Ethereum co-founder Vitalik Buterin’s Soulbound Token proposal for a robust identity and reputation system has stirred up the crypto community. Soulbo
Ethereum co-founder Vitalik Buterin’s Soulbound Token proposal for a robust identity and reputation system has stirred up the crypto community.
Soulbound Tokens or SBTs are non-transferable, non-financialized tokens tied to a unique profile proving verifiable achievements and commitments. Still at the concept stage, it’s suggested SBTs will be capable of tracking memberships, credentials and affiliations with educational establishments, decentralized lenders and other entities.
Supporters say that SBTs could be the use case for the next bull market. But others have likened the concept to China’s social credit system and say it’s an “expensive solution to a problem that’s already been solved.”
So, which is it? Let’s take a deeper dive.
Web3 should be more than financial assets
Last month, Vitalik Buterin and co-authors Glen Weyl and Puja Ohlhaver released a paper outlining their vision for Soulbound Tokens, which would enable individuals to accrue permanent non-tradeable records of merits and attributes and store them in a private blockchain wallet.
These would form an essential building block for a decentralized society, or DeSoc, which points away from the current hyper-financialized state of Web3 and depends on non-transferable social relationships of trust. The crypto world, the co-authors say, will move past simple transferable financialized assets.
#Soulbound might be the next biggest thing for #Blockchain applications. The concept of an #NFT that can identify unique individuals. Use cases are endless and can be the foundation of a decentralized society. The biggest next thing? Stay tuned!#Strader #STDR #Decentralized
— Straderlabs (@straderlabs) June 8, 2022
The non-transferable Soulbound Tokens represent credentials, commitments and affiliations and are linked to our “Souls.” To put it simply, they are tokenized representations of a whole host of possible traits, features and achievements that make up a person or entity. Souls can also issue and attest SBTs to other Souls. Students will receive an SBT, for example, from a college, which will also be represented by its own Soul.
Why we need Soulbound Tokens
Co-author Glen Weyl, an economist with RadicalxChange, provided the core ideas for the paper on Soulbound Tokens. When I get through to him on Zoom, he is just getting his board ready for a paddle around Lake Washington next to his house. As he saunters down to the waterfront, he explains why this new concept is vital.
“Right now, almost all the things that happen in the Web3 ecosystem are purely financial objects: They’re transferable and saleable wrappers, like wallets of transferable saleable assets, like tokens and currencies, there’s no actual such a thing as a person. All there is, is a financial holding account,” he says.
For Weyl, moving decentralization away from just financial objects is critical, “even for making the financial aspects of the space work well, as well as for allowing for much more interesting futures.”
Weyl believes that without social relationship development, financial relationships on Web3 will continue to be difficult. “It’s just like a feature of reality, that our social relationships are the fabric on top of which financial relationships are built. And a system that’s not able to represent that is going to be extremely limited, hyper financialized, anarcho-capitalist etc.”
In a sense, SBTs are a sort of universal aggregation system. Crucially, it’s not built in the top-down way China’s social credit system is imposed on the population, but is instead a bottom-up community system owned and governed by network users. You can also have multiple Souls.
“People would have like two or three [wallets] that represent different, very distinct aspects of your life. You might have one for your health profile, which would all be encrypted and would only have access to doctors or something. You might have one that represents a professional life, like your CV. You might have one that represents personal relationships — those might all be unlinked from each other.”
Weyl sees Soulbound Tokens as bringing the same values of decentralization to real human relationships and communities. “The key element is that the tokens can’t be transferred across people. Now what a person is, is actually really subtle when you build it within the Web3 space.”
Decentralized verifiable credentials already exist, so this isn’t some sort of Soulbound NFT versus off-chain identifiers debate. SBTs are likely to be a small subset of verifiable credentials that are imbued into an NFT on a blockchain.
Storing verifiable credentials in Web3
Evin McMullen is a co-founder and the CEO at Disco.xyz, which specializes in verifiable credentials and storage solutions…
cointelegraph.com