Vitalik Buterin, Puja Ohlhaver, and Glen Weyl proposed Soulbound Tokens in May 2022. The SBTs is a concept based on the Ethereum blockchain.
This whitepaper explores a ‘fully-decentralized society’ where the users govern. Soulbound tokens are used to prove legitimacy.
SBTs were created to rethink the fundamentals of an online game.
Soulbound tokens are wallets that have medical records and other personal information. It also has a non-transferable token for identifying a person or entity.
You could have a separate wallet for all your credentials or use Souls and SBTs to build a digital web3 reputation.
Souls can represent an organization that allocates SBTs. For example, a company could be a Soul, issuing SBTs to each employee. A digital country club could issue SBTs to verify membership status.
Soulbound items cannot be sold or transferred. Once a player picks up one of these items, they belong to that player forever and can’t be sold or transferred to any other player.
Now, imagine a world where NFTs are used for certificates of ownership over things like digital art or collectibles. NFTs can be traded or shown off as a symbol of status and wealth.
The SBT tokens are different from NFTs in that they represent an entity’s reputation, not property like an NFT. Unlike an NFT, the SBT token is non-transferable and lacks any monetary value.
SBTs are machines that can be programmed to perform various functions. SBTs could be used for many different tasks, including:
People can prove their educational history by getting a certificate from their university. Universities are like issuers of soul-based degrees, and the students would be receivers. Cymatic stores the students’ credentials in our SBTs, proving they have the relevant qualifications and are part of this university.
You could submit all of your previous work histories through certificates that come with SBT or skill-based trust.
Instead of going through the often slow process of paperwork, verifying your medical history, and speaking on the phone with someone, SBT can replace that.
In order to keep lending trustworthy in the Web3 industry, SBTs could be used to track a borrower’s DeFi borrowing history and other metrics.
Systems such as the Swarm Blockchain Tech (SBTs) are used by decentralized autonomous organizations to decentralize authority in a more democratic way. Instead of assigning voting power based on how many tokens an individual has, the SBT assigns voting power based on interactions with the community and reputation. This system prioritizes voting power for those who are most interested in the community through interaction.
There is currently a system of reputation-based voting. SBTs may also defend against Sybil attacks as well as protect the integrity of the DAO governance model.
Due to the public, verifiable nature of SBTs, it is possible to identify and prevent bad actors from entering a DAO and thereby effectively stop corruption and Sybil attacks.
It was debated whether SBT would exist by 2022. As of August 2022, there are no SBTs on paper. By the end of 2022, early use cases might arise with SBT.
With BAB tokens, Web3 users can verify their identity and receive access to the Binance platform. They are non-transferable tokens and have no monetary value. They are a digital verification tool for those who have already completed KYC.
Binance, along with third-party protocols, will use BAB tokens for various purposes, such as airdropping NFTs, preventing bot activity, and facilitating DAO governance voting.
With a blockchain-based system, SBTs could give Web3 users an in-app identity card. It is to be seen if such a system can work like Web3’s version of the identity card.