What are Soulbound Tokens (SBTs)?

Digital certificates that cannot be sold or handed to others. They tie things like education, memberships, attendance and promises to repay to an account called a "Soul". In 2022, Buterin, Weyl and Ohlhaver proposed them as part of a "Decentralized Society" (DeSoc) that would rebuild money-centered Web3 on human relationships.

A diploma or a membership card is proof that a person actually studied something or belongs somewhere. If it could be sold to someone else for money, it would lose its meaning. Yet many digital certificates online can easily be bought and sold. Soulbound Tokens (SBTs) are the idea of making digital certificates that cannot be sold or transferred.

In short

A Soulbound Token (SBT) is a digital certificate, recorded on a blockchain (a public ledger that anyone can check), that cannot be sold or transferred. Like a diploma, a membership card or proof of attending an event, it is meant to show not something you can buy with money but what a person has actually done, or where they belong [1][2].

In 2022, Vitalik Buterin, E. Glen Weyl and Puja Ohlhaver put forward a vision of using SBTs to represent the web of trust between people. The idea was to rebuild the world of crypto-assets (Web3), which had come to center on financial transactions, on top of social relationships. The three named this "DeSoc" (Decentralized Society) [2].

For example

From "soulbound" items in a game. The name comes from "soulbound" items in the online game World of Warcraft. Once picked up, they cannot be given or sold to another player, so if you want the best gear, you have to defeat the dragon yourself, together with friends. In a January 2022 blog post, Buterin asked whether, if NFTs (certificates of one-of-a-kind items online) could likewise be made non-transferable, they could show not just an owner's wealth but who that person is [1].

Proof of attending an event. Buterin writes that POAPs, NFTs given to people who attend an event, lose their meaning as proof that the holder attended if they can be bought from others. In fact, POAPs that Adidas gave fans for free were quickly resold at high prices once they came with a right to buy products first [1].

Contribution certificates from Taiwan's Ministry of Digital Affairs. In a 2023 conversation, Audrey Tang talked about a program that sends young people out to local areas as digital transformation ambassadors. Besides a year of pay, she said, they receive "soulbound NFTs that show their contributions, their impact certificates". "But if there's a digital signature from the digital ministry, that's easily verified," she added [3].

Contributors to the book Plurality. In a December 2023 video, Weyl explained that the amount people contributed to the book is recorded through soulbound tokens and ⿻ credits, and that those who contribute enough have their names on the cover [4].

How it works

Why non-transferability matters

Buterin writes that bad things happen when governance rights (the right to make decisions) are easily transferable [1].

If you want to spread power widely but rights can be transferred, wealthy people buy them up. If you want to give rights to capable people but they can be transferred, people who are merely eager, not capable, buy them all. So Buterin asks: what if governance rights were made non-transferable [1]?

Souls and SBTs

The basic building block in the DeSoc paper is an account holding tokens that are public and non-transferable (though they can be revoked by whoever issued them). The account is called a "Soul", and the tokens it holds are SBTs [2].

A Soul can hold education, work history, records of works and so on as SBTs. In the simplest form, these can be self-declared, like a CV. But their real power, the paper says, comes when the other party to the relationship, such as a university, a company or an event organizer (each a Soul of its own), issues or attests to them [2].

A Soul need not be tied to a legal name. Nor does the system try to guarantee one Soul per person [2].

Steps toward DeSoc

The paper lists things SBTs could achieve step by step [2]:

Provenance of works: showing that a work really came from its creator, a defense against realistic fake images and videos (deepfakes).
Reputation-based lending: lending and borrowing without collateral, based on trust.
Community recovery: when someone loses their keys, recovering them with the consent of one person from each of at least a set number of the communities they belong to (workplace, club, university, church and so on).
Collusion-resistant voting and funding: detecting votes from people in the same circle and discounting them.

The paper calls DeSoc a society in which individuals and communities nurture one another while building together a network useful to all [2].

Background, and privacy

In 2019, Weyl and his co-authors wrote a series on "decentralized social identity" on the RadicalxChange blog. They argued, in substance, that today's identity relies on keys no one can remember and on logins from a few giant companies, and badly fails to capture the richness of who each of us is [5].

