Summary
Soulbound Tokens (SBT) are digital identity tokens that represent the traits, characteristics and achievements that make up a person or entity. SBTs are issued by “Souls,” which represent blockchain accounts or wallets, and cannot be transferred.
Introduction
The concept of Soulbound Tokens (SBT) was proposed in May 2022 by Ethereum co-founder Vitalik Buterin, lawyer Puja Ohlhaver, and economist and social technologist Glen Weyl.
The whitepaper titled “Decentralized Society: Finding Web3’s Soul” lays out the foundations of a fully decentralized society (DeSoc) governed by its users and describes how Soulbound Tokens (SBT) can act as the credentials we use in everyday life.
What are SBTs?
Soulbound Tokens (SBT) are non-transferable tokens that represent a person's identity through the use of blockchain technology. This could include medical records, employment history, and any type of information that identifies a person or entity. Wallets that contain or issue these records are called "Souls."
People could have multiple wallets (or Souls) to represent different parts of their lives. For example, someone might have a "Credential Soul" for their work history and a "Medical Soul" for their medical records. Souls and SBT would allow people to build a verifiable digital Web3 reputation based on their past actions and experiences.
On the other hand, Souls can represent an entity that has SBT assigned to it. For example, companies can be Souls and issue SBT for each employee. A digital country club could issue SBT to verify membership status.
The logic behind Soulbound comes from the popular online game World of Warcraft.
Players cannot sell or transfer soulbound items. Once collected, soulbound items are forever bound to the player's soul.
Imagine this idea applied to non-fungible tokens (NFT). Today, most NFTs are certificates of ownership of digital artworks or collectibles, as is the case with Bored Ape Yacht Club. People buy, trade, or display NFTs as a symbol of status and wealth.
SBTs aim to turn the concept of NFT into something that goes beyond money and boast property rights, they seek to be unique and non-transferable tokens. While NFTs represent assets and property, an SBT represents the reputation of a person or entity. Unlike an NFT, SBTs have no monetary value and cannot be exchanged once they are issued to someone's wallet.
How can you use an SBT?
SBTs have a wide range of possible use cases. These are some examples that could find their niche in everyday life.
1. Academic record: When people graduate from college, they receive a certificate as proof of completion of required courses. The university could be a Soul that issues SBTs and the students could be Souls that receive those SBTs. The SBT would store the student's credentials as proof that they passed the relevant grades and are a member of the university. Simply put, the SBT would function as proof of attendance.
2. Job applications: In theory, job seekers could submit their work history and professional certificates in official SBTs issued by the companies they have worked for and institutions where they have studied. SBTs would function as proof of skill certificates.
3. Medical Records: With SBTs containing the person's medical records, the process of changing doctors or healthcare providers could be expedited. Hypothetically, SBT would replace the usually time-consuming process of completing paperwork, verifying medical history, and long phone calls.
How do SBTs work on Web3?
Trust is one of the biggest challenges affecting the Web3 industry. How can you trust a person's reputation in a system designed to be trustless? Let's use borrowing money as an example. Like traditional bank credit scores, SBTs could track a user's DeFi lending history, as well as other metrics that determine their risk profile.
SBTs are also a proposed alternative to voting in a Decentralized Autonomous Organization (DAO). Instead of the current governance model, which is based on how many tokens a member holds, DAOs could issue SBTs that allocate voting power based on users' interactions with the community. This model would prioritize the voting power of the most dedicated users with a solid reputation.
In addition to creating a reputation-based voting system, SBTs could improve the integrity of voting in the DAO, i.e., be a defense against Sybil attacks, one of the biggest threats to the current DAO governance model.
During a Sybil attack, a malicious individual or group overthrows a DAO by purchasing the majority of governance tokens. Those with the most voting power can manipulate voting proposals and steer projects in their favor. The public and verifiable nature of SBTs could help detect and prevent malicious actors from accessing a DAO and, in turn, be a deterrent so that corruption and Sybil attacks do not happen.
What are some examples of SBTs in action?
As of August 22, 2022, SBTs only exist in theory. Glen Weyl, one of the co-authors who contributed to the original SBT whitepaper, believes that early SBT use cases will begin to emerge by the end of 2022.
Binance also recently announced its own SBT called Binance Account Bound (BAB). The BAB token is non-transferable, has no monetary value, and is the first SBT issued on the BNB Chain. BAB aims to address identity verification issues on Web3 and function as a digital verification tool for Binance users who have completed KYC.
In addition to the Binance ecosystem, third-party protocols will be able to use BAB tokens to airdrop NFT tokens, prevent bot activity, and facilitate DAO governance voting, among other use cases.
Conclusions
Los SBT se han convertido en un tema de tendencia en la Web3. En teoría, los SBT podrían permitir a las personas establecer su propia reputación digital y evaluar la de otros en la blockchain. Aún está por verse si un SBT puede funcionar como una versión de "documento de identidad" en la Web3.
