Earlier this month, the founder of the Ethereum Blockchain, Vitalik Buterin, endorsed the Soul NFT project. In the 37-page paper, Vitalik referred to Soulbound tokens (SBT) as “the future of Ethereum.”
Vitalik Buterin believes the project is key to solving some existing problems in web3.
Why Soulbound Tokens?
The SBT token standards will help users peer into other users’ behavioral patterns and real-world activities. Technically, the SBT tokens will reflect a glimpse of the holders’ souls. Vitalik’s are held in unique crypto wallets called Souls. The SBT tokens will not be transferrable, nor can they be sold.
Soulbound non-fungible tokens will serve as an on-chain resume or portfolio. Thus, instead of a web3 hiring manager using LinkedIn to check up on the profile of a potential employee, all vital information and on-chain activities are already stored on an individual’s Soulbound tokens.
In his paper, Vitalik said:
“Souls can encode the trust networks of the real economy to establish provenance and reputation.”
While Web3 has improved the way the internet is used today, some problems persist. Many users stick with centralized platforms, and blockchain users lack social scores. Additionally, voting rights usually go to the highest bidders in decentralized systems. More so, the web3 ecosystem lacks enough incentives to foster community engagement.
The Soulbound tokens can solve a bulk of these existing problems. The nature of the tokens will birth a positive paradigm in decentralized ecosystems. The tokens can represent a commitment to projects and serve as genuine certificates or endorsements for web3 folks.
Amongst the many objectives the release of Soulbound tokens will achieve, two goals stand out. That is, rewarding a coordinated strategic behavior and promoting decentralization.
In truth, these goals are great, and the project seems to be the solution to a long-held problem. However, some questions remain. How well will the Soulbound tokens protect users’ privacy, and what measures will be taken to prevent the misuse of these new token standards? Perhaps, the answers to these questions will be uncovered shortly.