Vitalik Buterin proposes ‘soulbound’ NFTs for path to decentralized society
Ethereum co-founder Vitalik Buterin co-wrote a 40 page paper titled ‘Decentralized Society: Finding Web3’s Soul’, in which he proposed the concept of ‘Soulbound’ tokens (SBTs) and said that they will form the basis of the Web3 decentralized society.
SBTs are NFTs that encompass personal information, including your birth certificate, degrees, private accomplishments and work credentials. They embody the ‘obligations, powers, and belongings’ of a person, according to the paper, all of which will be stored on the Blockchain to vouch for their ‘origin and reputation’. This means the information cannot be removed or altered, making them bound to the person. Buterin explained them as an ‘extended resume’.
‘We illustrate how non-transferrable soul-bound tokens (SBTs) representing obligations, credentials, and soul ownership, can encode real-economy trust networks to establish provenance and reputation.’
In the event of losing your SBT keys, Buterin proposes a community recovery process that will involve ‘guardians’, who can be your family, friends and legitimate institutions, collectively assenting to unlock the SBT address.
How would Soulbound NFTs work in real life?
SBTs’ use cases include recording academic and employment credentials so a potential employer can verify a candidate’s authentic resume and grades. The SBTs can also be issued or attested by other SBTs, for instance, a company can draft a recommendation letter for an employee as an SBT.
They can help us share information about ourselves in an enhanced version of our current resumes. ‘The idea is to bolster people's social identities by customizing them with unique, non-exchangeable badges. In theory, the tokens could help solve some of the problems ravaging decentralized finance, like scams and theft,’ Buterin explained.
These NFTs can also bring together like-minded individuals to an event or cause. For example, DAOs can giveaway SBTs to those who show interest in a particular topic or field.
How will Soulbound NFTs work and what problems do they address?
According to Buterin, governance tokens should be soulbound and their transferability will be problematic. He said the rich could manipulate the ecosystem by buying voting rights which goes against the goal to widely distribute power. While the same applies to the incompetent, for they can obtain power and status the same way.
Buterin said that ‘the transferability of the tokens should be removed in some instances to make the Web3 ecosystem less ‘money-driven’. He explained that the transferability would affect the long-term sustainability of Web3. However, positive use cases for the NFTs include ‘funding artists and charities’, creating your credit report to streamline and authenticate the borrowing and lending process.
He also commented on the recent addition of Twitter Blue feature that enables users to show off their wealth with expensive NFT artworks as their profile pictures.
‘But what exactly are these NFTs signaling?” He wrote, “Certainly, one part of the answer is some kind of skill in acquiring NFTs and knowing which NFTs to acquire. But because NFTs are tradeable items, another big part of the answer inevitably becomes that NFTs are about signaling wealth.’
He proposes an alternate proof-of-attendance protocol (POAP), which shows the events that a user attended, setting it apart from the NFTs that are merely lavish displays of wealth. He also shared his POAP profile with the events he attended since 2015.
He adds that realizing SBTs would require a lot of technical expertise and effort, but it has the potential to ‘open a much wider door to blockchains being at the center of ecosystems that are collaborative and fun, and not just about money’.
SBTs are a part of Ethereum’s larger plan to build a ‘decentralized community’ by 2024.