With investment from Animoca and YGG, Shards Protocol uses an AI on-chain reputation system to incentivize "silent contributions."
Transform on-chain contributions into reputation and rewards.Author: momo, ChainCatcher
Yesterday, the Web3 reputation and rewards system Shards Protocol announced it has raised $2 million, with investments from Animoca Brands, Kyber Ventures, and strategic investment from Yield Guild Games. This funding is primarily aimed at advancing the development of its core product, the on-chain identification layer Aura.
Transitioning from Tool Layer to On-Chain Identification Layer
Shards Protocol initially started as a software development kit (SDK) layer, known as Shards.Tech, focusing on helping game studios improve player retention and in-game average spending. Specific features include allowing anyone (players, non-players, speculators, or community members) to purchase a share of a game team and trade it freely in the market, thereby enhancing user engagement and the game economy.
According to Shards Protocol, after integrating Shards.Tech, multiple games achieved a transaction volume of $400,000 in 2024. Games that integrated Shards.Tech saw player retention rates increase by over 200% and in-game average spending rise by over 100% in 2024.
Currently, Shards has expanded from Shards.Tech to Shards Protocol and launched its core product, Aura. Aura is an identification layer that converts on-chain contributions into reputation and rewards.
What is the model of Aura?
Aura aims to generate verifiable reputation and rewards by analyzing users' on-chain behavior, addressing the lack of recognition for meaningful on-chain activities in the Web3 ecosystem.
Its core components consist of two parts: first, soul-bound badges. These record users' on-chain activities (such as trading, staking, minting, and governance participation) in areas like DeFi, NFTs, and gaming through non-transferable tokens, serving as proof of users' on-chain identity and contributions, enhancing the verifiability of reputation.
Second, the AI-driven reputation engine. It analyzes users' on-chain data using artificial intelligence to generate a multi-dimensional Aura score, providing a transparent behavior-driven assessment. The score is primarily based on three dimensions:
- Reputation: Evaluating wallet age, transaction diversity, and consistency.
- Expertise: Measuring the depth of participation in DeFi, NFTs, gaming, etc.
- Loyalty: Tracking long-term engagement and sustained contributions to platform assets.
For users, Aura scores, badges, and other identity markers can be integrated into the X platform via a browser extension, publicly displaying on-chain reputation, transforming passive data into social capital, enhancing visibility and trust within the Web3 community, and obtaining rewards at a low cost, thereby increasing the practicality of on-chain identity.
Aura mentions that the main rewards include:
- USDT rewards, where users can receive direct USDT payments by participating in high-risk, merit-based lottery activities.
- Token airdrops, where eligible users can receive token airdrops from ecosystem partners based on badge activities and verifiable participation.
- Whitelist access, where users holding specific badges can secure spots for exclusive token launches, NFT minting, or early protocol participation.
- Early access to products or events, where high-reputation users can prioritize experiencing new dApps, features, or limited-time events.
- Exclusive partner benefits, where badge holders can unlock enhanced earnings, premium access, and invite-only community privileges.
For projects, accurately targeting users based on badge types and Aura scores can improve user acquisition efficiency and return on investment.
Technically, Aura primarily utilizes sharding technology (OSADA and SFlow) to optimize cross-chain transaction efficiency, combining PoS consensus and random validator allocation to ensure security.
Aura aims to redefine how Web3 users engage through the on-chain identification layer, providing visibility and rewards to "silent contributors," while offering efficient community-building tools for project teams.
What participation opportunities do users have?
Shards Protocol mentioned in its funding news that it plans to expand the functionality of its core product Aura and prepare for TGE within 2025.
Currently, the official website has opened the minting of soul-bound badges, with a minting cost of approximately 0.0005 ETH (about $1-2). Aura will provide airdrop rewards based on tracked on-chain behaviors such as staking, trading, minting, and governance participation.
