Introduction
Soulbound Tokens (SBTs) were proposed in May 2022 in a whitepaper entitled “Decentralized Society: Finding Web3’s Soul,” by economist & social technologist E. Glen Weyl, lawyer Puja Ohlhaver, and Ethereum creator Vitalik Buterin.
Soulbound Tokens, and that which they inspire, stand to shape Web3’s path forward in a meaningful way. They are the proposed building blocks that could reshape how we relate to one another, build and manage communities, communicate reputation, and more. What is just an idea today might one day become part and parcel of our Web3 lives and beyond.
👻 What are Soulbound Tokens?
SoulBound Tokens(SBTs) are a primitive, or foundational building block, in an emerging Web3 trend known as the Decentralized Society.
DeSoc sits at the intersection of politics and markets and, much like the wider Web3 context into which it fits, is based around principles of composability, bottom-up community, cooperation, and emergent networks that are owned and governed by network users. It aims to augment Web3’s trajectory toward hyper-financialization to something more inclusive, democratic, and decentralized.SBTs are an essential feature of DeSoc.
Soulbound tokens (SBT) are non-transferable, publicly-verifiable digital tokens that can act as a type of CV for web3 users, showing an individual’s memberships, credentials, and affiliations.
The idea stemmed from the popular video game, World of Warcraft, which rewarded users with items known as 'soulbound', that can't be traded or sold to other characters.
Unlike NFTs and other cryptocurrencies that can be traded on the open market and transferred from one wallet to another, soulbound tokens as the name implies, are permanently bound to a wallet or account for its entire lifespan. Such wallets or accounts that host soulbound tokens are referred to as "Souls.”
Imagine having a blockchain account (Soul) that stores immutable records like educational credentials, employment history, or works detailing a person's experiences. Similar to a CV, SBTs can help to build a user's digital reputation among web3 solutions.
For example, your high school could have a Soul that issues diplomas as SBTs to its graduates, all of whom have Souls that hold their respective diploma SBT. You receive this SBT in your Credentials Soul, where you also hold SBTs for your Girls Scouts badges and National Honors Society SBTs. This Credentials Soul, however, is separate from your Identification Soul, which holds your drivers license and passport.
How do Soulbound Tokens (SBTs) work?
Soulbound tokens function in a similar manner to NFTs apart from their non-transferability, which is also why Ethereum creator Vitalik Buterin refers to them as non-transferable NFTs. They are non-fungible i.e they can't be interchanged, with each token being unique and non-transferable.
Souls can issue self-certified SBTs to themselves. However, a prevalent process is when other Souls or SBT creators issue an SBT to another Soul's address. The SBT, its issuer, and Soul's address can be publicly verified on the blockchain. Hence, anyone can easily track or prove the trust circles of a particular Soul.
What happens if you lose your Soul?
So what happens if your Soul wallet is hacked? Or if you lose the key to your Soul address? With thefts rampant within the NFT community, it’s vital to have proper safeguards or contingencies in place to prevent bad actors from taking identity theft to a whole new level.
Buterin has proposed community-wide adoption of the social recovery model to prevent SBT thieves. With social recovery, users can appoint a set of individuals or institutions as “guardians” who have the ability to access and change the private keys to their wallet should it get compromised. However, an individual would be hard-pressed to recover stolen SBTs if the people they appoint as guardians pass away or if their relationship breaks down.
What are the use cases of SBTs in everyday life?
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Medical record management- Switching doctors or insurance providers can be a frustrating experience. It requires spending hours on the phone requesting medical history, verifying your identity, and trying to remember if you used your mother’s maiden name or the street you grew up on as a security question. SBTs would render this cumbersome process obsolete with something like a medical Soul that holds all of your medical records. - 💧
Souldrops- Crypto projects usually form new communities by launching airdrops or carrying out token sales. But this process is often subject to Sybil attacks and it fails to attract the right community. With the concept of Souldrops as mentioned in Vitalik Buterin's whitepaper, projects can attract the right communities by conducting airdrops based on computations from the SBT or other tokens within a Soul. - 📜
Digital CV- health institutions have encountered a series of events where inexperienced medical personnel lie about their CV, and eventually, administer wrong medications to patients during employment.SBTs solve these challenges since they can serve as a digital CV that can be publicly verified.
When will SBTs be available?
SBTs could be available by the end of 2022, according to Jason Levin, who interviewed the paper’s co-author, E. Glen Weyl.
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