For the past few months, a new type of non-fungible token (NFT) with new features has been attracting interest in the ecosystem. Soulbound tokens (SBT) are non-transferable tokens, they represent a person’s identity using blockchain technology. This concept would solve issues related to identity and data storage, but still requires some adjustments.
SBT what is it?
The idea of Soulbound Tokens SBT was theorized by Vitalik Buterin in January 2022. On May 11, 2022, he published a manifesto “ Decentralized Society: finding the soul of Web3.”
These are NFTs linked to the address on which they are issued.
They are non-transferable, once received, and remain forever in a soul wallet. They have no monetary value and cannot be exchanged once issued in someone’s wallet.
They represent the identity of a person (medical record for example) useful to a company to reference its employees or for memberships in associations or others using blockchain technology.
According Binance Academy :
“Soulbound Tokens (SBT) are digital identity tokens that represent the traits, characteristics, and accomplishments that make up a person or entity. SBTs are issued by (Souls), which represent blockchain accounts or wallets and cannot be transferred. »
Use cases with the different types of souls:
medical souls
Health records that bring together a person’s medical records: changing doctors, making appointments and appointment reminders could be issued more quickly with an SBT that would replace the long, complex and expensive.
Accreditation Souls
Schooling
To validate attendance, results and graduations.
It would replace resumes
This system would simplify the updating and sending of CVs.
Skill certification
Job applicants could thus present all their work history and professional certificates using official SBTs issued by previous companies and institutions.
Guarantee the profile of people who integrate a DAO thanks to the public and verifiable nature of SBTs.
Governance
If the goal is a large-scale distribution of governance power, then transferability is counterproductive, because concentrated interests are more likely to buy governance rights from everyone else.
Digital reputation on social networks to avoid fake profiles.
This individual reputation could also make it possible to dispense with the usual guarantees to grant certain loans in DeFi. The interest in a loan like this is that in the event of default, a borrower’s reputation could be tarnished.
Conversely, a honored loan could be rewarded with the award of an SBT.
In the event of repayment of the entire amount borrowed, the borrower may burn the Soulbound Token or replace it with proof of payment.
The advantage is that this constitutes a sort of “credit risk” rating.
Gamefication: sort of CV of the player’s journey and results
The player will therefore be able to have his entire journey and his results gathered in this token.
Subscriptions
Newspapers, gym, etc.
Legitimacy of an artist and to certify his works
Indeed, the artists seek to be able to guarantee to collectors the origin of the works.
For the sale of tickets, or access to events, which we want non-transferable
With Soulbound Tokens, it will not be possible to transfer this access.
Presence
Buterin points to the “Proof-of-Attendance” protocol (PoAP), a mechanism that distributes crypto-badges to indicate that a user has personally attended an event.
Metamask, Binance, Cobo and Gnosis launch SBTs for identity verifications.
SBT issues
The use of SBT is not without risks and can lead to privacy issues.
This is why they must be coupled with solutions preserving anonymity.
Issuers of some SBTs could choose to make them public or not, while others, such as passports or medical records, or confidential, would only have unilateral permission to the Souls holding these SBTs as a data storage solution.” off-chain” is envisaged, so an individual could reveal the contents of one of his Soulbound Tokens only when he wishes.
There is also a problem of discrimination and targeted cyber attack.
There is also a risk of losing your “Soul” or risk losing all your very precious single-issue SBTs, such as diplomas. Recovery solutions will have to be put in place. Purists are considering a network validation solution to be able to vote for the return of the account.
They are excluded from the future European MICA regulation, under point 8a non-transferable digital assets will be excluded from the scope.
However, SBTs would also be revocable by the issuer through a burn.
Conclusion
As you will have understood, STBs seem to be a promising solution for many web problems. However, the implementation of these non-transferable tokens still requires adjustments before being applied. For Vitalik Buterin: ” Attach certain elements to identity objects that users cannot [ou ne veulent] not exchange seems like the most promising path, but there are still challenges to make this easy to use, private and secure “. ” We need to put more effort into thinking about and resolving these issues. If we get there, it opens a much wider door for blockchains to be at the center of ecosystems that are collaborative and fun, and not just about money. »
Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of daily and weekly so you don’t miss any of the essential Tremplin.io!
