Soulbound NFTs Explained

What if you could own items on blockchain just like in World of Warcraft? Would you like them to be your property and enhance your opportunities IRL like WoW gear? Well, it will become a reality soon.

Vitalik Buterin is already thinking about how to make it happen. In a paper published on May 11, Ethereum’s co-founder and his co-authors suggest that soulbound tokens can “encode the trust networks of the real economy to establish provenance and reputation.”

What are soulbound NFTs, how will they work, and what pros and cons have? OneArt explains the ballyhoo about SBTs and spells it out for you.

How it all started, or What NFTs and killing dragons have in common

Let’s go from afar. In gaming, soulbound are items joined to a particular character, i.e., they can be used only by that character. You can’t sell or transfer them. These are weapons, shields, gear, and armor — usually the mightiest ones that can help you kill the dragon. The key word here is you: there’s no way to delegate the task.

Source: Pillars of Eternity Fandom

So, what if some NFTs, such as regarding certificates, licenses, academic degrees, etc., could be the same — non-transferable? It’s exactly what Vitalik Buterin was thinking about, citing a Proof of Attendance Protocol and Proof of Humanity verification system as examples.

POAP creates ERC-721 tokens to prove it was you and not someone else who killed that dragon, i.e., visited the event. Technically, they can be traded but are highly likely to be of dubious value. Unless it’s some celeb’s POAP or the one providing exclusive access to a major event. PoH “combines social verification and video submission” to create a list of people who are proved no to be fake or bot accounts, i.e., Sybil-proof. These protocols are de facto non-transferable but can be revoked.

“Making more items in the crypto space “soulbound” can be one path toward an alternative, where NFTs can represent much more of who you are and not just what you can afford.” ©️ Vitalik Buterin

☝️ Earlier this year, HonestNFT promised SBTs to its community members for completing bounties.

What is soulbound NFT?

Soulbound token stands for “non-transferable token” meant to prove affiliations, commitments, and credentials. It can’t be traded but has revocation features.

It’s kind of a blockchain-based resume issued and proved by other accounts, or, as the authors refer to them, “souls”. For example, an X college could be a “soul” giving SBT degrees to its graduates. You can claim you’ve finished an X program or even buy that SBT from someone else, but it will be revoked.

Other use cases may include:

  • Credit history
  • Uncollateralized community lending
  • Voting
  • Portfolios
  • Work experience
  • Certificate of marriage
  • Tickets for exclusive events and souldrops
  • And other IRL stuff.

SBTs are almost here:

What’s under the hood

Source: The Crypto Times

Here’s an example of what a code of SBT could look like:

Merits and demerits

Want to hear Vitalik Buterin and Evin McMullen hash it out? Watch this video 👇

Imagine all the people living in DeSoc

SBTs are at the heart of DeSoc — a decentralized society. As per the authors, it’s a “pluralistic ecosystem” at a point where markets and politics meet. Web3 is now focused on financialized transferable assets. DeSoc is meant to push it towards more decentralization, merit-based governance, and relationships of trust.

Its key principles are:

  • Co-determination
  • Bottom-up organization
  • Composability and “decomposable property rights”
  • Networks governed and owned by their users.

In DeSoc, communities and separate “souls” team up to co-produce plural network goods. These can be, for example, data for prediction markets or social provenance-based and “souls”-governed plural intelligences.


Will soulbound tokens cut out NFTs?

No, as they pursue different goals. SBT is designed more like a proof of your identity, while NFTs “are signaling wealth” and status.

What if I lose my “soul?”

Soulbound tokens allow for community recovery, a more robust solution than social recovery. It means tying recovery to a broader range of IRL relationships (see below). SBTs can also access off-chain communication channels, e.g., a meetup, physical conversation, or a shared secret confirmation. The authors admit we need more experiments to grab the idea in detail.

Source: Decentralized Society: Finding Web3’s Soul

SBTs are meant to be non-transferable. How do I transfer them to a different wallet?

Vitalik Buterin suggests that you can transfer them on-chain, e.g., via a transaction calling a factory contract to make the old item invalid and the new one valid with a zk-SNARK proving the operation validity.

Several options are possible to protect privacy:

  • For storing, create an address that is the hash of an index, the address of the recipient, and the recipient’s secret.
  • When publishing a hash of multiple items, create a Merkle branch for every single recipient.
  • Provide a zk-SNARK to allow a smart contract to check whether you possess an item of a specific type.

How are SBTs different from NFTs?

Unlike NFTs, SBTs are non-transferable, have community recovery features, prove someone’s merits and identity and not ownership, and show provenance.

Aren’t SBTs the same as the Nosedive (Black Mirror) ratings?

They might be — any good idea can be used for evil. To solve the problem, the authors suggest implementing the possibility of hiding or “burning” soulbound tokens.

Can I use SBTs right now?

Not yet. They’re expected to be available by the end of 2022 — and that’s for early use. Wider adoption might be possible by 2024. However, there have already been some attempts to launch SBTs (1 and 2, for example).


SBTs are more an idea than a real thing now. So far, we can only speculate about their future and details of use cases and issues, raising more questions than answers regarding privacy, inheritance, red lines, and more. The good news is an SBTs-based DeSoc seems to have great potential for enhancing provenance, privacy, and governance mechanisms based on merits.

Our digital identities won’t migrate to SBTs on web3 in the twinkling of an eye. Let’s wait until standardizing the process will make it a handy tool for developers and average users. OneArt will track the emerging trends and changes. Follow us to stay updated!

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