Leviathan Smart Contract: A Theory of Trust in Web3

1. The question of trust — central in sociology. It was formulated by American sociologist Talcott Parsons, under whose influence the “Hobbesian problem” entered scientific discourse. It is framed as: how is social order possible? As we will see, trust between people is a crucial part of the solution.

Philosopher Thomas Hobbes, who lived through the English Revolution and witnessed the collapse of the familiar social order, arrived at the following conclusions in his work Leviathan, or The Matter, Form and Power of a Commonwealth, Ecclesiastical and Civil (1651). Humans are bodies with carnal passions, but also endowed with reason. From this, one understands that people want to live in safety and prosperity. But the presence of passions leads to the fact that one individual can never fully trust another. Therefore, in the natural — pre-civil, pre-state — condition, people live in a regime of “war of all against all.” How, then, can safety be guaranteed if each of us has his own interests and aims? Hobbes’s answer is striking in its simplicity and paradox.

He argues that secure interaction without external tools is impossible. Therefore, Hobbes contends, people delegate part of their natural rights, including the right to liberty and life, to a sovereign — a supra-human institution arising from the social contract. This entity is capable of coercion, as it is stronger than everyone and each individual. The sovereign may take the form of state power.

Thus, trust between people is possible because there exists a supra-human entity that acts as a guarantor of security through its coercive power. This idea was developed by Lawrence Kohlberg in his Theory of the Development of the Moral Subject and by Tolcott Parsons in his Theory of Social Order.

2. Trust comes in different forms. Sociologists distinguish three types:

• interpersonal trust. It rests on direct experience of communicating with a particular person: a friend, a relative, a shop assistant from the nearest store. No external confirmations are required in this case;
• institutional trust. Here a person trusts a representative of an institution on the basis of the general reputation of social institutions, for example, government bodies. It is eroding worldwide, but in Russia — especially. For instance, during the Covid-19 pandemic distrust of the healthcare system was revealed; in countries where it was traditionally high, similar distrust occurs to a lesser extent;
• generalised trust. For example, towards a territory. In urban environments this type of trust is particularly pronounced. In the 2010s, parents of underage children were willing to let their child roam central Moscow unsupervised, even though in their own residential district they would not even permit a walk in the yard. And this despite objective crime rates within the Garden Ring being significantly higher than on the outskirts. This demonstrates generalised trust in “people in the centre.” Another example — a Harvard graduate, in general, trusts people from Ivy League universities more than others.

Modernity and industrialisation were, in many ways, built on the latter type. In the post‑industrial era, a caste society returns, based on generalised trust toward members of one’s own social stratum.

3. Organisations cannot function without trust. DAO participants trust not each other but the mechanism by which consensus is reached. Yet it is not flawless and, evidently, it cannot be so. Therefore no DAO will function without external mechanisms of coercion, as Hobbesian theory would have it. In traditional companies, for instance, shareholders can initiate a change of the board of directors if there is suspicion they act not in the interests of stakeholders.

No interaction can exist in a state where trust is not backed by anything. This is likely the insoluble problem of blockchain.

4. Rationality underpins behaviour aimed at group and human welfare. It can be divided into two types:

• formal rationality, prioritising self-interest;
• substantive rationality, for which belonging to a particular group is the priority.

An example of substantive rationality is the provision of zero-interest loans by ethnic banks, where value shifts from self‑enrichment to fulfilling obligations to the community or clan. This is one possible path for the development of a DAO.

5. The processes now visible in Web3 resemble those that swept European society at the turn of the 19th to 20th centuries. Rapidly growing cities were incomprehensible to new residents. Web3 today similarly seems bewildering. As German philosopher and sociologist Georg Simmel wrote, the city differs from the countryside in the number of people and the intensity of processes. One must adapt, adjust thinking, to interact successfully with others in new conditions.

The city is anonymous. In it you may do what you would not dare in the village, where everyone is known to everyone. The city is a space of formal rationality, oriented toward self‑interest. In the village, by contrast, one must take into account many traditions and customs.

Yet gradually the city sheds anonymity. Urban studies emphasise the importance of city communities: they are cultivated and developed. Interestingly, Web3 also shows a demand for deanonymisation. We observe a trend toward distinguishing “proper,” “verified” and “improper,” “suspect” wallets — these are elements of the reputation institution. Perhaps in the future the main condition for trust will be the digital trace of a person.

6. Smart contracts will not save us from irrational decisions. Such mechanics are a tool against cheating, which will inevitably occur because, when there are large economic risks, agents tend to take risky and harmful actions for the organisation. The code is imperfect, and the problem here is not technical but social. More often than not a person is not and cannot be an expert in all the spheres in which they participate. A user does not read the DAO’s smart contracts they join. The code has passed an audit by an independent firm with a solid reputation? Excellent, I’m in!

A new form of trust arises in institutions that lie above Web3 and are not part of the smart contract. People are irrational in their electoral trust. After all, don’t people vote for the president of their country based on a marketing brochure with emotional slogans? A vast body of sociological research shows that majority voting is not the best way to make decisions. Yet, at present, it remains the most effective.