Soulbound Tokens: The Non-Transferable NFTs

Soulbound Tokens: The Non-Transferable NFTs

Soulbound tokens are tokenized assets in the form of NFTs that are not transferable once purchased and controlled by an individual. They are utilized in carrying out specific tasks, such as maintaining digital identities.

Understanding Soulbound Tokens

Soulbound tokens (SBTs) are non-transferable tokens that use blockchain technology to portray an individual’s identity. Medical records, work history, and any other kind of data that tends to make up a particular individual or entity could be included. “Souls” are wallets that carry or issue such records.

SoulBound tokens intend to concentrate on NFT advancement, which will mean more than ego and financial gain. It will be a unique token that cannot be traded or transferred. The SBT will constitute an entity’s public image or a person, whereas the NFTs only symbolize property and assets. SBTs, in contrast to NFTs, have no intrinsic value and cannot be traded once issued.

In a nutshell, Soulbound tokens can be self-certified on how we reveal our data in CVs. Similarly, in methods utilized by the university in providing its graduates with certificates for their studies, SBTs may therefore be awarded souls acting in people’s places, businesses, or organizations.

Most importantly, remember that SBTs are information based on facts concerning you broken down into individual NFTs stored in the private blockchain wallet. 

How do Soulbound Tokens work?

Soulbound tokens may aid web3 systems in the use of non-transferable tokens as track record markers rather than relying on frameworks that are financial to do so. For instance, the lender reportedly confirms the debtor’s bank financial accounts, credit ratings, and repayment capacity to provide an undercollateralized loan.

However, a person’s prestige will serve as leverage to obtain an undercollateralized loan when SBTs are used to depict their credentials. Presently, if you remember the core idea of NFTs, they stand for assets or property with a monetary value. How can a blockchain-based, trust-free system verify an individual’s reputation?

Let’s use the voting system of a decentralized autonomous organization (DAO) as an example to clarify this idea and how SBTs function in the Web3 space. Most DAO governance structures distribute voting power according to a participant’s token holdings.

Moreover, DAOs issuing SBTs may give reputation precedence over tokens held by a participant. Users’ relationships with society can be used to confirm their importance. Examples of trophies that can be utilized to portray someone’s reputation come from the Governance Reward scheme offered by Kusama for each on-chain referendum member votes in.

To that end, trophies in Kusama and Polkadot DAOs represent a member’s on-chain occurrence, which could now be enough confidentiality for an undercollateralized loan. A brand image voting system may also protect DAOs from Sybil attacks.

In a Sybil attack, one or more malicious parties seize the overwhelming majority of governance tokens to sway the program’s course in their favor. Due to their ability to be openly verified, soulbound tokens can shield DAOs from malicious individuals. For example, to safeguard the integrity of decentralized autonomous institutions, souls possessing honorable SBTs may be given vast bulk voting power.

Several uses for soulbound tokens in the Web3 universe are discussed in the section below. When, however, will soulbound tokens be made accessible? The first SBT that Binance will release on the BNB chain is called Binance Account Bound (BAB). The BAB token will not be exchangeable and will have no monetary value.

This will substitute traditional validation for Binance users who have met the necessary Know Your Customer (KYC) requirements. Furthermore, third-party protocols can use BAB SBTs to support airdrop and DAO governance voting, among other use cases.

What to do if you Lose your SBTs?

The NFT society has experienced numerous instances of theft and fraud. Regrettably, there is a lot to worry about regarding the prospect of having your Soul address stolen or lost. Therefore, it is necessary to have a workable backup framework to stop theft.

In a post regarding SBTs, ETH co-founder Vitalik Buterin responded by recommending that a notion known as the “social recovery model” be adopted by the community members. Customers can designate a group of people or organizations as “guardians” using this notion.

If a user’s wallet is plundered, such people or organizations could access confidential details and modify them. The authors argue that obtaining a Soul’s private keys would require the approval of a qualified majority of a chosen subset of Soul communities.

Sadly, it doesn’t make the problem go away. For example, in this case, it would be difficult for a client to get their hijacked wallet back if their connection with their designated vanguards had soured or if they had died recently. Additionally, it could have disastrous effects if a cohort of guardians decides to attack someone they disagree with.

Vitalik thinks that more people can contribute to the recovery of stolen wallets. He asserts that this might make the SBT process of recovery somewhat more superficial than that of other NFTs.

