The Soulbound Token is a means of "escaping the over-financialization of today's web3 ecosystem" to transition to a decentralized society that "encodes trust in social relationships".But what are Soulbound tokens? If you are familiar with NFTs, you might hear of Soulbound. In this article, we will discuss about Soulbound tokens.
What are Soulbounf tokens?
Soulbound Token (SBT) was proposed in May 2022 by economist and sociotechnologist E. Glen Weyl, lawyer Puja Ohlhaver, and Ethereum founder Vitalik Buterin. Buterin first discussed the concept of “soul-bound” assets on blockchains in a January 2022 blog post. In it, he explains that in the popular fantasy game World of Warcraft, there are powerful "soul-bound items" that, once picked up, cannot be transferred or sold to other players.
Soulbound Tokens (SBTs) are non-transferable, publicly verifiable digital tokens that serve as a kind of resume for web3 users, showing an individual's membership, credentials, and affiliations.
Unlike NFTs and other cryptocurrencies, which can be traded on the open market and transferred from one wallet to another, soul-bound tokens, as the name suggests, are permanently bound to a wallet or account during their lifetime. Such wallets or accounts that host Soul-bound tokens are called "Souls".
In its simplest form, an SBT can "self-certify" like a person can add their education or work history to their resume. SBTs can also be issued by souls representing individuals, companies, or institutions, in the same way, that universities can issue diplomas to graduates who have successfully completed their studies.
How do Soulbound tokens work?
Soulbound tokens are like an extended resume, issued by other wallets that demonstrate these social connections. Only SBT creators can publish them to other addresses, called soul addresses. Once these tokens are transferred to Soul, they will stick to that wallet address for the entire lifetime.
Aside from their non-transferability, Soulbound tokens function similarly to NFTs, which is why Ethereum creator Vitalik Buterin called them non-transferable NFTs. They are non-fungible, ie they are not interchangeable and each token is unique and non-transferable.
Souls can issue self-certified SBTs to themselves. However, a common process is when other souls or SBT creators issue SBT to another soul's address. The addresses of SBT, its issuer and Soul can be publicly verified on the blockchain.
So now you know what are Soulbond tokens and how do they work. SBT has become a hot topic in Web3. In theory, SBT could allow people to build their own digital reputation and assess the reputation of others on the blockchain. It remains to be seen whether SBT can serve as the "identity card" for the Web3 version.
