Summary

Soul-Bound Tokens (SBT) are digital identity tokens that represent the traits, characteristics and achievements that make up a person or entity. The issuer of the Soul-Bound Token is the “soul” representing the blockchain account or wallet, and the Soul-Bound Token cannot be transferred.

Introduction

May 2022 , Ethereum founder Vitalik Buterin, lawyer Puja Ohlhaver, and economist and social technology expert E. Glen Weyl proposed the concept of Soul-Bound Tokens (SBT).

White paper "Decentralized Society: Searching for the Soul of Web3", for a fully decentralized society (DeSoc) for user autonomy It lays the foundation and explains how Soul-Bound Tokens (SBT) can play the role of credentials in our daily lives.

What are soul-bound tokens?

Soul-Bound Tokens (SBT) are non-transferable tokens that use blockchain technology to represent individuals. identity. Soul-bound tokens may include medical records, employment history, and any other information that identifies a person or entity. The wallet that holds or issues these records is called a "soul".

People can have multiple wallets (or souls), representing different aspects of their lives. For example, people can have "credential souls" that record work resumes, and they can also have "medical souls" that record health records. Souls and soulbound tokens allow people to build a verifiable digital Web3 reputation based on past actions and experiences.

Souls, on the other hand, represent entities that distribute Soulbound Tokens. For example, the company can assume the role of soul and issue soul-bound tokens to each employee. Digital country clubs can issue soul-bound tokens to verify membership.

The logic behind Soulbound Tokens comes from the popular online game "World of Warcraft".

Players cannot sell or transfer soulbound items. Once bound, the soulbound item is forever "bound" to the player's "soul".

Now, imagine what it would be like to apply this idea to non-fungible tokens (NFTs). Now, most NFTs are digital art or certificates of ownership for collectibles like the Bored Ape Yacht Club. People buy, trade or show off NFTs as symbols of status and wealth.

The goal of soul-bound tokens is to transform the concept of NFT into something beyond money and bragging rights, making this A token is not only unique but also non-transferable. NFT represents assets and property, while SBT represents the reputation of a person or entity. But unlike NFT, SBT has no monetary value and cannot be traded once it enters the wallet.

How to use soul-bound tokens?

The potential uses of Soulbound Tokens are vast. Let’s look at a few examples below to see how they can be used in daily life.

1. Educational background - Students will receive a diploma when they graduate from college, proving that they have completed Required courses. The university can act as the soul that issues the soul-bound tokens, and the students are the souls that receive the soul-bound tokens. Soul-bound tokens will store students’ certificates, proving that they hold relevant qualifications and are students of the school. In short, soul-bound tokens will serve as proof of attendance.

2. Job Application - Theoretically, job seekers can submit previous employers and organizations Official soul-bound tokens issued to prove their work experience and professional certifications. Soulbound Tokens will serve as proof of skill certificates.

3. Health records - Use soul-bound tokens that save personal health records to speed up changing doctors or medical treatments Healthcare provider speed. It is envisioned that soul-bound tokens will replace lengthy processes such as filling out paper documents, verifying medical history, and communicating over the phone.

How do soul-bound tokens work in Web3?

Trust is one of the major challenges affecting the Web3 industry. What if you trusted the proof of your personal reputation provided by a system designed to be trustless? Let’s take a loan as an example to illustrate. Like traditional bank credit scores, Soulbound Tokens can track a user’s DeFi loan history and can also determine other indicators of a user’s risk profile.

Soul-bound tokens are also a recommended alternative for voting on Decentralized Autonomous Organizations (DAOs). The current governance model is based on the number of tokens held by members, but the DAO does not adopt this governance model. It can issue soul-bound tokens that allocate voting rights based on the interaction between users and the community. This model prioritizes voting rights to the most dedicated and reputable users.

In addition to creating a reputation-based voting system, soul-bound tokens may also improve the integrity of DAO voting, which means that they can resist Sybil attack, this attack is one of the biggest threats facing the current DAO governance model.

During the Sybil attack, individuals or groups of bad actors overthrew the DAO by purchasing the majority of the governance tokens. Individuals or groups of bad actors with a majority of the voting power can manipulate voting proposals and steer projects in their favor. Because soul-bound tokens have the characteristics of publicity and verifiability, they can help discover and prevent criminals from entering the DAO, thereby preventing corruption and witch attacks from occurring.

What are the usage examples of soul-bound tokens?

As of August 2022, soul-bound tokens are still in the theoretical stage. Glen Weyl, one of the co-authors of the original soul-bound token white paper, believes that there will be early use cases of soul-bound tokens by the end of 2022.

Recently, Binance also released its own soul-bound token, named Binance Soul-Bound Token (BAB). Binance Soul-Bound Tokens are non-transferable and have no monetary value. They are the first Soul-Bound Tokens issued on the Binance Coin Chain. The Binance Soul-Tethered Token aims to solve the identity verification problem in Web3 and provide digital verification tools for Binance users who have completed identity authentication.

In addition to the Binance ecosystem, third-party protocols will also be able to airdrop NFTs using Binance Soul-bound tokens to prevent bots , facilitate DAO governance voting, and can also be used for many other use cases.

Summary

Soul-bound tokens have become a hot topic in Web3. In theory, soul-bound tokens could allow people to build their own digital reputations and evaluate the reputations of others on the blockchain. However, it remains to be seen whether the soul-bound token can serve as the Web3 version of the “ID card”.