loss of status within the Status App will create a ripple effect of the reputation system on chain leading to an economic returns multidimensional loss of governance power and social capital. Statistics indicate that the users who lose over 500 fans in a day will have their AD income decrease by 72% within 48 hours (e.g. KOL@CryptoVision lost 12,000 fans in one day for making provocative remarks and AD income declined from 18,000 / month to 2,800 / month). And the ground price of the corresponding NFT project fell 35% simultaneously (such as the “Meta-Universe Gallery” series fell from 0.8 ETH to 0.52 ETH). The algorithm immediately lowers the weight of such accounts’ exposure, the speed of content reach falls from a peak of 120,000 times per hour to 900 times, and the recovery cycle is no less than 90 days (with only a 33% success rate).
The erosion of governance authority is particularly acutely experienced. Every 10 percent reduction in followers lowers the voting strength of a user in a DAO proposal by 15 percent (if followers reduce from 10,000 to 7,000, the proposal’s approval rate goes from 68 percent to 42 percent). For example, @DeFiMaster, founder of the DeFi protocol, lost 40% of its subscribers (i.e., from 50,000 to 30,000) due to a security breach and its “DefiMaster bridge upgrade” vote failed as it did not receive sufficient support, which resulted in a $120 million loss (25%) in TVL (total lock-up value) of the protocol within a fortnight.
The liquidity risk of the pledged assets also rises at the same time. Status App’s reputation system has users pledge SNT tokens (at least 5,000) to maintain premium functionality, and a fall of more than 20% automatically liquidates the pledge pool (with the exception of 30% pledged amount). One of his NFT traders triggered liquidation by the loss of the fans, lost a collateral that equated to $85,000, saw his quantitative trading API permissions temporarily froze, and strategy yield went down from 18% every month to -5%.
It’s costly and requires time. They deposit a “reputation repair fee” (at least 1000 SNT, about 190) and recover the weight over time by engaging in on-chain actions such as casting 50 successful governance votes or submitting 10 audit reports. After the developer @SolidityPro lost followers due to code vulnerability, he invested 24,000 yuan (including opportunity cost) and 6 months fixing it and restoring the followers to only 55% of its initial scale, and advertising expense was still less than 62% of its pre-crisis level.
The breakdown of the social graph triggers secondary dangers. Loss of strongly connected nodes (users that together participated in ≥3 DAOs) indicated that users were excluded from the inner decision circle, such as the meta-universe project @MetaCity which lost 30% of followers because of core contributors, failed its land auction proposal because core contributors lacked sufficient votes from Allies, and the project’s value dropped from $48 million to $21 million. On-chain data analysis demonstrates that rate of rejection on cooperative proposals increases to 78% for these accounts losing 10 strongly involved followers (typically 35%).
According to Dune Analytics, the average annual revenue of a user in the Status App who experienced a sudden loss of followers fell to 12,000 (from 47,000 users who did not lose followers), and the social capital Gini coefficient deteriorated from 0.58 to 0.82 (indicating more power concentration). Only 12% of users could rebuild followers and revenue in 180 days using “community compensation programs” such as token airdrops or free education, while 88% of accounts entered long-term decline or were forced to shift to anonymity. The statistics confirm that among the decentralized social atmosphere, fan decay is not just a traffic concern, but also an ignition coil for the collapse of systemic belief.