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What are Soulbound Tokens (SBT)?

soulbound tokens sbt what are

Soulbound is the latest idea from Vitalik Buterin. Given the success of Ethereum, this is already enough to make us take a closer look at the concept.

Web3 and blockchain are more than crypto

Decentralization is a trendy buzzword these days. Closely related to Web3, it is supposed to provide a new, better version of the Internet. More democratic, less dependent on digital giants, emphasizing the needs of users. It’s a beautiful vision, but for now we see decentralization mostly in DeFi and cryptocurrencies. There’s nothing wrong with that, however, wouldn’t it be worth taking it a step further?

That step is to be the development of a decentralized society, from the English acronym referred to as DeSoc. Unlike DeFi, it is not to be based on trustless protocols. On the contrary, it is supposed to build networks of trust, just as it happens in the real world.

People we can trust are the foundation of how we function in society or business. Family, colleagues at work, a reliable plumber, a neighbor. We don’t need a guarantee to lend them a kilo of sugar or ask them to water our flowers while we’re on vacation.

But can these trust mechanisms, operating on a small scale, be taken to the next level? This is where a new concept comes onto the scene.

What is Soulbound?

The basic building blocks for building DeSoc are to be Soulbound tokens (SBT). They were proposed in early 2022 by Ethereum creator Vitalik Buterin, economist E. Glen Weyl and lawyer Puja Ohlhaver.

SBT are intended to act as a kind of digital curriculum vitae of the user, documenting a person’s achievements, experiences and connections. Unlike NFTs and cryptocurrencies, which can be traded on the market and transferred to another wallet, SBTs are meant to be irrevocably tied to a single account.

Soulbound idea comes from the game World of Warcraft, in which some earned items are permanently tied to the player. Users cannot sell them to other players or exchange them for anything. Likewise, Soulbound’s non-transferability ensures that their holders cannot trade their social status online. For that, more and more of them appear with each new experience, and the user’s reputation slowly crystallizes.

Some SBTs can act like achievement badges, similar to computer game achievements. However, instead of getting a badge for defeating an enemy, you get SBTs for earning a degree, participating in a project or supporting some community.

SBT, however, can validate more than just our activity. They can be linked to a myriad of other characteristics and personal information, such as name, date of birth or medical history. The possibilities are endless.

That’s why accounts or wallets hosting Soulbound NFT are known as “Souls.”


To clarify the situation, let’s write out how these two categories of tokens differ:

In summary, SBTs show more similarity to the POAP tokens discussed earlier than classic NFTs.

What SBT give us

As we have already mentioned, Soulbound can have a myriad of applications. For example:

Problems with Soulbound

Soulbound have characteristics similar to a tool – used skillfully they do a lot of good, but they also have the potential to cause a lot of trouble. Let’s think:

Soulbound – yes or no?

It is necessary to start by stating the obvious – Soulbound tokens are, for now, a loose concept rather than a polished project. The idea is fresh and evolving all the time, and yesterday’s rules may be changed tomorrow. However, it is worth the temptation to take stock, although it is not easy.

After all, it is difficult to unequivocally assess a project that could have such far-reaching effects. On the one hand: SBTs can prevent fraud, distribute profits fairly, protect DAOs and other organizations from hostile takeovers. Allow borrowing without collateral. Make our lives easier, give us new opportunities, signal who we can trust and who better not.

On the other hand… they come dangerously close to the concept of “social credit,” intensively developed in China. In theory, it is supposed to reward productive and law-abiding individuals; in practice, it serves to repress those who don’t quite toe the party line. And if you think such things only happen in China, think again.

Anyway, just look at Italy. At a press conference of the mayor of Bologna on March 29, 2022, a “Smart Citizen Wallet” was presented, awarding points to citizens who have demonstrated “desirable behavior.” For now, there’s no mention of punishment for undesirable behavior… but perhaps let’s still wait with delight.

Vitalik and company probably have pure intentions, but as the saying goes, “hell is paved with good intentions.” Soulbound looks interesting, but until solid privacy protection mechanisms are implemented, it is better to look at this project with some reserve.

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