Soul Bound Tokens - Everything you need to know!

Hey everyone, and welcome to another issue of NFToday!

Today's issue is a special one, you might want to grab a cup of coffee because you're in for very unique and game breaking potential addition to the web3 ecosystem.

You may have guessed from the newsletter's subject line, but we're talking about Soul Bound Tokens, otherwise known as SBTs!

Today also marks the first issue where I only cover one article (I'm still covering crypto sediment and charts).

Let me know what you think!

- Hunter Maier

👨‍💻 The future of NFTs

📈 The suspense...

Heaven Land - 9 SOL

DEGEN TOONZ - 2.949 ETH

Otherdeeds - 3.2 ETH

goblintown.wtf - .495 ETH

Note: Floor prices of these may or may not be different when reading this!

Introduction

I've been seeing a whole lot of "SBT" talk within the web3 ecosystem over the past few days; I didn't think much of it until today…

After coming to my senses and diving in, I realized why so many people were talking about it. Soulbound Tokens could genuinely be that "next big thing" people are looking for…

Ready to become educated? Let's go!

SBT Definition

Soulbound tokens or SBTs are NFTs that cannot be transferred, sold, bought, traded, or transacted. Once minted, they're forever bound.

0 - The origin of the "soulbound" concept.

Believe it or not, the idea originates from the hit MMO RPG: World of Warcraft. Once a player acquires an in-game item with "soulbound," this item cannot be transferred, traded, or sold to another player.

While some of the ecosystem's available protocols have shown to provide aspects of SBTs, none of them fully encapsulate what Vitalik envisions:

- Driver's Licenses

- University Degrees

- Proof of Age

Here's the rundown of Vitalik's soulbound blog post:

- Soulbound NFTs/SBTs

- Governance

- Implementation

- Privacy

Let's jump in!

1 - Soulbound NFTs/SBTs

Can NFTs become Soulbound to a person/wallet?

Well…kinda?

At this moment in time, the answer is debatable.

Vitalik mentioned that the @POAP (proof of attendance protocol) could perhaps be the best project that currently represents SBT's need for validity.

For those not aware, POAP tokens are typically given out at events as a memento for physically attending. For example, anyone who attended Doodle's SXSW event was allowed to mint this beauty:

Currently, POAP tokens are transferable - they can be bought and sold just like any other NFT.

Yet, in theory, POAP tokens could work BETTER if they were soulbound.

Vitalik brings up a great point here:

Authenticity and physical attendance is the driving motivator/uniqueness for POAP tokens.

No one is interested if you bought your POAP off the secondary, they're interested to see that YOU are the original attendee of the represented event.

2 - Governance

"...there are very bad things that can easily happen to governance mechanisms if governance power is easily transferable." - Vitalik.

If governance intends to be widely distributed, making transferability relatively easy can lead to dominance by a single individual.

No one person should have more voting power just because someone may be more wealthy/power-hungry than someone else.

3 - Implementation

As mentioned previously, an official SBT protocol has yet to be created/established.

While POAP tokens require physical presence validity, it's far from becoming SBT's protocol of choice.

In terms of implementation, Vatilik states the closest protocol we currently have to non-transferability is proof-of-humanity.

Once verified as a human, you can sell/transfer your account. Yet, once transferred, the original owner can submit another video claiming that the newly transferred account is no longer under their control, making transfers of account ownership impractical.

Another method proposed would be bounding an SBT to an ENS name, but then we have to assume that users aren't willing to transfer their ENS names.

While both of these methods have potential, they're not ideal!

4 - Privacy

SBTs and privacy are two aspects that become more and more difficult to merge together as technology advances. One advancement could significantly impact another advancement.

Despite this, privacy is essential, especially in the web3 ecosystem.

Vitalik uses vaccination as an example:

"If, one day in the future, being vaccinated becomes a POAP, one of the worst things we could do would be to create a system where the POAP is automatically advertised for everyone to see and everyone has no choice but to let their medical decision be influenced by what would look cool in their particular social circle." - Vitalik.

Conclusion

The use of SBTs could have a massive decentralized impact on the current centralized world. Some more future use cases could include:

- Credit Cards

- Medical Records

- Insurance Coverage

Without trying to sound too degen, we're early :)

While not a perfect retracement, Bitcoin has just quad bottomed on the 4-hour chart.

Consolidation continues to reign supreme as the market's ideal sediment.

According to the fear/greed index, we've been categorized under "extreme fear" for a few weeks now.

While the bullish presence is strong, the bears might launch an all-out barrage at any point.

Until we see the fear subside, I encourage you to stay on your toes!

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👍 IT WAS INCREDIBLE!!!

😐 It was alright!

👎 Could've been better.