The issue of information production is not exactly new to the blockchain space. Ethereum-based prediction market icons Augur and Gnosis have made it their business to reward those who hold valuable information when they act upon it, effectively imparting that information to the public.

Inspired by this, we’ve taken a two-pronged approach to solving the problem of information around remote producers seeking capital. We call this approach “Divine.”

The first part involves the initial establishment of a reputation score — like a credit score. When you apply for your first credit card, you don’t tend to have any credit history. In the same sense, when a new producer attempts to use Topl, they don’t have any established history on the system.

The standard action would be to assign a default “starting score” to each new producer. And this is what we do, to begin. However, this by itself is insufficient. Especially early on in the system, any producer is a new producer.

We need to establish a gradient of risk even early on so that investors can have a reasonable choice between risk levels. Topl accomplishes this by defining a procedure to incorporate information from untrusted parties: namely, a prediction market. We call this process “bootstrapping”.

Prediction markets have some nice properties. They enable the integration of private information into public sentiment without exposing that information. This means that someone with confidential information is inspired to affect the prediction market simply due to profit motive without risk of exposing information, if they’d like. Further, prediction markets allow for rapid integration of new information on the basis of the perceived legitimacy of the information. This rewards those actors who can discern, and therefore act on, truly legitimate information and penalises those who cannot. Over time, this creates an environment where those with the most power and desire to affect the marketplace are those with the best information.

Topl exploits these advantages to encourage and reward information production about parties who likely have few official and obtainable records. Today’s due-diligence firms and middlemen can become tomorrow’s information providers by staking arbits (the network arbitration token) on a producer’s legitimacy vis-à-vis their ability to fulfil their contractual obligations.