How Soulbound Tokens (SBT) are Revolutionizing Blockchain Technology
Any broad discussion of NFTs presupposes they are tradable assets that may be sold on a marketplace or transferred between digital wallets. However, recent advancements in the field of non-fungible tokens have created additional options, such as the non-transferable non-fungible SoulBound tokens. What are the new projects, and how do they relate to Web3's future?
This section will help uncover the solution by providing a comprehensive introduction to the new non-transferable NFTs.
Inception of Soulbound
Vitalik Buterin, interestingly, is one of the co-authors of the whitepaper that introduces the idea of SoulBound NFTs. In May of 2022, three individuals, including Ethereum co-founder Vitalik Buterin, submitted a proposal for the SoulBound project. The other creators of the SoulBound initiative are attorney Puja Ohlhaver and economist and social technology expert E. Glen Weyl.
The SoulBound Tokens, or SBTs, have been designed to serve as the fundamental building pieces of the new notion of a decentralized society (DeSoc). Decentralized Society on the Web3 resides at the convergence of markets and politics and a broader Web3 framework. Important decentralized society principles include creative network architectures, composability, bottom-up community alignment, and collaboration.
What constitutes SoulBound Tokens?
The legitimacy of SoulBound's creators and their vision of utilizing them as a tool in Web3 is highly reflective of their use. SoulBound is currently nothing more than a paper project. The thorough whitepaper written by Vitalik Buterin and colleagues, cofounders of SoulBound NFT, provides a precise overview of the new category of NFTs.
SoulBound is a new non-transferable, publicly verifiable digital token initiative that may act as an individual's Web3 social status token. SBTs may function as an individual's digital resume in the Web3 ecosystem. It would include all information on a person's memberships, affiliations, and credentials.
SoulBound derives its inspiration from the popular video game World of Warcraft, in which some objects are "soulbound". Its goods cannot be sold or traded to other players or characters. Similarly, the SoulBound non-transferable NFT project would guarantee that Web3 users cannot exchange their social standing.
The unique feature of SoulBound NFTs is that they are permanently tied to a certain wallet for the remainder of their existence. The accounts or wallets holding SoulBound NFTs would be called "Souls."
A user's blockchain account would include immutable documents, such as job history, work experience, and academic qualifications. SBTs may be crucial for establishing a user's reputation in Web3 ecosystems.
SoulBound Tokens' Function in Everyday Life
SoulBound's non-fungible token, or SBT, might be a useful instrument for gaining access to various advantages associated with the transition of social identities on digital networks. Understanding how non-fungible tokens or NFTs may be used to prove ownership of certain assets is essential.
On the other hand, non-transferable NFTs do not just provide monetary benefits. SBTs might help improve the benefits of non-fungible tokens for assisting individuals in confirming their reputation.
Before engaging in a commercial transaction with a person, the new tokens might be used to examine their background. For instance, employers might utilize SoulBound NFT to validate applicants' work experience before extending a job offer. Consequently, the uses of the novel non-transferable NFTs in the Web3 environment might contribute to achieving conceivable benefits for a decentralized society.
In addition to occupying a significant section of the project's whitepaper, the significant points about SoulBound token usage cases are also emphasized in detail. Clarity on the value of these new nontransferable tokens is a key feature that may drive their adoption. Here is a summary of the significant application cases for SoulBound NFTs.
The biggest value benefit of SoulBound's nontransferable NFTs is the ability to trace their origin. To establish ownership of their unique digital assets, NFT owners must rely on centralized platforms such as OpenSea. People's NFT profile images have disappeared lately due to a brief outage in the NFT marketplace.
SoulBound NFT, on the other hand, may fix the issue. The more tokens it acquires, the simpler it will be to authenticate the NFT's credibility, assisting creators and artists.
2) Defi Lending
Due to the antagonism of extremely private decentralized ecosystems, popular Defi lending platforms such as Aave do not provide new services like unsecured loans. SoulBound token, on the other hand, may allow Defi protocols to provide unsecured loans by exploiting the real-time interactions of a Soul across many communities.
3) Resistance to Sybil Attacks
The Sybil attack is one of the most significant system concerns in DAO currency voting. How? A person may acquire 51 percent of the DAO token to seize control of the system. Most DAO token holders lack the skills to ensure key judgments.
