Sybil Resistance

Liquidity is the life blood of a network. Liquidity creates the utilization, fee and value dynamics necessary for a healthy game theory model. Liquidity incentive programs are designed at the application or network (metal) level with an aim to drive long-term growth at a positive ROI relative to token & network value.

tl;dr:

• Highlighting natural activity and increasing incentives for non-automated actors improves reward distribution.
  
• Redistributing value created by automated actors into the network-wide momentum improves incentive value for all.
  

One of the biggest threats to this is Sybil attacks.

For a successful incentive program, the goal is to create a pool of sticky users who continue to gain value and use the network after incentives are removed. This means the incentive programs must be difficult or impossible to exploit. While automation has its place, the adversarial competition of "who can build the better bot" emerges in a race to the bottom, often disrupting the natural experiences of non-bot using participants.

The most straight forward path to sybil resistance is not by penalizing Sybil attackers, rather it's by rewarding the most organic participation that map to long term use. Methods include:

• User Engagement - Measured through loyalty (historic participation), badges, referral (vouching), social signals (Twitter), account fingerprinting
  
• Community Engagement - Measured through connected social signals and session fingerprinting
  
• Economic Engagement - Measured through participation, volume (weighted in slashing and drifting)

It is common knowledge that it is unlikely that novice users provide significant trading volume relative to more experienced traders, which as a trade off, it is likely that experienced traders diversify activity in an attempt to avoid sybil detection. Increasing the participation dimensions to activities that can't be historically manipulated acts as a neutralizer against attacks.

Governance mechanisms also improve sybil resistance, though I am against the non-automatically-executable props, social exhaust created around proposals and votes; I do believe vote escrow gauges and bribing fixes this, though difficult for most users to operate. Using a volume weighted approach to allow momentum to act as consensus, implicitly for autonomously creating economic outcomes is a network wide benefit even with sybil super users - see Plug.

Using transaction momentum as a form of implicit consensus bypasses the social overhead of explicit governance while still achieving network-wide coordination -- a natural path to find equilibrium rather than discrete voting.

Plug's implementation of this approach demonstrates how even with potential sybil actors or script users, the system can still produce beneficial economic outcomes. The key is tapping into the natural participation weighted friction, ensuring that incentives align such that even strategic behavior by automated actors contributes to rather than extracts from the network.

Swap Harder.