Why Soulbound Tokens Need Zero-Knowledge to Be Useful

Public SBTs expose sensitive affiliations, credit scores, and medical credentials to competitors, adversaries, and scrapers. This transparency paradoxically destroys the utility it aims to create.\n- Sybil attacks become trivial without privacy.\n- Discrimination vectors (e.g., employer, club membership) are permanently recorded.\n- Commercial data (e.g., KYC status, loan history) cannot be monetized or used securely.

Zero-Knowledge Proofs allow a user to prove a credential is valid without revealing the credential itself or their wallet address. This enables private, granular attestations.\n- Prove you're over 21 without revealing your birthdate or ID.\n- Prove loan repayment history without exposing transaction amounts or other debts.\n- Prove DAO membership for a gated channel without doxxing your on-chain identity.

The functional model shifts: SBTs become private, stateful inputs to a ZK circuit. The public output is a verifiable proof of a specific claim. This mirrors real-world identity systems.\n- SBTs are held in stealth/encrypted wallets (e.g., using zkBob, Aztec).\n- Circuits are standardized for common proofs (inspired by zkEmail, World ID).\n- Verification is cheap on L2s (e.g., zkSync, Starknet, Scroll), enabling mass adoption.

The first major use case is decentralized credit scoring. Users can aggregate private financial data (SBTs from Goldfinch, Maple, bank verifications) to generate a ZK credit score.\n- Borrowers prove creditworthiness to lenders without exposing full history.\n- Lenders access better risk models while complying with privacy laws (GDPR).\n- Protocols like Credora or ARCx can become the private underwriters for DeFi 2.0.

Public SBTs broadcast your entire identity graph, turning every wallet into a honeypot for sybil attacks and social engineering. ZK proofs allow you to prove a credential (e.g., 'KYC'd human') without revealing which one.

• Selective Disclosure: Prove you hold an SBT from a DAO without revealing which DAO.
• Sybil Resistance: Enable 1-person-1-vote governance without doxxing every voter.
• Composability: Private credentials become usable inputs for DeFi (e.g., credit scoring) and gaming.

Storing personally identifiable information (PII) like diplomas or employment history on a public ledger violates GDPR, CCPA, and creates permanent liability for issuers. Zero-knowledge proofs move the verification logic on-chain while keeping the data off-chain.

• Regulatory Safe Harbor: Issuers avoid storing regulated data on immutable ledgers.
• User Sovereignty: Individuals control their data in custodial wallets (e.g., Privy, Capsule) or zk-SNARK wallets.
• Revocation Privacy: Credentials can be invalidated without publishing a public blacklist.

In a world of public SBTs, revealing any credential reveals your entire social graph, creating negative externalities for your connections. This kills network formation. ZK enables positive-sum signaling where trust is proven without exposing the network.

• Graph Privacy: Prove you're connected to a trusted entity without revealing the connection path.
• Collusion Resistance: Enable anti-collusion mechanisms (like MACI) for private voting and grants.
• Portable Anonymity: Maintain pseudonymity across contexts (e.g., Gitcoin Passport) while proving aggregate trust scores.

Aggregates off-chain and on-chain identities into private, reusable ZK badges. It's the data layer for selective reputation.

• Prove you're a Gitcoin donor without revealing your wallet address.
• Sybil-resistant airdrops via ZK proofs of unique humanity or past activity.
• Gasless for users, leveraging off-chain proof generation and on-chain verification.

A non-transferable NFT that permanently links all your actions to a public address is a surveillance instrument, not an identity primitive.

• Permanent linkage of health, credit, and employment records to an on-chain address.
• No selective disclosure; you must reveal your entire transaction history to prove one fact.
• Front-running & targeting becomes trivial for adversaries and extractive platforms.

Shift from public ledger entries to privately-held, verifiable credentials. Your identity is a locally-stored proof, not a blockchain state change.

• Prove membership in a DAO without revealing which one.
• Claim a credit score range (>750) without exposing the exact number or history.
• Interoperable trust across chains and apps via proof standards, not token standards.

Uses custom hardware (Orb) to issue a global ZK-proof of unique humanity. The most ambitious attempt to solve Sybil resistance at scale.

• Privacy-preserving: The iris code is deleted; only a ZK-proof of uniqueness is stored.
• Global Sybil resistance as a primitive for fair distribution and governance.
• Critical trade-off: Centralized hardware verification for decentralized, private output.

An enterprise-focused stack for issuing and verifying ZK-based credentials. Bridges the W3C Verifiable Credentials standard to blockchain.

