Trustless and Trustworthy

What Led to the Trust Crisis in NFTs?

Amid the current crisis of trust sweeping across the NFT market, a friend ask me about the mechanisms of trust within the community.

In the world of Web3, we encounter two predominant scenarios when discussing trust.

Firstly, there are protocol-based projects which achieve trust through the implementation of code, a concept known as being 'trustless'. Take Bitcoin for example; one doesn't need to place their trust in Satoshi Nakamoto. Instead, their trust lies in the integrity of the bitcoin code. Similarly, if a person is concerned about the security of Uniswap, they needn't trust founder Hayden Adams but the code of Uniswap itself. This form of trust arises from consensus at the tech layer and underpins the foundational values of the crypto world.

Secondly, we find community-based projects that build trust through aligning with a shared set of values and goals. Despite being community-centric, these projects typically involve a central initiator or executor who oversees progress for a significant period. In such cases, trust stems from endorsing common values and goals and the community must agree upon shared values and have faith that the executor, whether an individual, group, or corporation, is similarly committed to those values. It's important to understand that technology's reach is limited; there are numerous areas it can't regulate. In such situations, should an executor wish, there are always methods to bypass the constraints. Here, Web3 technology has a relative role to play, assisting in group coordination and changes in ownership rights, as opposed to enforcing rigid control over all elements of a project. Multiplayer games have also become a prevalent narrative within Web3, despite this arguably being at odds with the initial ethos of Crypto.

It's clear that these scenarios are two ends of a broad spectrum; the world is indeed complex with numerous gray areas in-between. There are a large number of innovators who are working to achieve higher maturity autonomy through technology, so that community-based projects can also have more trust in technology.

But as of today, community-based projects still rely heavily on values to achieve consensus. If an individual or a team attempts to establish a convoluted mechanism to gain community trust, it suggests they haven't attained a widespread consensus on the social layer's values right from the start. In my opinion, for a community-based project, this is a clear harbinger of failure.

Returning to the discussion of NFT projects, particularly PFP NFT projects, do they truly have a consensus on values? It seems highly unlikely. Most NFT projects strive to narrate an appealing story to entice investment, while the majority of community participants are primarily there to profit. The objective appears to be finding the next person to whom one can offload, with no real consensus on values. What about the consensus introduced by the tech layer? With just a collection of onchain/offchain images and many lacking even a community-owned multisig account, there is little to no technical consensus to speak of.

While such projects might maintain a delicate balance of trust for a time, perhaps even exhibiting strong consensus characteristics to draw more participants, this equilibrium is incredibly fragile and can easily topple. The fate of a community-based project is not determined by the project's initiator, but by the community itself. Communities aren't assembly-line products - they need to mature organically, in tandem with their cultural ethos.