How to invest in SBTs

Even though the idea of SBTs is still relatively new, there are several steps you can follow to get involved in the universal cryptocurrency market.

Incorporate Infrastructure Correlation to SBT (Within Your Business)

Users can establish a business that promotes utilizing or issues Soulbound tokens, or you can act as an organization that does both. Individuals can establish a unit promoting the implementation of Soulbound tokens if your company is already operational. This might entail creating a system that allows users to confirm their legitimacy. Participants can also conduct souldrops just like airdrops in cryptocurrencies to increase the use of souls.

Support SBT Related startups

The startup’s intention to develop products that facilitate the use of Souls is one of the most crucial aspects that investors should consider before investing. There will be even more chances for startup companies to create goods that will encourage the use of Souls as these technologies are widely adopted.

Users can also engage in these businesses via financial support or stock purchases. Folks can encourage the company’s user acceptance of the SBT idea by collaborating with it.

Application of SoulBound Tokens

There are still many encouraging use instances for SBTs, given the difficulty of understanding how to implement systems effectively.

Academics credentials

It is anticipated that the implementation of Soulbound NFT in the field of academic credentials will attract considerable attention. The platform enables organizations to digitally certify student educational qualifications, such as those approved by colleges and universities, and distribute that proof to students. Candidates’ enrollment can also be confirmed using non-transferable NFTs, like those granted by Soulbound.

Digital CV

Individuals can innovate a digital resume highlighting their academic success and relevant expertise using the Soulbound token. It can facilitate the interview process and guarantee that the applicant is competent to work for the organization. Admittedly, candidates’ suppositions can be challenging to verify due to their academic backgrounds.

In such circumstances, a digital CV can assist in demonstrating that a candidate possesses the skills required to work for the company. Employers would no longer have to base their decisions on a candidate’s academic achievements, thanks to non-transferable NFTs. Instead, they could quickly determine whether a candidate possessed the qualifications and experience required to work for the business.

Medical Record Management

Finding a new insurance company or doctor can be challenging. A lengthy phone call may be necessary to obtain your medical history and answer security questions that may be challenging for you to recall. By enabling individuals to keep their health records in something akin to a medical Soul, SBTs could do away with the time-consuming process of finding a new insurance company or doctor.

Non-Fungible Token Art

Soulbound tokens can be typically tied by NFT artists to their compilations, letting collectors understand which are theirs. By doing this, bad actors who attempt to profit from the NFT market by peddling random goods under the names of well-known artists are eliminated.

Artists can also create a linked Soulbound token that is kept in their Soul. Correspondingly, by certifying an SBT’s participation in a “collection,” NFT can affirm the demand and supply limits established by the artist.

SBTs allow NFT creators and artists to establish their reputation and image inside the NFT and digital art communities.

Decentralized Recovery and Key Management

The majority of web3 respondents use centralized wallets run by companies like Binance and Coinbase to hold their assets. Users cannot have control over their assets on these exchanges.

The critical management systems in use today could be more user-friendly. Although multi-sig recovery is a great choice, it has security and usability flaws. Social recovery is another strategy that relies on a person’s reliable connection. Similar to how the SBT’s approach functions, so do this one.

SBT wants to develop a solid important management system that connects community recovery to soul recovery. This gets rid of 3rd software and gives people access to their assets in real-time. Along with other on-chain organizations like DAO, these societies may also consist of off-chain institutions like churches, universities, and businesses. A group’s members would need to agree in order to recover a Soul’s private key under a community recovery model.

Vitalik presumed that the capability to communicate with Souls would be comparable to that of social rehabilitation. Users could affirm their shared secrets or have dialogues using it. These interaction techniques require more bandwidth (the capacity to carry richer “information entropy”) than on-chain bots or data processing over SBTs.

Undercollateralizing on-chain lending

Credit is how the conventional financial markets finance their business. Crypto projects have needed help finding a scaleable solution to this problem because of the technical limitations of these systems. Through SBTs, a person can easily verify their ability to repay a loan with the aid of a provable reputation.

DAO Sybill Attack protection

A Sybil attack, which happens when a person or group gathers a substantial chunk of governance tokens and then tampers with the outcomes of a vote, is among the most significant dangers that a decentralized organization (DAO) faces.

A DAO can address this problem by putting in place a number of mechanisms with the aid of a verifiable reputation. For example, a venture can stop a group of people from affecting a particular decision and discounting as a result by looking for a correlation between the different governance tokens that its users hold.

