Due to the increasing popularity of Web3 and the complexity of its model, leaders in the field have started to develop an alternative model that involves communities with rich social identities. Vitalik Buterin, who is the creator of Ethereum, has offered to help build a decentralized society called Soulbound. These tokens are associated with a type of address known as Souls, which establishes provenance.
The word “soul” is often associated with the financial and high-tech industries, but it is not usually associated with cryptocurrencies or blockchains. The term “Soulbound Token” is a strange and contradictory one, but it is helping shape the path of Web3.
The concept of Soulbound tokens is a proposed building block that can help transform the way we interact with each other and manage communities. In this article, we will talk about the various aspects of this project and how it can be used to improve the way we live in Web3.
In May 2022, E. Glen Weil, a social technologist and economist, and Pooja Olhaver, a lawyer, proposed the creation of Soulbound tokens. It is a foundational building block for the emerging Web3 trend. The concept of DeSoc is similar to the broader Web3 context. It focuses on the principles of community, collaboration, and composability. It aims to help increase the hyperfinancing trajectory of Web3.
One of the main features of DeSoc is the creation of Soulbound tokens, which are known as SBTs. These are non-transferable tokens that represent the obligations that people have to each other on Web3. These tokens are designed to represent the various characteristics and achievements of people and entities. They can also be issued and validated by other Souls. For instance, a college can issue an educational certification that says that the course taken by a student has been taken under the student's Soul.
Although the details of the Soulbound token are still in their early stages, they have been described as non- transferable. Unlike other cryptocurrencies, such as Ethereum, which are fungible, Soulbound tokens are not intended to be transferred to another wallet. Instead, they are designed to be used to represent the obligations of individuals and entities on Web3.
In the context of DeSoc, Soulbound tokens are held in accounts known as Souls. These are wallets that are designed to establish a reputation and provenance for certain assets. It is important to note that these are not intended to represent people.
For instance, a person can have multiple Souls in DeSoc. For instance, if a school has a Soul that awards diplomas to its graduates, each of them has a Soulbound diploma that they can keep. They can also keep the SBT for their Girl Scout badge and the National Society of Honor's rewards. This distinction between the Credentials Soul and the Identification Soul is important because the former allows people to keep their driver's license and passport.
The characteristics of the Soulbound token are representative and descriptive. They can be used to represent the obligations that people have to each other on Web3. The power and usefulness of the tokens can be attributed to how they interact with other Souls.
Unlike other cryptocurrencies, such as Ethereum, which are fungible, Soulbound tokens are not intended to be transferred to another wallet. Instead, they are designed to be used to represent the obligations of individuals and entities on Web3. The concept of non-funded and non-transferable tokens has been around for a long time.
Projects such as POAP validate event attendance by issuing badges that have no monetary value. Proof-of-Humanity is another example of how non- transferable tokens can be used to associate profiles with individuals.
The unique characteristics of the Soulbound token make it ideal for the decentralized society that is searching for the Web3. According to the authors of an article about the concept, Soulbound tokens are the building blocks that will allow Web3 societies to be built. Although the concept is still in its early stages, the authors of the article claim that they are the ones who are most likely to make the most impact.
What are the use cases for Soulbound tokens?
Although the potential use cases for the Soulbound token are limited by the design and implementation capabilities of the project, there are a few promising ones. One of these is medical record management. It can be very time-consuming and unpleasant to change doctors or insurance companies. With the help of a Soulbound token, people can easily manage their medical records.
Medical records can be stored in a Soulbound token, which eliminates the need for people to go through the laborious process of transferring their records to different insurance companies. One of the main issues that blockchain projects have faced when it comes to solving this issue is the lack of collateral. This is because the technical limitations of establishing a verifiable ability to repay a loan have prevented many projects from developing a solution.
One of the biggest threats that DAOs face is the sybil attack, which occurs when a group of individuals or groups accumulate a significant amount of governance tokens and then manipulates the outcome of a vote. With the help of semantically-based transactions (SBTs), these organizations can mitigate these risks by developing multiple mechanisms that can help prevent this type of attack.
Although the Soulbound token is only a few months old, its potential use cases and ideas have not yet been fully explored. This is because the project is still in its early stages. However, it is clear that the concept and its potential are very promising. In the future, the token should serve as a fundamental element of a decentralized society, which would allow communities to arise around the interests and networks of people who use it.