• Issuer-centric model: Enterprises and institutions act as trusted claim issuers.
• User-held wallets: Credentials are stored in a user's private wallet, not on-chain.
• On-chain verification: Smart contracts can permission actions based on ZK proofs of claims.

EAS provides a schema registry for attestations. When combined with ZK rollups like zkSync or Scroll, it becomes a private credential system.

• Schema flexibility: Any entity can define a data structure for attestations.
• ZK Rollup integration: Attestations can be made private, with only proof validity posted on-chain.
• Becoming the standard: A minimalist, composable base layer for SXTs (Soulbound Extended Tokens).

Public SBTs create a permanent, linkable dossier of your entire on-chain life. This enables predatory targeting and violates core privacy principles.

• Sybil resistance becomes doxxing-as-a-service for competitors.
• DeFi credit scores can be scraped to front-run liquidations.
• DAO participation exposes political affiliations and net worth.

SBT logic often depends on off-chain data oracles (e.g., proof of Twitter followers, KYC status). These are centralized points of failure.

• A compromised oracle can mint fraudulent reputation, breaking the system's trust model.
• Data staleness means your SBT state may not reflect real-world changes.
• Projects like Chainlink and Pyth mitigate but don't eliminate this vector.

Generating ZKPs for SBT claims is computationally expensive and user-hostile. Current UX is a bottleneck for adoption.

• Proving times of ~2-10 seconds and costs of ~$0.10-$1.00 per action are prohibitive for frequent use.
• Wallet integration is nascent; users cannot be expected to manage proving keys.
• Solutions require robust proof aggregation (like zkSync's Boojum) and sponsored proof systems.

What constitutes 'proof of personhood' or 'reputation' is inherently subjective. Encoding this on-chain invites governance capture and legal risk.

• DAO votes on SBT issuance can be gamed by whale collusion.
• Regulators may view certain SBTs as unlicensed securities or identity systems.
• Projects like Worldcoin face scrutiny over biometric data and centralization.

Soulbound implies non-transferability, but what happens when a token is issued in error or a private key is lost? Permanent negative reputation or locked assets become a feature, not a bug.

• No recourse for fraudulent or mistaken attestations burns real-world opportunities.
• Lost keys render lifetime achievements permanently inaccessible.
• This demands complex, privacy-preserving revocation mechanisms and social recovery designs.

Even with ZKPs for individual SBTs, their use across dApps (DeFi, DAOs, Gaming) can create correlation vectors that de-anonymize users through pattern analysis.

• Temporal analysis of transaction timing can link anonymous SBT actions to your public wallet.
• Cross-dApp footprints create a unique behavioral fingerprint.
• This requires ZK-proof systems with stealth addresses and application-level privacy pools.

Public SBTs create permanent, linkable records of credit scores, health data, and employment history. This enables predatory targeting, discrimination, and destroys the concept of a fresh start.

• Doxxing Vector: A single SBT can deanonymize an entire wallet's transaction history.
• Discrimination Risk: Lenders could deny loans based on public health SBTs.
• Reputation Lock-In: Badges become permanent scarlet letters, stifling innovation.

Zero-Knowledge Proofs allow a user to prove a property (e.g., "I have a credit score > 750") without revealing the underlying data or other linked SBTs. This turns SBTs from surveillance tools into private credentials.

• Minimal Disclosure: Prove you're over 21 without revealing your birthdate or driver's license.
• Unlinkable Interactions: Use a credential across protocols (e.g., Aave, Compound) without creating a correlatable identity graph.
• Composability Preserved: Private proofs can be verified by any smart contract, enabling complex DeFi and governance logic.

Functional SBT systems store credentials off-chain or in private state, using on-chain verifiers (like zkSNARK or zkSTARK circuits) to check proofs. This mirrors the design of zkRollups (e.g., zkSync, Starknet) for identity.

• Off-Chain Storage: Hold sensitive data in encrypted storage or personal servers (e.g., IPFS with private gates).
• On-Chain Verifier: A lightweight, gas-efficient contract checks the ZK proof's validity.
• Revocation via Nullifiers: Use cryptographic nullifiers (like in Semaphore, Tornado Cash) to revoke credentials without exposing them.

ZK-SBTs unlock high-value use cases impossible with transparent ledgers. They move beyond simple POAPs to form the backbone of a credible, private web3 economy.

• Sybil-Resistant Voting: Prove unique personhood (via Worldcoin or BrightID) without exposing your identity, enabling 1p1v governance for Compound or Uniswap.
• Credit-Based Lending: Securely share a credit score with a MakerDAO vault to mint DAI with less collateral, bridging TradFi and DeFi.
• Compliant Anonymity: Prove jurisdiction (e.g., "I am not a US person") for regulatory compliance while remaining pseudonymous.