Ethereum creator Vitalik Buterin recently proposed a new kind of token standard that will help users gain insights into others’ real-world activities, accomplishments, likes and dislikes – something like a glimpse into their soul.
Buterin’s soulbound tokens (SBTs) are non-transferrable NFTs held by unique crypto wallets called Souls. In the paper Buterin co-authored to introduce the concept, he described multiple ways SBTs could be used – as university degrees, education credentials, and as web3 credit scores.
Instead of a web3 hiring manager calling up your alma mater or checking LinkedIn, he could check your on-chain resume for a transaction showing the university’s Soul transferring you an SBT. As Buterin writes, “‘Souls can encode the trust networks of the real economy to establish provenance and reputation.”
SBTs have the ability to decentralize power away from major institutions and companies and towards the users – instead of a private database owning your credentials, you would own the keys to your credentials.
On-chain credentials are already being used by companies like 101 and RabbitHole. Ben Yu told The Defiant that his team at Curious Addys will soon be using SBTs for their web3 Q&A platform Curious.xyz to help users build on-chain reputations for answering questions.
Paper co-author Glen Weyl told The Defiant he believes that SBTs could be in early use by the end of 2022 and that he suspects the “2024 up cycle will focus on them”.
But judging from early community feedback, there are still some wrinkles to iron out in the Soulbound Tokens idea for it to really take off.
First is every crypto-native’s nightmare: losing access to your wallet. It’s bad enough when the address holds digital assets, but what happens if you lose access to your Soul – is your SBT university degree gone forever?
The paper’s co-authors proposed an idea called community wallet recovery, meaning that recovering a Soul’s private keys would require members from the Soul’s communities to consent.
Still, this solution would only work for those deeply ingrained and involved in crypto projects and would not be very useful for newbies just getting started who don’t have a network that can vouch for them.
Also, what happens if someone sends your Soul unwanted SBTs? Are you stuck with them forever?
In their paper, the team proposed an idea for hiding SBTs from public viewing, and Weyl told The Defiant that “there should be” a way to hide or burn NFTs without using gas.
Privacy and Free Speech
Beyond issues with spam and private key protection, having key aspects of people’s identity exposed in a public blockchain sounds like a privacy nightmare, said Richie Bonilla, founder of DAO dashboard Clarity.
“You don’t want everyone to see every facet of your identity,” Bonilla said in an interview. “What about persecuted groups?” Bonilla asked. If you go to a religious conference that gives out SBTs, could you never hide your religion?
If there is no way to hide or burn NFTs, it’s easy to see how SBTs could be problematic – even life-threatening if abused by bad actors.
Some went as far as to suggest that SBTs sound like the social credit system adopted in China where all citizens get a score that fluctuates based on their behavior. The dystopian scenario could emerge in a far-flung situation where SBTs are used for every aspect of online life, and not just for web3 credentialing.
Lastly – and somewhat frivolously – some in Crypto Twitter thought “Soulbound Tokens” is not an ideal name to attract new users to NFTs and web3 as it is derived from nerdy World of Warcraft while also signaling religious affiliation.
Danielle Lauren suggested “Infinity Tokens” on Twitter. This author suggests “Forever Tokens.”
A Soulbound Future?
SBTs will likely only be used by web3-native institutions to start – DAOs, NFT collections, and web3 companies. Gaby Goldberg, investor at TCG Crypto said in an interview it will likely be over five years until her alma mater Stanford University adopts NFT degrees.
Perhaps a university’s blockchain program will offer SBTs to graduates or, more likely, coding bootcamps, startup accelerators, and prestigious fellowships will try offering SBTs first.
There is a difference between “mainstream” and “mainstream in web3”. SBTs aren’t even mainstream in web3.
But neither were ERC20 tokens and automated market makers when they were proposed by Buterin.