Soulbound Token (SBT)

SBTs act as verifiable credentials for an individual's or entity's identity. Key use cases include:

• Proof of Personhood: Issuing a unique SBT to verify a human user, combating Sybil attacks.
• Professional Credentials: Representing university degrees, professional licenses, or employment history.
• Reputation Scores: Accumulating SBTs from successful transactions or community contributions to build a portable, on-chain reputation.

SBTs enable more nuanced and sybil-resistant governance models for Decentralized Autonomous Organizations (DAOs).

• Voting Power: Granting voting rights based on proven contributions (e.g., SBTs for completed bounties) rather than mere token ownership.
• Role-Based Access: Issuing SBTs as membership badges to grant access to gated channels, treasuries, or specific tools within a DAO.
• Transparent Participation: Creating a permanent, auditable record of a member's roles and involvement over time.

In DeFi, SBTs can enable creditworthiness based on reputation, moving beyond pure over-collateralization.

• Credit History: A borrower's SBTs could represent a history of repaid loans, enabling lower collateral requirements or better rates.
• Sybil-Resistant Credit Scoring: Lenders can assess risk based on a composable, on-chain reputation built from various SBTs, reducing reliance on opaque off-chain credit scores.

SBTs serve as immutable proof of participation or achievement.

• Event Attendance: Issuing commemorative SBTs to conference attendees or concert-goers.
• Game Achievements: Representing in-game accomplishments, titles, or completed quests as non-transferable digital trophies.
• Educational Milestones: Awarding SBTs for completing online courses or certification programs, creating a verifiable learning record.

For artists and creators, SBTs can authenticate origin and manage rights.

• Creator Badges: Issuing SBTs to verified original artists, helping collectors distinguish official works from derivatives.
• Royalty Management: Linking an SBT representing creator identity to an NFT, enabling automatic and enforceable royalty payments on secondary sales across all marketplaces.

Understanding how SBTs differ from other token types is crucial.

• vs. NFTs: Both are unique tokens, but SBTs are non-transferable by design, binding them to a "Soul" (wallet).
• vs. Fungible Tokens: SBTs are non-fungible and represent attributes, not interchangeable currency.
• vs. POAPs: While POAPs are a specific implementation for proof of attendance, SBTs are a broader standard for any non-transferable, social identity token.

A Soulbound Token (SBT) is a non-transferable, publicly visible token permanently bound to a specific wallet address (a "Soul"). Unlike fungible or NFT assets, SBTs are designed to represent immutable credentials, memberships, and attestations that cannot be bought or sold, forming a persistent on-chain identity and reputation layer.

• Non-Transferable: Permanently locked to the minting address.
• Publicly Verifiable: On-chain proof of traits, achievements, or affiliations.
• Non-Financialized: Primarily represent social, not monetary, capital.

SBTs enable verifiable, portable identity across decentralized applications (dApps). Key use cases include:

• Decentralized Identity (DID): Representing educational degrees, professional licenses, or government-issued IDs.
• Reputation & Governance: Proving participation in DAOs, voting history, or contribution levels for sybil-resistant governance.
• Membership & Access: Serving as non-transferable keys for gated communities, exclusive content, or physical events.
• Credit History & Underwriting: Building a transparent, portable record of creditworthiness and financial behavior.

While the concept was popularized by Vitalik Buterin, the ERC-5114 standard provides a formal specification for Soulbound Tokens on Ethereum. Key technical features include:

• Soul Interface: A contract interface that defines a token as "soulbound."
• Locking Mechanism: Functions that prevent transfers after minting.
• Revocability: Optional functionality allowing the original issuer to revoke the token under certain conditions.
• Composability: Designed to work with existing token standards like ERC-721 for metadata and display.

The "Soul" is the wallet address that holds SBTs. The collection of SBTs in a Soul forms a decentralized social graph, mapping relationships and affiliations.

• Network Effects: SBTs from reputable issuers (universities, employers, DAOs) become valuable signals.
• Sybil Resistance: Makes it costly to fake a credible identity, as SBTs require provable, real-world or on-chain actions.
• Composable Reputation: Applications can programmatically read a user's SBTs to customize experiences, offers, or access based on verified traits.

