-sustainable.

[AUDITABILITY] Please provide information on whether this proposal is a continuation of a previously funded project in Catalyst or an entirely new one.

This is a new proposal.

Sustainable Development Goals (SDG) Rating

SDG goals:

Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

SDG subgoals:

16.7 Ensure responsive, inclusive, participatory and representative decision-making at all levels

Key Performance Indicator (KPI):

16.6.2 Proportion of population satisfied with their last purchase in online marketplaces

16.7.2 Proportion of population who believe decision-making is inclusive and responsive, by sex, age, disability and population group