Token Burning (SBT) vs Status Flag Flipping

Permanent state change: Burning an SBT (e.g., ERC-721) is a one-way, on-chain event. This provides cryptographic proof of revocation that cannot be reversed, which is critical for high-stakes credentials like KYC/AML compliance or legal attestations. It mirrors real-world document destruction.

Mutable state with lower gas fees: Updating a boolean flag in a smart contract (e.g., in an ERC-1155 or registry) costs ~20-50k gas, versus ~40-70k+ gas for a token burn + transfer. This matters for protocols like POAP for badge updates or gaming DAOs managing dynamic member roles that require frequent changes.

Preserves a complete audit trail: The burned token's transaction hash remains permanently on-chain, proving it once existed and was revoked. This is essential for regulatory compliance and audits where proof of a credential's lifecycle (issuance, holding, revocation) is legally required, as seen in projects like Civic's identity verification.

Enables lightweight, portable state: A single contract can manage the status of millions of tokens via mappings. This allows off-chain proofs (like EIP-3668) or cross-chain attestations without moving assets. Protocols like Guild.xyz use this for scalable role management across multiple DAOs and chains.

Permanent state change: Burning an SBT (e.g., via _burn in OpenZeppelin's ERC721) is a one-way operation. This provides cryptographic proof of non-existence, critical for compliance-heavy use cases like credential revocation or permanent bans. Auditors can verify state with 100% certainty.

Reduces on-chain storage: Burning removes the token from the owner's balance and total supply, potentially lowering future state read costs for protocols like The Graph. However, the initial burn transaction is expensive (~45k-60k gas for _burn) due to storage refunds and event emission.

Reversible state management: Flipping a boolean flag (e.g., isActive) allows for temporary suspensions and reinstatements. This is essential for subscription models (e.g., Uniswap Governance) or trial periods where user status may need toggling without minting new tokens.

Cheaper state updates: Toggling a storage variable costs ~5k gas (SSTORE) vs. a full burn. This enables high-frequency status changes feasible for applications like real-time attestations (EAS). Contract logic is simpler, avoiding hooks like _beforeTokenTransfer cleanup.

Permanent on-chain record: Once minted, the token's existence is a permanent, cryptographically verifiable fact. This is critical for soulbound credentials like academic degrees or lifetime memberships where revocation is undesirable. Protocols like Ethereum Attestation Service (EAS) leverage this for permanent attestations.

No native revocation or updates: To "revoke" a status, you must burn the token, destroying the entire history. This is gas-inefficient for dynamic traits (e.g., credit scores, subscription tiers). Managing expirations requires complex off-chain logic or costly wrapper contracts, increasing system overhead.

Low-cost state updates: A single bit flip in a verifiable credential (e.g., using Iden3's zkProofs or Veramo) can revoke or update a status without touching the core identity. This enables real-time reputation systems (like a DAO voting power toggle) and reduces gas costs by >90% for frequent updates compared to mint/burn cycles.

Requires trusted verifiers & data availability: The authoritative state often lives off-chain (IPFS, Ceramic Network). This introduces a liveness dependency; if the verifier's data is unavailable, the credential cannot be verified. It adds complexity versus the simple balanceOf check of an SBT, requiring integration with systems like Chainlink Proof of Reserves for robust decentralization.