Soulbound tokens (SBTs) are “the future” of Ethereum, according to cryptocurrency founder Vitalik Buterin. In summary, SBTs are NFTs that cannot be transmitted once received. You would keep it in a Soul wallet forever.
What are SBTs/Soulbound Tokens
Vitalik Buterin has predicted that Soulbound tokens will be available for early use by the end of this year. Twitter user Jason Levin (@iamjasonnevin) interviewed a co-author of a 37-page paper written to “predict the future of Ethereum.”
Quite simply, portability cannot exist. The reasons for using a non-negotiable NFT may confuse some people. The transmissible nature is a big part of why people are so into them, but there are many use cases.
Additionally, the paper stated that the tokens may be revocable by the issuer. Regarding the loss of a soulbound token, it was clarified that they can be restored through community restoration, with the soul being the “intersectional voice” of their social network. To do this, a user curates a set of “guardians” and gives them the power to change the keys of their soul purse. Guardians can be a mix of individuals, institutions, or other wallets. Unfortunately, there is a risk that people will fall out with their guardians or that the guardians will die, etc.
You can read the full paper here.
The possible use cases
According to the document and Jason Levin’s Twitter thread, there are multiple use cases for soulbound tokens on Ethereum. A university degree was mentioned as the first use case. Imagine a university issuing a graduate certificate as an SBT. Currently, if a university issued a degree as a standard NFT, the graduate would theoretically be able to sell it due to the nature of the technology. On the other hand, if it was a soulbound token, they couldn’t sell or transfer it.
Next, if a company wants to hire people who attended a specific conference or event and that conference handed out SBTs, they could do so as it would confirm that they actually attended the conference rather than just buying one secondary marketplace.
A final example would be Souldrops. These are airdrops based on calculations about SBTs and other tokens within a soul. For example, a DAO wishing to convene a community within a specific Layer 1 protocol could offer a Souldrop to developers with 3 of the last 5 conference attendance SBTs or other tokens indicating attendance, such as POAPs.
If this happens as they hope, Vitalik and the team would speak of a “decentralized society” in 2024.