What Are Soulbound Tokens (SBTs) & How do they Work?

Introduction

Computerized character tokens called Soulbound Tokens (SBTs) describe the characteristics, traits, and accomplishments that make up a person or thing. SBTs are supplied by “Spirits,” which cannot be relocated and address blockchain records or wallets.

The concept of Soulbound Tokens (SBT) was first up in May 2022 by E. Glen Weyl, a financial expert and social technologist, legal advisor Puja Ohlhaver, and Ethereum primary proponent Vitalik Buterin.

The “Decentralized Society: Finding Web3’s Soul” whitepaper lays out the foundation for a decentralized society (DeSoc), which is represented by its clients, and explains how Soulbound tokens (SBTs) may function as the standards we use daily.

What are Soulbound Tokens?

Soulbound tokens (SBTs) are immutable tokens that use blockchain technology to address a person’s character. This might include medical records, employment history, and any other type of information that describes a person or thing. The “Spirits” are the wallets that store or distribute these recordings.

People could have different wallets (or Souls) for other aspects of their existence. For example, a person may have a “Certifications Soul” for their professional background and a “Clinical Soul” for their medical history. Spirits and SBTs would enable people to create an unquestionable, digital Web3 reputation based on their prior actions and interactions.

However, souls have access to a chemical that distributes SBTs. Organizations, for instance, can be Souls that provide SBTs to each representative. A computerized country club might send SBTs to determine enrolment status. Soulbound’s inspiration came from the well-known online game World of Warcraft. These items cannot be moved or sold by players. Once acquired, soulbound items remain “bound” to the player’s “soul” infinity. Imagine this idea right now, but with non-fungible tokens (NFTs). Today, most NFTs are declarations of ownership for computer-generated artwork or collectables, like Bored Ape Yacht Club. People will buy, trade or hotshot NFTs to symbolize their wealth and prestige.

SBTs aim to convert the NFT concept into a unique and immutable symbol that goes beyond money and boasting rights. An SBT addresses a person or substance’s status, whereas NFTs focus on assets and property.

How to use Soulbound Tokens?

There are many different possible use cases for SBTs. Here are a few models that may be able to locate us in our everyday daily lives.

Training history

After graduating from college, students receive a certificate that attests to completing the required courses. The understudies would be Souls on the less-than-desirable end, while the college might be a Soul providing the SBTs. 

The understudy’s credentials, which attest to their considerable talents and status as college students, would be kept in the SBT. In essence, the SBT would serve as proof of enrolment.

Employment forms

In theory, job applicants might use the official SBTs from previous companies and institutions to display their prior employment history and professional endorsements. The SBTs would serve as a means of validating claims of abilities.

Health records

Using an SBT that stores a person’s medical information might speed up changing doctors or medical care providers. Imaginatively, the SBT would replace the usually cumbersome process of wrapping up administrative tasks, reviewing your medical history, and chatting with someone on the phone.

Role of Soulbound Tokens in Web3?

One of the critical issues affecting the Web3 Company is trust. How could you have faith in someone’s reputation in a system that is supposed to be unreliable? Let’s take lending money as an example. Similar to traditional bank FICO scores, SBTs may track a client’s Defi getting history and other metrics that determine their gambling profile.

SBTs are also a suggested voting option for decentralized autonomous associations (DAO). DAOs might provide SBTs, which distribute voting power based on clients’ connections to the local region, as an alternative to the continuing administration model, based on the number of tokens a portion has. This strategy would emphasize giving the most loyal voters the power to vote.

In addition to developing a standing-based voting framework, SBTs may focus on the legitimacy of DAO voting, particularly by preventing Sybil attacks, one of the biggest threats to the current DAO administration architecture.

An individual or group of troublemakers dethrone a DAO during a Sybil attack by purchasing most management tokens. Those with more voting influence can control voting suggestions and direct the task’s course in their favour. The general public and unquestionable nature of SBTs may be able to recognize and prevent agitators from joining the DAO, hence reducing debasement and Sybil assaults.

Some examples of Soulbound Tokens?

By August 2022, SBTs will be a concept on paper. Glen Weyl, one of the co-creators who contributed to the original SBT whitepaper, acknowledges that early SBT use cases will be present by the end of 2022.

Additionally, Binance disclosed its own SBT known as Binance Account Bound (BAB). The BAB token is the first SBT given on the BNB Chain and is non-adaptable with no monetary value. BAB intends to address Web3 character check concerns, acting as a computerized confirmation tool for Binance customers who have completed KYC.

Outside conventions will want to use BAB tokens to airdrop NFTs, prevent bot activity, and cooperate with DAO management regardless of the Binance context.

Conclusion

Putting thoughts to rest, we have finally concluded that Spellbound Tokens are currently a contentious topic in Web3. SBTs might theoretically allow users to describe their advanced standing and assess that of another user on the blockchain. On the off possibility that an SBT can serve as Web3’s version of the “character card,” this is not yet known.