How Soulbound Tokens Could Revolutionize Social Identity Representation in the Decentralized Finance Ecosystem?
The concept of soulbound tokens (SBTs) was introduced in a paper by Vitalik Buterin, Ethereum’s co-founder, and others, as a way to address the lack of social identity representation in the decentralized finance (DeFi) ecosystem and to create more collaborative and fascinating ecosystems. According to the authors, soulbound tokens provide the basis for a decentralized society (DeSoc), which is a co-determined sociality in which communities and souls come together bottom-up as emergent features of one another to co-create plural network goods and bits of intelligence at various scales.
A soulbound token is a publicly verifiable and non-transferable nonfungible token (NFT) that represents an individual’s credentials, affiliations and commitments. This provides a more comprehensive and verifiable representation of an individual’s reputation or history, allowing for a more authentic and transformational path for the DeFi ecosystem. For example, a Soul can represent an individual’s employment history, which can be self-certified similar to information in one’s curriculum vitae. This allows for the creation of more complex and sophisticated smart contracts such as apartment leases or other real-world transactions.