SoulBound Tokens — The Way To Decentralized Society?!
Vitalik Buterin — co-founder of Ethereum has just published a 37-page research paper (white paper) on SoulBound Tokens (SBTs). SBTs are the way to a Decentralized Society (DeSoc) according to Buterin and his co-authors. Let’s find out about “Soul”, SBTs, their applications in society and web3, their risks, and how can the “Soul” be secured.
What are SoulBound Tokens (SBTs)?
Soulbound Tokens are NFTs that function as real-life achievement badges, similar to what you’d obtain in a video game after completing a task or reaching a goal. Buterin envisions these badges as a method to demonstrate your career history, education, and other real-life talents, rather than as a reward for getting your character to the max level.
How do SBTs work?
On the blockchain, Soulbound Tokens are essentially your resume. Yes, anyone can claim to have attended Oxford by adding it to their Facebook profile. However, in order to make that claim using SBTs, Oxford’s “Soul” (their wallet) would have to award your “Soul” an SBT of a diploma.
As proof of affiliation, SBTs can be issued among members of a group or institution. SBTs can be used as digital portfolios by artists, writers, and other creatives. Your corresponding SBT would serve as a manner of certifying those achievements to the others, even if it’s for something as niche as becoming the world’s leading expert on the fingerboard.
It would be nearly impossible for anybody to claim fraudulent credentials as a result of this. “The tokens could help tackle some of the problems affecting decentralized finance, such as scams and theft,” Buterin and his co-authors wrote. Here is where they feel the mechanism’s true power lies.
SBTs, unlike standard NFTs, will be non-transferable and so cannot be acquired through trade. Users will, however, be able to revoke their SBTs at any time.
SBTs will be used for what?
Credit & Voting
The tokens serve various purposes in addition to expressing our personal information and making it impossible for scammers to mimic us. They might be utilized for event ticketing, unique airdrops (a.k.a. “Souldrops”), or even credit score tracking because they’re non-transferable.
SBTs could be applied to the voting system as well. Buterin once said: “Decentralized governance is necessary, but doing it through coin voting carries many risks that are or have not been discovered. The solution’s core is to change or replace voting with coins”. Instead of a DAO architecture that benefits large holders of governance tokens, Vitalik suggested that we employ soulbound tokens for voting. Because soulbound permits are not marketable, this can prevent staking pools from collecting tickets from other users.
In some ways, this may appear scary. In their article, the authors admit that a database of SBTs may be used to “automate redlining of disfavored social groups or even target them for cyber or physical attack, impose restricted migration restrictions, or create predatory loans.” This is one of the reasons why users can request that their SBTs be revoked or that they be hidden from the public if necessary.
In Web3 World
With SBTs, the Web3 community will be able to determine for themselves whether a project’s developer is trustworthy, allowing them to make more educated judgments about which projects to support.
In Web3, SBT could play a big role in decentralized ID, where one unique wallet represents solely one person, and no one can alter and fake it. The “Soul” of one’s wallet would store your life record here as the real-life one. If one person passes away in real life, their “Soul” will die as well. This wallet “soul” will not transfer to anyone else, since it only represents uniquely one person.
Especially, SBT would act as a complementary factor to NFTs to make the world of Web3, Metaverse, SocialFi, more interesting, collaborative, balanced, and fun. Since NFTs are transferable but take a big part in Web3 spaces, they make everything more money-oriented. Being unique but not really unique. The NFT could represent the owner’s financial capacity, reputation, etc, but once it is transferred to the new owner, it’s not especially meaningful to one person anymore. However “Soul” stays, SBTs only belong to that person via the proof of attendance protocol, forever be uniquely special to that individual.
What happens if your Soul is taken away from you?
To avoid SBT thieves, Buterin has advocated a community-wide adoption of the social recovery concept. With social recovery, users can choose a group of people or organizations as “guardians” who will have access to and modify the private keys to their wallet if it is ever hacked. However, if the people they appoint as guardians pass away or if their relationship falls apart, it will be difficult to recover stolen SBTs.
Buterin believes that by allowing a larger community to participate in the recovery process, SBTs will be more easily recovered in the event of theft. According to the authors, “recovering a Soul’s private keys would require approval from a qualified majority of a (random subset of) Soul’s communities.”
What do you think about the SBTs application? Give us some more cases where SBTs would work!
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