Vitalik Proposes Soulbound NFTs That Are Not Tradeable

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Ethereum
Vitalik Proposes Soulbound NFTs That Are Not Tradeable

Vitalik Buterin has published a research paper that explains how non-transferable Soulbound Tokens (SBTs) can create an ecosystem within Ethereum named ”Decentralized Society” (DeSoc). Vitalik believes that the future of Ethereum lies in the identity of the person on the blockchain.

Non-Tradeable NFTs

Soulbound tokens are non-transferable NFTs held by a different crypto wallet called Souls. In the paper, Buterin described multiple ways to use SBTs – as education credentials, university degrees, and credit scores of web3. He said that this would help users gain insight into the real-world achievements, activities, likes, and dislikes of others.

Buterin writes, ”Spirits can encode the real economy’s belief networks to establish origins and reputation.” A Web3 hiring manager can look at your on-chain resume for a transaction in which the spirit of the university is sending you an SBT.

SBTs have the power to decentralize power away from companies and major institutions. Users will own the keys to their credentials instead of private databases. The founder of Web3 Education Platform 101, Tim Connors, tweeted, ”Instead of relying on educational institutions, we can directly see what was learned. It’s all transparent.”

Some Potential SBTs Use Cases

SBTs in the DeSoc ecosystem would offer a wide range of use cases. For example, Instead of universities giving NFT degrees, they would give SBT degrees. This is because SBTs can’t be sold or separated from the owner, but NFTs can be traded online.

Proof-of-Attendance (POAP) protocol can also include SBTs. This protocol distributes crypto badges to show a user has attended an event personally.

These tokens can also be used within a DAO to airdrop SBTs among its members. Since they are non-transferable, the power of governance would be distributed widely in the DAO. Concentrated entities won’t have the ability to buy the governance rights of others.

Companies like Rabbithole and 101 are already using on-chain credentials. Ben Yu told The Defiant that they would use SBTs for their web3 Q&A platform Curious. Xyz. This will assist in building an on-chain reputation for users answering questions.

Glen Weyl, the paper co-author, told the Defiant that by the end of 2022, SBTs could be in early use. He also suspects that the 2024 upcycle will focus on this token.

Initial reaction from the community suggests that for the Soulbound Token idea to take off, some wrinkles need ironing out.

Wayne Jones

Wayne is an all-rounded cryptocurrency writer who has written for several publications in the fintech industry. Having graduated from the University of Essex Colchester, he developed a passion for blockchain technology and has been curious about how the blockchain can modify the traditional financial industry.