By representing voting rights in DAOs, SBTs might help solve the problem. The non-transferable feature of SBT assures that nobody can purchase the necessary tokens for a Sybil assault. In addition, SBT may guarantee the transfer of voting rights to Souls with tokens on licenses, academic qualifications, and Soul-to-Soul endorsement.
Typically, the development of new cryptographic initiatives requires a community effort and the formation of new communities. In addition to performing token sales, crypto projects may also execute airdrops.
However, the procedure is often connected with Sybil attacks, and whales consume the vast bulk of the drops. Additionally, airdrops cannot reach the intended neighborhood.
SoulBound tokens may fix the issue by facilitating airdrops based on the details and analysis of SBT on a user's Soul. Vitalik Buterin's whitepaper provides a comprehensive explanation of the SoulDrop idea. For instance, programs that promote sustainability may assure the airdrop of governance tokens to Souls, with the tokens proving their participation in various sustainable actions.
Instead of defining privacy as a property right that can be sold or transferred, a more suitable strategy regards it as a programmable set of rights used to provide access, modify, or benefit from data collection. Improved outcomes are possible with this strategy.
SBTs make it feasible to have privacy as a programmable and composable property right, which means it can be mapped onto the complex collection of expectations and agreements. Moreover, they allow us to think of innovative arrangements since there are infinite ways in which privacy may be put together to create a complex constellation of access rights.
6) Academic Credentials
Future interest in the uses of SoulBound NFT in the sphere of academic qualifications would also be fruitful. SBT may be used as digital evidence of attendance or academic qualifications for students by universities, colleges, and institutions. As a significant group of non-transferable NFTs, they may be used to check applicants' credentials and attendance records.
Digital Curriculum Vitae Speaking of academic qualifications, the SoulBound token may also enable the creation of an original digital curriculum vitae. When a candidate's qualifications for the desired position are evaluated, the speed of the hiring procedure increases. On the other hand, it is difficult to verify a candidate's assertions about their professional experience and academic qualifications.
In such instances, SBTs might assist in demonstrating that a candidate has the requisite abilities for the position. The non-transferable NFTs would guarantee that experts in many sectors have a digital CV that is publicly verified. Therefore, it would be simpler for businesses to make recruiting judgments based on a candidate's SBT from past jobs or academic institutions.
Are SoulBound Tokens now usable?
SoulBound NFTs or tokens are a novel idea introduced to the Web3 community. The co-founder of the Ethereum network announced that tests about the SoulBound token idea would commence on the Ethereum blockchain. There is currently no set date for when the SBTs will be ready for usage.
A Comprehensive Analysis of SoulBound Tokens
The summary of SoulBound tokens' concept, operation, and application cases provides a positive image of the tokens. However, it is equally essential to recognize the significant obstacles connected with SBT NFTs. For instance, they may divulge a person's private information.
Additionally, zk-SNARKs may be used as a dependable remedy to this setback. Importantly, you must recognize that the SoulBound project's idea is novel, and its execution may be challenging.
SoulBound NFT's distinctive features indicate that non-transferable non-fungible tokens will play a vital role in the development of Web3. You must anticipate the practical prototypes of SBT, since its widespread adoption may take some time. Nonetheless, the principle underpinning the SoulBound token project's architecture seems intriguing.
It establishes a standard for creating a decentralized society inside the Web3 ecosystem via validating talents and credentials. Non-transferable NFTs play an important role in modifying the fundamental antecedents of NFTs themselves.
SoulBound is merely the beginning, and the first trials on the Ethereum blockchain will commence shortly. Stay current with the most recent information sources on SoulBound and its new use cases.
Nebulai’s Whitepaper on a Decentralized Solutions & Talent Marketplace, issued June 20th, 2021 introduced the idea of leveraging Decentralized Identities and Blockchain networks in a way where Talent can showcase their skills and experiences through a Decentralized Reputation System. We are happy to see that other organizations and communities are now focusing their efforts on advancing these possibilities and Nebulai remains committed to taking this technology forward.
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About Nebulai Corp Nebulai Corporation is a Miami-based Web3 company that is developing a Decentralized Solutions & Talent Marketplace which will allow companies, talent, solution providers, and investors to commerce on a Web and Mobile platform.