The paper starts from "public" SBTs, which are easier to handle, but says it cares deeply about privacy. In its later parts, it discusses techniques such as keeping the content off the ledger and recording only a pointer [2]. Buterin, too, gave the example that if vaccination records became public certificates, everyone could see them, and argued that privacy must be built into the design from the start [1].

What is debated

Dangers the paper itself names. The DeSoc paper acknowledges that the same SBTs that can support cooperation between different people can also be abused: automatically excluding disliked groups, choosing targets for attack, restricting migration, and predatory lending to vulnerable people [2]. It also discusses possible abuses such as gathering SBTs through bribes to fake social relationships, and deliberately not holding SBTs to increase one's influence [2].
Should it be on a blockchain at all? Right after the paper came out, a debate arose over whether it makes sense to use blockchains for identity. Buterin laid out the arguments side by side: the rebuttal that signed credentials should be used off the ledger, Ohlhaver's response to it, and pessimism about the idea of managing one's own identity [6]. A 2022 paper by Shrey Jain and others with Weyl argued that the various approaches to Web3 identity complement one another, and that their differences are more a matter of degree than of essence [7].
It is not a "one per person" system. SBTs are not identity verification or proof of being a real human in themselves. The paper says a Soul need not be tied to a legal name, and one Soul per person need not be guaranteed [2]. Proving that someone is human is covered in the article on proof of personhood.

Where it fits in Plurality

Chapter 4-1 of the book Plurality, "Identity and Personhood", sets two approaches side by side as the extremes of the debate on decentralized identity [8]. Advocates of "verifiable credentials" (VCs) prioritize "privacy and the ability of users to control which of the claims about them are presented at any time". Advocates of SBTs "emphasize the importance of credentials that are public commitments to e.g. repay a loan or not produce further replicas of a work of art". The book writes that in both it sees "the unattractive trade-off" between establishing identity and protecting it [8].

The same chapter calls a system in which "distinct parts of an individual's network who are unlikely to cooperate against her interest would together be able to recover her credentials" "community recovery", citing the DeSoc paper [8]. This is covered in more detail in the article on Identity and Personhood.

Chapter 4-3, "Commerce and Trust", cites the DeSoc paper in a footnote pointing out that the difficulty of secure identity has held back experiments with community currencies [9]. The same paper is also cited in footnotes on mechanisms that take account of participants' social relationships, in chapter 5-6 on ⿻ Voting and in the funding mechanisms of chapter 5-7 (such as Quadratic Funding) [10][11].

Sources

Vitalik Buterin, "Soulbound" (2022-01-26) — https://vitalik.eth.limo/general/2022/01/26/soulbound.html
Puja Ohlhaver, E. Glen Weyl and Vitalik Buterin, "Decentralized Society: Finding Web3's Soul" (2022-05) — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4105763
Audrey Tang, Conversation with Joichi Ito and Daum Kim (2023-02-24) — https://github.com/audreyt/transcript/blob/main/2023-02-24-Conversation-with-Joichi-Ito-and-Daum-Kim.md ［CC0］
Glen Weyl on Plurality Seoul (2023-12-02, video message) — https://scrapbox.io/plurality-japanese/Glen%20Weyl%20on%20Plurality%20Seoul
Glen Weyl, Lucas Geiger and Kaliya Young, "Motivating The Case for Decentralized Social Identity" (2019-06-06) — https://www.radicalxchange.org/updates/blog/2019-06-06-d4utdx/
Vitalik Buterin, "Where to use a blockchain in non-financial applications?" (2022-06-12) — https://vitalik.eth.limo/general/2022/06/12/nonfin.html
Shrey Jain, Leon Erichsen and Glen Weyl, "A Plural Decentralized Identity Frontier" (2022) — https://arxiv.org/abs/2208.11443
Plurality, 4-1 "Identity and Personhood" — https://www.plurality.net/v/chapters/4-1/eng/ ［CC0］
Plurality, 4-3 "Commerce and Trust" — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, 5-6 "⿻ Voting" — https://www.plurality.net/v/chapters/5-6/eng/ ［CC0］
Plurality, 5-7 "Social Markets" — https://www.plurality.net/v/chapters/5-7/eng/ ［CC0］

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