Vitalik Buterin, the co-founder of Ethereum, published a whitepaper outlining the Decentralized Society (DeSoc) and Soulbound currencies (SBTs). The paper claims to provide a method for defining “social identity” in Web 3.0 and De-Fi. Back in January, he explained the word “Soulbound,” which comes from the World of Warcraft game.
A Soulbound Token is one that can’t be transferred once it’s been obtained [but possibly revocable-by-the-issuer]. You can’t sell or transfer them after they’ve entered your wallet. They’re obligated to you. Once you obtain a Soulbound Token, you must keep it in your Soul wallet for the rest of your life. The Souldbound token may only be burned by the issuer. The accounts are referred to as “Souls,” and the tokens owned by the accounts are referred to as “Soulbound Tokens” by Vitalik (SBTs).
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It supports the creation of social identity using tokens in order to allow services that are now unavailable in the Web 3.0 and DeFi ecosystems, such as undercollateralized loans and simple contracts, such as an apartment lease.
Certification and Documentation
SBTs have the potential to be very important in the future of documentation and certifications. Soul has the potential to change the course of documentation from paper to paperless by bringing it to the digital network, as it can issue an infinite number of Soulbound tokens.
SBTs can be used by colleges and universities to offer degree certificates to graduates and students.
Proof of Attendance and Presence
Blockchain Developers who have attended certain conferences and finished a specific program will be desired by Web3 firms in the future. They would be able to verify applicants for consideration using SBTs. The company might then screen prospects for confirmed conference attendance.
SBTs can be used as evidence of attendance for a variety of activities, including special occasions, events, web conferences, seminars, and more. The event organizer or host can also call a controlled audience for their purpose by issuing SBTs to a restricted number of people.
Lending and Borrowing
Our credit reports can also be represented using SBTs. This will offer lenders a borrower’s complete credit profile. Even the loan might be accompanied by a revocable but non-transferable SBT. The SBT might be burnt or replaced with proof of payment after the debt is returned. As a result, it would discourage people from concealing their ongoing debts.
Let’s pretend there’s a country with a blockchain-based voting system and each person has an NFT-based identity card. Citizens might effectively sell their vote to the highest bidder by selling their NFT if these NFTs were transferrable. Nobody but themselves may vote or access their identity card with SBTs, making it really unique to them and no one else.
Other wallets might issue SBTs as an expanded portfolio attesting to these social relationships. Only SBT developers have the ability to send them to other addresses, which are referred to as soul addresses. Once these tokens have been transferred to Soul, they will remain in that wallet address for the rest of their lives.
SBTs, unlike non-fungible tokens (NFTs), cannot be traded on secondary markets like OpenSea.
SBTs stated that the issuer may be able to recover the tokens. It has been clarified that if a Soulbound token is lost, it may be recoverable through community recovery. This suggests that the Soul is the social network’s “intersectional vote.”
To do so, a user selects a network of “guardians” and grants them access to their soul wallet’s keys. Individuals, institutions, or other entities could serve as guardians. Unfortunately, this increases the likelihood of people falling out with their guardians, guardians passing away, and so on.
Soulbound Tokens will be ready before the end of the year, according to Vitalik. By 2024, he believes they will go mainstream.
Despite the fact that Soulbound Tokens have yet to gain traction in the blockchain sector, it is possible that they will do so in the near future. Allowing all NFTs to be transferable is a formula for disaster when NFTs are used for identification solutions and other sensitive goods, and Soulbound Tokens provide a simple alternative that might help NFTs become popular.
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