Why Soulbound Tokens Are More Than a Gimmick

One-token-one-vote is broken. DAOs like Aave and Compound are crippled by vote buying and low participation. SBTs bind voting power to verified identity, not capital.

• Key Benefit: Enables personhood-based quorums and delegated reputation.
• Key Benefit: Mitigates governance attacks by making influence non-transferable.

Users need to prove traits (e.g., KYC, credit score) without revealing underlying data. Projects like Sismo and zkPass use ZK proofs to mint SBTs from off-chain sources.

• Key Benefit: Selective disclosure for DeFi underwriting or gated communities.
• Key Benefit: Privacy-preserving compliance, moving beyond binary KYC checks.

A user's history (Gitcoin grants, ENS tenure, POAPs) is siloed across chains and contracts. This data is invaluable for underwriting but inaccessible.

• Key Benefit: SBTs act as a portable reputation layer for credit markets like Goldfinch.
• Key Benefit: Enables cross-protocol loyalty programs and customized airdrops.

Early SBTs were just NFTs with a soul tag. New standards like ERC-4973 (SBT) and ERC-5114 (Soul Name) define core semantics for binding, revocation, and recovery.

• Key Benefit: Standardized interfaces for wallets (Rainbow, Metamask) to display SBTs correctly.
• Key Benefit: Clear revocation logic for expired credentials or sanctions.

A credential that can never be revoked or updated is useless for real-world use cases like employment or certifications.

• Key Benefit: Time-bound SBTs for event access or subscription models.
• Key Benefit: Revocable SBTs managed by issuers (e.g., universities, employers) via EAS (Ethereum Attestation Service).

Replacing admin-controlled multisigs with programmable membership. Protocols like Orca and Collab.Land use SBT gating for treasury management and community channels.

• Key Benefit: Automated, permissionless role assignment based on on-chain activity.
• Key Benefit: Reduces operational overhead and centralization risk in DAOs.

One-token-one-vote is easily gamed. SBTs enable one-person-one-vote by anchoring voting power to a non-transferable identity.\n- Enables quadratic funding and sybil-resistant airdrops (e.g., Gitcoin Passport).\n- Creates persistent reputation graphs for DAO contributors, moving beyond mere token holdings.

DeFi requires over-collateralization because there's no persistent credit history. SBTs can serve as a portable, composable credit score.\n- Unlocks under-collateralized lending (e.g., protocols like Spectral Finance).\n- Reputation-as-collateral enables novel financial products without liquid staking derivatives.

SBTs are nodes in a verifiable social graph. This creates a new data layer for building context-aware applications.\n- Enables gated experiences (e.g., token-gated Discord with real identity).\n- Facilitates decentralized job markets where proven skills (SBTs) are more valuable than self-reported resumes.

EAS is the leading infrastructure for issuing SBT-like attestations, providing a standard schema for on-chain reputation.\n- Schema-based attestations are more flexible than standard SBTs.\n- Becoming the de facto standard for projects like Optimism's Citizen House and Coinbase's Base.

Permanent, public reputation is a dystopian feature, not a bug. Solutions are emerging for private attestations and revocation.\n- Zero-Knowledge Proofs (e.g., Sismo ZK Badges) prove traits without revealing identity.\n- Time-bound or revocable SBTs are critical for practical adoption and user safety.

Persistent, non-transferable player identity is foundational for complex on-chain economies and governance.\n- Prevents wealth-based P2W by separating skill/rep (SBT) from assets (NFT).\n- Enables player-driven governance and provably rare achievements (e.g., Dark Forest).