SBT Soulmates
A quick overview of Soul Bound Tokens
Introduction
ArtGeebz’s article (and the Genesis blog post for the one2three substack), “The POAP Vending Machine”, got my wheels turning on the potentials for SBTs. That’s when I realized I don’t know very much about them…
In May of 2022, Ethereum co-founder Vitalik Buterin, E. Glen Weyl, and Puja Ohlhaver proposed a new concept called "Soul-bound Tokens" (SBTs) in a white paper titled "Decentralized Society: Finding Web3's Soul", which describes a new type of non-transferable tokenized digital asset on the Ethereum blockchain.
Quick refresher - Ethereum is a decentralized, open-source blockchain platform that enables the creation and execution of smart contracts and decentralized applications (dApps). The Ethereum blockchain provides a secure and decentralized platform for storing and executing smart contracts, allowing SBTs to be transferred and owned transparently and securely.
SBTs are "soul-bound," meaning they cannot be transferred to another address without the owner's permission. This makes them appealing to users who want to protect their digital assets from being stolen or lost. They were designed to help encode trust networks within real economies by facilitating the ability to establish provenance and social reputation. The white paper also introduces the concept of DeSoc or ‘Decentralized Society’ and how SBTs can enable decentralized applications like community wallet recovery, sybil-resistant governance, and more.1
Spartan Labs published an extensive article covering SBTs and their vision, succinctly highlighting the need for SBTs to enable social composability on-chain:
“1.1 Problems in the Web3 space
The economic value of the world is largely produced by people and their interdependent relationships. Being a system that is fully run by mathematical and cryptographic functions, Web3 lacks the primitives to represent such social relationships and identities, which resulted in its dependence on the centralised Web2 infrastructure that it originally aimed to disrupt.
The core aspects of trust and ownership should be on-chain in order to enhance social composability in the world of smart contracts, which could open many possibilities for decentralised applications. "2
Dalle-2 “Rendering of the inside the Ethereum blockchain, digital art”
How SBTs work
To create Soul Bound Tokens (SBTs) on the Ethereum blockchain, developers first need to write and deploy a smart contract that defines the rules and characteristics of the SBT. This smart contract acts as a template for creating individual SBTs, which are then minted and issued to specific Ethereum addresses.
The main differences between regular non-fungible tokens (NFTs) and Soul Bound Tokens (SBTs) are that SBTs are permanently non-transferable and can contain private data. Additionally, if you lose access to your SBTs, there is a system called Community Wallet Recovery that can help restore access.
It's important to note that the use of SBTs and other non-fungible tokens (NFTs) is a rapidly evolving area of the cryptocurrency industry, and there is ongoing debate about their potential uses and value.
Potential uses of SBTs
As is the case with NFTs, the possibilities for SBT use-cases seem endless. Below are only some of the use-cases Crypto communities are openly discussing:
Academic/Certifications
KYC
Governance/Voting
Membership Access
Criminal History
Medical Records
Some projects are already using SBTs as a solution for on-chain identity. For example, as of Fall 2022, Binance launched the Binance Account Bound (BAB) token, a non-transferable and non-financialized token based on the company's native BNB chain. Users whose identities have been verified through the platform's know-your-customer (KYC) process can mint the SBT directly on their Binance digital wallets. BAB will serve as KYC credentials, indicating that a user's identity has been validated. Third-party protocols can also use BAB to airdrop NFTs and prevent bots.
While SBTs hold tremendous social and economic promise, they also hold potential for fraud and harm as we have seen countless times in the NFT space. Equally alarming is the potential for Governments to issue SBTs to surveil, limit and control individuals.
Conclusion
One of the appealing aspects of blockchain technology is that it is considered "trustless," meaning that it does not rely on central authorities or intermediaries to facilitate transactions. Soul Bound Tokens (SBTs) have the potential to introduce a new layer of trust within this trustless system by allowing individuals to verify their personal information and achievements. I'm interested in seeing how existing protocols will incorporate SBTs and what new companies will emerge to support this growing social trust layer in the Web3 space.
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
Jun Hao Yap and Yong Kang Chia , The Construction of the Soul Part 1: The ABCs of SBT (September 7, 2022). Available at Medium.com: https://medium.com/the-spartan-group/the-construction-of-the-soul-part-1-the-abcs-of-sbt-5f7776a88479#c175
I want to collect one2three POAPs and SBTs now!!