Reputation

Any observer can derive a client's or a provider's reputation from their past trade behavior.

The reputation consists of two parts:

• positive reputation, showing in how many trades this participant behaved honestly
• negative reputation, showing the number of trades this participant behaved dishonestly

Clients

In the first protocol step, the client essentially promises that one solution will be paid for, if it's delivered in the specified timeframe. The client can prove payment by posting the preimage in the last protocol step.

Therefore, the client can earn:

• positive reputation by posting a valid preimage for at least one valid blinded solution
• negative reputation by either posting an invalid preimage, or not posting any at all

If that trade only received invalid blinded solutions, or no blinded solutions at all, the client doesn't need to post anything.

A client can also earn negative reputation by posting obviously invalid Asks, for example with negative prices or target difficulty > 255.

Providers

The providers are bound by the blinded solutions they post. If they are unblinded with a preimage, and it turns out the solution was incorrect, the provider is identified as the culprit and will have their negative reputation increased. If instead it turns out the solution was correct, their positive reputation increases.