Think May 2022. Spring is here, the NFT100 is a month away, and the co-founder of Ethereum Vitalik Buterin just made a big announcement: Soulbound Tokens (SBT). The idea, which arose through a White paper Titled “Decentralized Society: Finding the Soul of Web3,” it inspires “oohs” and “ahhs” throughout the metaverse. That same month, the co-author of the article E. Glen Weyl states that the first uses of SBT may be available by the end of 2022.
Fast forward to January 2023 though, where are all these early use case SBTs? Has the NFT space overlooked this potentially paradigm-shifting technology in favor of more Bored Ape derivatives…again? Or is there just a lack of infrastructure to create SBT in the first place? Maybe both, or maybe neither, because SBTs are here, but they are still far from their final form.
What are Soulbound Tokens?
In simple terms, Soulbound tokens are NFTs that are non-transferable, making them ideal for managing permanent records (rather than storing documents in your safe deposit box). But taking over the paper records is just a unique function of these NFTs. Because, according to Buterin’s article, SBTs will function as a complete set of tools for online users to preserve and protect their identity.
Over the past year, it has become a common sentiment that if SBTs are adopted as originally planned, they will have a significant impact on our daily lives. Through SBT, medical records, academic achievements, alumni status, employment history, criminal records, and everything else can be minted as an NFT with immutable, non-transferable ownership. This could be especially useful for healthcare administrators and hiring managers. But so far, SBTs have yet to reach the outside world.
Where Soulbound Tokens Are Currently Located
While SBTs have yet to be adopted in mainstream society (or NFTs, for that matter), there are still current Soulbound efforts paying off on the blockchain. Not en masse, as some may have imagined after the initial white paper was released, but a select few have taken it upon themselves to help usher in a new phase of Web3 identity.
One such company aiming to innovate within this burgeoning sector comes from MoonPay. In 2023, the company, led by CEO Ivan Soto-Wrightis poised to help define the potential of SBTs in our current blockchain climate by launching the Web3 Passport. Billed as a “next-generation loyalty and rewards program,” the passport will grant holders guaranteed access to exclusive experiences and products from MoonPay partners and other leading brands and creators. This Soulbound NFT offering could prove especially beneficial for Web3 brand building.
But of course MoonPay is a single player in the fast growing SBT game. While it could potentially be the most NFT-native SBT offering on the horizon (aside from an adjacent Chubby Penguins Endeavor), other entities have begun to pioneer Soulbound projects that do not necessarily rely on NFT technology or culture. From the Tenora Blockchain plans to go Soulbound in the future for VC Cryptographic LongHash considering an SBT reward system, and even a collaborative company With MetaMask, Cobo, and Gnosis Safe in the works, organizations from a variety of sectors have expressed interest in Soulbound Tokens.
Even so, considering how new the SBT concept is, the practicality of the new type of token may still be vast. While real life SBT applications such as tokenized diplomas from the National University of Mongolia and the possible launch of SBT trials through Japanese banking giant SMBC have shown that Soulbound tokens have every incentive to venture outside of Web3 nativity, yet they feel like a novelty that falls short of communicating the full potential of SBTs.
The infrastructure issue
However, perhaps this perceived shortcoming is more a matter of form versus function. Currently, there are few methods through which NFT issuers can provide non-transferable, usable and secure tokens at scale. Given the limitations of SBTs as outlined in Buterin’s white paper (that SBTs might not be achievable until we have moved into a decentralized society where everyone has a “Soul” wallet), those hoping to launch SBTs should first create an infrastructure and a protocol that grant the SBT function. Either that, or bet that a chain or platform will do it for them.
This is precisely why some, like Masa Finance, are already tackling technological hurdles head on. With the launch of Masa’s Ethereum mainnet in January 2023, the company sought to empower users to mint a variety of Soulbound tokens, including Soulbound Identity SBTs, Web3 Credit Reports, and unique .soul domain name NFTs. , on its own unique platform, which focuses on a decentralized credit protocol.
Although the launch was indeed a huge step forward for the digital identity, and one that has opened the door for Masa Start adding biometric authentication, multi-level permission, and Web3 lending capabilities. Per his protocol, it’s also an achievement that Masa co-founder Brendan Playford admits he can’t exist in a vacuum.
“It is difficult to go to market with an identity protocol where the first use case is credit. The biggest problem identity protocols have is cold starting. If you don’t have something someone can use their identity for, you’re not going to track those early adopters,” Playford said in an interview with nft now.
A firm believer in SBTs to drive mainstream adoption, Playford may have hit the nail on the head when discussing the current issues in bringing the tokens to market. Adding to the lack of infrastructure available to make SBTs truly work at scale, if investors and consumers can’t immediately see how Soulbound tokens could be useful, it begs the question why they would want to mint and own an SBT in the first place. place. place.
Has the adoption of SBT become widespread?
So when might we see the increasingly elusive use cases of SBTs become a major part of the NFT ecosystem? The answer is anything but simple. Because while the benefits of SBTs seem to outweigh the caveats, no one knows when a decentralized society might become a feasible reality.
For now, developers will likely continue to look for new and novel ways to use SBTs, slowly laying the groundwork for their relevance in the next market cycle or so. Of course, Masa and MoonPay SBTs will bring value to the NFT and Web3 space in general. But until major financial, medical, and educational organizations (and the like) are ready to replace outdated accreditation models with a more immutable and effective system that might be possible through SBT, the true utility of these tokens cannot be realized. .
