According to Vitalik, Soulbound tokens (SBTs) are โthe futureโ of Ethereum.
Earlier this month, he co-authored a 37 page paper describing them and their role for Ethereum.
Hereโs a TLDRโฆ๐ง
Earlier this month, he co-authored a 37 page paper describing them and their role for Ethereum.
Hereโs a TLDRโฆ๐ง
Web3 has some problems.
As of today:
-Users still verify collections with centralized platforms like OpenSea
-There is a lack of social scores
-Custodial wallets are still dominant
As of today:
-Users still verify collections with centralized platforms like OpenSea
-There is a lack of social scores
-Custodial wallets are still dominant
-Voting rights go to the highest bidder
-There is a lack of incentives to encourage community engagement
-A single user within a DAO can have multiple wallets to accrue voting power
-There is a lack of incentives to encourage community engagement
-A single user within a DAO can have multiple wallets to accrue voting power
Additionally, Web3 today centers around expressing transferable, financialized assets, rather than encoding social relationships of trust.
Yet, many core economic activities are built on persistent, non-transferable relationships.
Yet, many core economic activities are built on persistent, non-transferable relationships.
However, there is a solution.
Soulbound tokens, and โSoulsโ have the potential to change everything.
These two models layout the framework for a decentralized society existing solely on-chain.
Letโs go over each of these terms..
Soulbound tokens, and โSoulsโ have the potential to change everything.
These two models layout the framework for a decentralized society existing solely on-chain.
Letโs go over each of these terms..
Soulbound tokens are non-transferable tokens that are revocable by the issuer.
SBTs can be used to represent commitments to projects, real world credentials, certificates, & much more.
Itโs an easy way to bring off-chain attestations to Ethereum.
SBTs can be used to represent commitments to projects, real world credentials, certificates, & much more.
Itโs an easy way to bring off-chain attestations to Ethereum.
Next, we have โSoulsโ.
A Soul is an account or wallet that holds one or more SBTs.
The various SBTs stored within a Soul can can be used to form oneโs Web3 identity.
A Soul is an account or wallet that holds one or more SBTs.
The various SBTs stored within a Soul can can be used to form oneโs Web3 identity.
With these two primitives, we can form a society centered around native web3 identities with rich composability.
The future vision of Ethereum described in this paper involves small, incremental advances in the use cases of SBTs..
The future vision of Ethereum described in this paper involves small, incremental advances in the use cases of SBTs..
These steps are referred to as โThe Stairway to a Decentralized Societyโ, which consist of the following:
-Establishing provenance
-Unlocking undercollateralized lending with reputation
-Enabling decentralized key management
-Establishing provenance
-Unlocking undercollateralized lending with reputation
-Enabling decentralized key management
-Compensating coordinated strategic behavior
-Measuring decentralization
-Creating novel markets with decomposable, shared rights & permissions
Lets dive into each of these furtherโฆ
-Measuring decentralization
-Creating novel markets with decomposable, shared rights & permissions
Lets dive into each of these furtherโฆ
๐๐๐๐ฎ๐ฏ๐น๐ถ๐๐ต๐ถ๐ป๐ด ๐ฃ๐ฟ๐ผ๐๐ฒ๐ป๐ฎ๐ป๐ฐ๐ฒ
Souls can be used as a natural way for artists to stake their reputation on their works.
When issuing an NFT, an artist can issue it from their Soul.
Souls can be used as a natural way for artists to stake their reputation on their works.
When issuing an NFT, an artist can issue it from their Soul.
By viewing the SBTs in an artistโs Soul, buyers can confirm the Soul belongs to the artist, thereby confirming the NFTs legitimacy.
Additionally, artists could issue an SBT in their Soul that attests to the NFTโs membership to a collection & vouches for its scarcity.
Additionally, artists could issue an SBT in their Soul that attests to the NFTโs membership to a collection & vouches for its scarcity.
Souls would thus create a verifiable, on-chain way to stake and build reputation on the provenance and scarcity of an object.
This can go beyond art. Souls can be used for services, rentals, and any market built on scarcity, reputation, or authenticity.
This can go beyond art. Souls can be used for services, rentals, and any market built on scarcity, reputation, or authenticity.
๐๐ง๐๐๐ซ๐๐จ๐ฅ๐ฅ๐๐ญ๐๐ซ๐๐ฅ๐ข๐ณ๐๐ ๐๐๐ง๐๐ข๐ง๐
In the traditional finance world, undercollateralized lenders use credit scores to determine trustworthiness of a borrower.
In web3 this isnโt possible.
There is no method for establishing reputation for web3 identities.
In the traditional finance world, undercollateralized lenders use credit scores to determine trustworthiness of a borrower.
In web3 this isnโt possible.
There is no method for establishing reputation for web3 identities.
With SBTs, this all changes.
SBTs that represent education credentials, work history, previous loans, and rental contracts could serve as a persistent record of credit relevant history.
Itโs your on-chain identity.
