Introduction

Soulbound tokens were announced in May 2022 with the whitepaper titled "Decentralized Society: Finding Web3 Soul" by Ethereum co-founder Vitalik Buterin, economist Puja Ohlhaver, and sociologist E. Glen Weyl.

The whitepaper lays out the foundation for a fully decentralized society (DeSoc) managed by its users, and how Soulbound tokens (SBTs) can function as credentials.

Soulbound token (SBT), is defined as a concept "the soul" of crypto wallets.

SBT token can connect only to a wallet and is like non-transferrable NFT tokens. NFTs are unique; however, are able to transferable whereas SBTs can not be transferred to another wallet.

I can explain to the purpose of being defined as a soul with a simple example. If we can think that the user's wallet is the body and the soul-bound token is the soul, we can understand that they are inseparable duos.

Once soulbound tokens are publicly assigned to a wallet, the wallet will now forever own that NFT. These tokens are non-saleable, non-transferable and non-leaseable tokens.

In short, SoulBound Token represents the key to unlocking access to a group that needs members to prove their identity.

Soulbound tokens are as Vitalik Buterin said indispensable idea especially for DAOs.

Soulbound Tokens Use Cases

In this period when NFTs have entered our lives, lots of new projects, DAOs, and even some companies rewarding users with NFTs. For example, you had registered a course in LearnWeb3DAO and you have successfully completed the course. If LearnWeb3DAO want to send a degree with NFT, you can prove to complete the course. What a great technology, isn't it?

Would you sell it if a lazy student offers 10 ETH for your degree? Wouldn't that hurt the DAO's charisma?

Another example is more. Let's think that you are a football fan. The team you support, put up for sale match tickets. You could buy a ticket but other tickets sold out immediately. Ticket transactions will be in the black market anymore. Unfortunately, this will be a bad situation for the club.

We had talked about Web2 companies selling our data to other companies for money in the article where we deep dive into web3 philosophy. Even if I connect my wallet to a secure web page, how can I know that I won't see ads about soulbound tokens in my wallet?

The more we can understand why we need soulbound tokens, the better we can understand how they work. Now let's take a look at how it works.

How Soulbound Tokens Work?

Every crypto wallet is defined as a "body" that can store soulbound token. Soul wallets are responsible for verifying SBTs' data before publishing it for storage, owing to SBTs are non-transferable. In short, SBTs are connected to wallets forever. Thus, anyone can looking for your soulbound tokens for different purposes.

Unfortunately, there are a few problems for soulbound tokens too. I told you above that you get NFT for completing the LearnWeb3 course. When you finish university, you can get an NFT degree. This means, your wallet same will be like web3-CV. One question: Would you share your degree with everybody?

Vitalik Buterin and his friends explained to solve this problem with a hash method as you can see below.

Therefore, Vitalik and other authors are considering adding options such as burning SBTs and hiding. There are lots of questions to discuss and will be but it is the mission of those who believe in decentralization to solve.

Wen will I use SBTs?

Vitalik is getting ready to present SBTs for the vision of Decentralized Society (DeSoc) in 2024. Therefore, it is expected to become mainstream by 2024.

Soulbound Tokens, launched by Puja Ohlhaver, E. Glen Weyl, and Vitalik Buterin for realizing the vision of Decentralized Society whit equal rights of people. SBTs unlock many use cases that NFTs cannot facilitate. To reiterate, SoulBound Tokens still has a long way to go for mass adoption. Yes, there are many problems, but we must not forget that everything is very, very new for soulbound. We will see together how soulbound tokens will benefit for a decentralized society.

For this, it is necessary to understand the philosophy and purpose of web3 well. To take a deep dive into the Web3 philosophy...