The public nature of SBTs presents significant privacy challenges. Emerging solutions aim to balance verifiability with user control:

• Zero-Knowledge Proofs (ZKPs): Allow a user to prove they hold a specific SBT (or a property of it) without revealing the token ID or associated wallet address.
• Selective Disclosure: Protocols enabling users to reveal specific credentials to specific verifiers for a limited time.
• Semaphore & ZK-Badges: Frameworks for creating anonymous, group-based attestations where membership is provable but individual identity is hidden.

A core security challenge is balancing the immutable nature of on-chain data with the need for revocation in cases of key loss, fraud, or outdated credentials. Solutions include:

• Delegated Revocation: A trusted entity (e.g., an issuer or DAO) holds revocation authority.
• Time-Locking: Tokens expire after a set period, requiring renewal.
• Social Recovery: A user's trusted network can collectively authorize a new wallet address, effectively migrating the SBT's association.

By default, SBTs and their metadata are public, creating permanent, linkable records of identity and activity. Privacy-preserving techniques are critical:

• Zero-Knowledge Proofs (ZKPs): Prove possession of an SBT or a claim (e.g., "is over 18") without revealing the underlying data.
• Private Data Storage: Store sensitive metadata off-chain (e.g., IPFS, Ceramic) with on-chain pointers, granting selective disclosure.
• Semaphore or RLN: Use privacy pools to signal membership in a group (proven by an SBT) without revealing individual identity.

Preventing a single entity from creating multiple fraudulent identities (Sybil attacks) is fundamental for SBT-based governance and reputation systems. Common mechanisms include:

• Proof of Personhood: Integration with biometric or government ID verification services (e.g., Worldcoin, Civic).
• Costly Signaling: Requiring a non-trivial, non-recoverable cost (beyond gas fees) to mint an SBT.
• Social Graph Analysis: Leveraging the interconnectedness of SBTs in a web of trust to detect anomalous, isolated identities.

The value and legitimacy of an SBT are intrinsically tied to the trustworthiness of its issuer. This creates centralization vectors:

• Issuer Compromise: If an issuer's private keys are stolen, an attacker could mint fraudulent credentials.
• Censorship: A malicious or coerced issuer could unjustly revoke valid SBTs.
• Decentralized Issuance Models: Mitigations include using multi-signature wallets, DAO-governed issuer contracts, or attestation networks where many entities must concur on a claim.

Publicly visible reputation SBTs can become targets for manipulation and exploitation:

• Extortion and Doxxing: High-reputation addresses could be targeted for phishing or physical threats.
• Gaming and Bribery: Actors may attempt to artificially inflate reputation scores to gain undue influence in governance or access.
• Negative Externalities: A tarnished reputation (e.g., a "bad actor" SBT) could lead to permanent, automated exclusion (de-banking) without recourse, raising ethical concerns.

Unlike fungible tokens, a lost private key for a wallet containing crucial SBTs (like a passport or degree) represents an irrecoverable loss of identity. This necessitates advanced account abstraction solutions:

• Social Recovery Wallets: Use smart contract wallets (e.g., Safe, Argent) where guardians can recover access.
• Multi-Party Computation (MPC): Distributes key shards across devices or trusted parties.
• Time-Delayed Transactions: Add a security delay for sensitive operations like changing recovery settings.

A Non-Transferable Token (NTT) is a broader category of blockchain-based assets that cannot be transferred after minting. An SBT is a specific type of NTT designed for identity and reputation.

• Key Distinction: All SBTs are NTTs, but not all NTTs are SBTs (e.g., a non-transferable event ticket).
• Mechanism: Enforced by smart contract logic that rejects transfer functions.
• Purpose: Ensures the token is permanently bound to a single wallet address.

Proof of Personhood is a cryptographic method to verify a unique human identity without revealing personal data. SBTs are a primary tool for achieving this on-chain, helping to combat Sybil attacks.

• Goal: Distinguish unique humans from bots or duplicate accounts.
• Implementation: Often uses biometric verification (e.g., Worldcoin) or trusted attestations to issue a unique SBT.
• Application: Used for fair airdrops, governance voting, and resource allocation.

A Social Graph is a map of relationships and interactions between entities. In web3, a decentralized social graph built from SBTs (e.g., memberships, endorsements) allows applications to understand user relationships without relying on a central database.

• Data Source: Composed of SBTs representing group affiliations, collaborations, and reputational scores.
• Portability: Users own their graph and can bring it to any application.
• Example: The Lens Protocol uses NFTs and SBT-like mechanisms to create a portable social graph.