SBTs that represent education credentials, work history, previous loans, and rental contracts could serve as a persistent record of credit relevant history.
Itโs your on-chain identity.
Loans and credit lines can be represented as non-transferable but revocable SBTs until they are repaid and subsequently burned, or replaced with proof of repayment SBTs.
SBTs have the potential to decentralize lending markets.
SBTs have the potential to decentralize lending markets.
๐๐จ๐ฆ๐ฉ๐๐ง๐ฌ๐๐ญ๐ข๐ง๐ ๐๐จ๐จ๐ซ๐๐ข๐ง๐๐ญ๐๐ ๐ฌ๐ญ๐ซ๐๐ญ๐๐ ๐ข๐ ๐๐๐ก๐๐ฏ๐ข๐จ๐ซ
So far, web3 has largely relied on token sales or airdrops to summon new communities.
These airdrops yield little accuracy or precision, and are easily susceptible to sybil attacks.
So far, web3 has largely relied on token sales or airdrops to summon new communities.
These airdrops yield little accuracy or precision, and are easily susceptible to sybil attacks.
SBTs offer a radical improvement called โsouldropsโ.
Using SBTs, a DAO that wants to form a community within a specific L1 can souldrop to devs who hold 3/5 conference attendance SBTs, or other tokens reflecting attendance like POAPs.
This can make up of any arbitrary logic.
Using SBTs, a DAO that wants to form a community within a specific L1 can souldrop to devs who hold 3/5 conference attendance SBTs, or other tokens reflecting attendance like POAPs.
This can make up of any arbitrary logic.
๐ ๐ถ๐๐ถ๐ด๐ฎ๐๐ถ๐ป๐ด ๐ฆ๐๐ฏ๐ถ๐น ๐๐๐๐ฎ๐ฐ๐ธ๐
SBTs can mitigate sybil attacks by:
-Conferring more power to Souls who hold more reputable SBTs
-Issuing โproof-of-personhoodโ SBTs
-Checking for correlations between SBTs held by Souls who support a particular vote
SBTs can mitigate sybil attacks by:
-Conferring more power to Souls who hold more reputable SBTs
-Issuing โproof-of-personhoodโ SBTs
-Checking for correlations between SBTs held by Souls who support a particular vote
๐ ๐ฒ๐ฎ๐๐๐ฟ๐ถ๐ป๐ด ๐๐ฒ๐ฐ๐ฒ๐ป๐๐ฟ๐ฎ๐น๐ถ๐๐ฎ๐๐ถ๐ผ๐ป
Measuring decentralization is hard.
Existing approaches have trouble determining the criteria that should be measured, dealing with partial coordination, and what constitutes a โdistinct entityโ.
Measuring decentralization is hard.
Existing approaches have trouble determining the criteria that should be measured, dealing with partial coordination, and what constitutes a โdistinct entityโ.
SBTs enable a different way of measuring the level of decentralization.
Using SBTs, protocols can:
-Limit token voting to reasonably sybil resistant (SBT rich) Souls
-Discount votes by Souls if they share a large number of SBTs
Using SBTs, protocols can:
-Limit token voting to reasonably sybil resistant (SBT rich) Souls
-Discount votes by Souls if they share a large number of SBTs
๐๐ซ๐๐๐ญ๐ข๐ง๐ ๐๐๐ซ๐ค๐๐ญ๐ฌ ๐๐ข๐ญ๐ก ๐๐ก๐๐ซ๐๐ ๐๐ข๐ ๐ก๐ญ๐ฌ & ๐๐๐ซ๐ฆ๐ข๐ฌ๐ฌ๐ข๐จ๐ง๐ฌ
So far web3โs scope has been limited to property whose bundle of rights are transferrable tokens
This makes it incapable of supporting simple property contracts, such as apartment leases
So far web3โs scope has been limited to property whose bundle of rights are transferrable tokens
This makes it incapable of supporting simple property contracts, such as apartment leases
SBTs have the flexibility to represent property rights of both physical and virtual assets, while encouraging new experiments
Here are just a few example use cases:
-Permissioning access to privately or publicly controlled resources (homes, cars, parks)โฆ
Here are just a few example use cases:
-Permissioning access to privately or publicly controlled resources (homes, cars, parks)โฆ
-Using SBTs to grant data access to researchers
-Holders of SBTs representing membership in a community can quadratically vote on parameters such as incentives and tax rates
-Using SBTs to program economic incentives for provenance-rich data
-Holders of SBTs representing membership in a community can quadratically vote on parameters such as incentives and tax rates
-Using SBTs to program economic incentives for provenance-rich data
It is clear why Vitalik thinks SBTs are โthe futureโ of Ethereum.
By making items in crypto Soulbound, they can represent more of who you are and not just what you can afford.
NFTs are your identity and your identity is not for sale
Further reading:
pastry.xyz
By making items in crypto Soulbound, they can represent more of who you are and not just what you can afford.
NFTs are your identity and your identity is not for sale
Further reading:
pastry.xyz
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