SBT

Introduction:

Soulbound Tokens (SBT) is a concept proposed in May 2022 by Ethereum co-founder Vitalik Buterin, lawyer Puja Ohlhaver, and E. Glen Weyl, an economist and social technologist.

The white-paper, entitled “Decentralized Society: Finding Web3’s Soul,” lays out the foundation of a fully-decentralized society (DeSoc) governed by its users and how Soulbound tokens (SBTs) can function as the credentials we use in everyday life.

What are SBTs?

Soulbound tokens (SBTs) are non-transferable tokens representing a person’s identity using blockchain technology. This could include medical records, work history, and any type of information that makes up a person or entity. The wallets that hold or issue these records are called “Souls.”

People could have multiple wallets (or Souls) representing different parts of their lives. For example, someone could have a “Credentials Soul” for their work history and a “Medical Soul” for their health records. Souls and SBTs would allow people to build a verifiable, digital Web3 reputation based on their past actions and experiences.

On the other hand, Souls can represent an entity that allocates SBTs. For example, companies can be Souls, issuing SBTs to each employee. A digital country club could issue SBTs to verify membership status.

Use cases of SBT

Digital credential: Digital verification and documentation e.g. driver's license

Governance: Besides creating a reputation-based voting system, SBTs may potentially improve the integrity of DAO voting — namely, defending against Sybil attacks — one of the biggest threats to the current DAO governance model. Proof of attendance, buying a vote

Lending: Micro economy in traditional finance trust and reputation allows an uncollateralized loan to work, crypto eliminates all trust. If you don’t repay the loan your reputation will take a hit and it may limit future financial opportunities