Soulbound Tokens

Description

1. Via J.P. Morgan:

"(SBT) Proposed by Ethereum founder Vitalik Buterin, SBTs represent a person’s digital identity attributes on-chain. SBTs are encompassed within the Ethereum Request for Comment (ERC) 5114, Ethereum Improvement Proposal (EIP) 4974, and several others. SBTs are a permanent, non-transferable form of a non-fungible token (NFT) that can be seen as an evolution of POAPs (see section below). Entities and individuals, referred to as ‘souls’, can use their Ethereum-enabled wallets to hold and view their SBTs. The SBT could represent a fact about an individual, such as a person’s degree or their professional certification. A collection of these tokens, issued by different institutions and individuals, would form a publicly-verified, on-chain identity of a user. Once a SBT is issued to the wallet of a soul, the SBT is bound to that wallet and represents an attribute linked to the soul controlling that wallet. Unlike verifiable credentials covered in the below section, SBTs are public in nature and can be viewed by anyone."

(https://www.jpmorgan.com/onyx/documents/Digital-identity-assessing-web3s-building-blocks.pdf)

2. Andrey Sergeenkov:

"what if there was a digital token tied to an individual that could not be bought or sold? In May 2022, a concept called soulbound tokens (SBT) was proposed by Ethereum co-founder Vitalik Buterin, economist Eric Glen Weyl and lawyer Puja Ohlhaver to address the current limitations of NFTs and other decentralized structures. Here’s what soulbound tokens are and how they work.

The concept of “soulbound” assets on the blockchain was first discussed in a January 2022 blog post by Buterin. In it, he explained that in the popular fantasy game World of Warcraft there are powerful “soulbound items” that cannot be transferred or sold to another player once picked up.

“NFTs in their current form have many of the same properties as rare and epic items in a massively multiplayer online game,” he wrote, before describing some of their shortcomings. “While transferable NFTs have their place and can be really valuable on their own for supporting artists and charities, there is also a large and underexplored design space of what non-transferable NFTs could become.”

This idea was expanded on by Buterin and his colleagues in a May 2022 paper titled “Decentralized Society: Finding Web3’s Soul.” Soulbound tokens are described as non-transferable digital tokens that represent social identity in a decentralized society,

In the paper’s vision for a decentralized society, accounts called “Souls” will hold or issue SBTs that represent the “commitments, credentials and affiliations” of an individual holder. “Such tokens would be like an extended resume, issued by other wallets that attest to these social relations,” the authors explain In their simplest form, SBTs can be “self-certified” in the same way a person might add their education or employment history to their resume. SBTs could also be issued by Souls representing individuals, companies or institutions, just as a university could award a diploma to a graduate for successfully completing their studies.

Soulbound tokens cannot be bought and sold and are not designed to have market value. Instead, they can be issued by individuals or by another entity to symbolize an accomplishment.

NFT innovation platform Idexo claims that it launched the first soulbound token in April 2021 before the idea was formally named. Its non-transferable Early Adopter NFTs were minted on the Binance Smart Chain and are tied to the holder’s Telegram username.

Idexo also recently added SBTs to its software development kit, enabling the community to create SBTs on multiple blockchain platforms."

(https://www.coindesk.com/learn/what-are-soulbound-tokens-the-non-transferrable-nft-explained/)

More information

• Article: Weyl, Eric Glen and Ohlhaver, Puja and Buterin, Vitalik, Decentralized Society: Finding Web3's Soul (May 10, 2022).

Available at SSRN: https://ssrn.com/abstract=4105763 or http://dx.doi.org/10.2139/ssrn.4105763

"In this paper, we illustrate how non-transferable “soulbound” tokens (SBTs) representing the commitments, credentials, and affiliations of “Souls” can encode the trust networks of the real economy to establish provenance and reputation. ... We call this richer, pluralistic ecosystem “Decentralized Society” (DeSoc)—a co-determined sociality, where Souls and communities come together bottom-up, as emergent properties of each other to co-create plural network goods and intelligences, at a range of scales. Key to this sociality is decomposable property rights and enhanced governance mechanisms—such as quadratic funding discounted by correlation scores—that reward trust and cooperation while protecting networks from capture, extraction, and domination."

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4105763)