Proof of Presence

SBTs can be used to show enrollment at events, conferences, seminars, online conferences, and other occasions. Additionally, by granting SBTs to the restricted person, the event host or organizer can gather a controlled audience for their objectives.


It typically takes society work to establish new communities for cryptocurrency projects. Airdrops may also be started as a part of token sales. However, since whales would consume the majority of the drops, this process can be linked to Sybil attacks. Furthermore, the airdrops are frequently linked to the attack because they need help to meet the potential target audience.

By guaranteeing that the drops are conducted based on the examination of the user’s Soul, SoulBound can remedy this issue. The Vitalik Buterin whitepaper claims that projects aiming to improve sustainable development can use SoulDrop. For example, if a project aims to improve community sustainability, it can make sure that the governance token is connected to various sustainable endeavors.

Advantages of SoulBound Tokens

Using soulbound tokens for professional certification verification prevents information falsification because data is replicated entirely on the blockchain. A person’s accomplishments can also be publicly verified via SBTs, including any awards and credentials obtained. Furthermore, it promotes trust among token holders and the general public because authenticity cannot be bought with Soulbound tokens.

Big props to Soulbound NFTs; protocols will also be able to verify borrowers’ credit histories and assess their credit scores to figure out how much they can borrow. Additionally, SBTs prevent Web3 projects from turning into moneymaking enterprises by prohibiting the trading of digital representations. NFTs cannot be purchased; instead, one must work hard to earn them.

Drawbacks of Soulbound Tokens

The tokens can represent our personal information but also serve a number of other functional purposes. Sending and receiving exclusive airdrops, also known as “Soul drops,” as well as event tickets and other perks for particular community members, are examples. For instance, a company could easily send reunion tickets to every graduate from a specific year.

In the meantime, the inverse is also true. Bad actors may employ various techniques to recognize, target, and endanger participants of a particular community. For example, they can use a token subset to identify particular groups and individuals. This could result in a variety of issues, such as denial of healthcare coverage or voting rights.

As per the authors of the article, a database of SBTs comprising all of the unfavored social circles can be used to computerize the redlining of specific groups. It may also focus them on cyber and physical attacks. As a result, the author suggested that patrons have a way to conceal or abandon their SBTs if necessary in the future.

When Will SBTs be available?

According to the white paper, the Souls and SBTs will lay the groundwork for a decentralized society. This concept depicts a transformative future in which individuals can create their own Web3 identities through social interactions and human relationships.

In Web3, Soulbound tokens create notoriety and authenticity. This could effectively deter people from destroying the environment by lying about their accomplishments or purchasing status. It may also aid in reducing the number of identity fraud cases caused by parody and fraud.

According to one of the paper’s authors, Eric Weyl, the first Soulbound token (SBT) could be available as early as 2022. Binance, a cryptocurrency exchange, revealed in September 2020 that it would be releasing Soulbound tokens to all its users who had already accomplished the Know Your Customer (KYC) requirements.

Regardless of the numerous benefits of decentralization, privacy continues to be a problem for the decentralized community. Soulbound tokens, with the ability to function on a large scale, could be an excellent resource for large-scale versatility.


NFTs and SBTs have numerous parallels as well as extensive variations. Both are non-fungible tokens that operate on blockchain networks. They both provide genuine value to the holder, and each is unique. They can be gathered in addition. They are, nevertheless, collected for a variety of reasons.

An NFT continues to stand out because it is a virtual asset with monetary value. Due to this distinguishing feature, NFTs can be purchased, sold, and traded. Many tokens are linked to NFTs.

On the other hand, Soulbound NFTs offer value via their identity and data storage capabilities. They include specific information about the holder, such as their driver’s license number, educational history, affiliation with a particular religion, and more.

SBTs are distinctive since they contain information that is particular to the person. The token holder receives non-financial value from their verification and identification features. Additionally, Soulbound tokens offer functionality for businesses, associations, authorities, and other institutions. SBTs are not tradable, in contrast to NFTs.

NFTs gave birth to Soulbound NFTs. SBTs, however, are not displacing NFTs. You can anticipate that both will play a significant role in the future of the crypto world because they each serve unique and vital purposes in their own right.


SBTs are among the hot topics in the Web3 category. They can help one to access others on the blockchain platform and adequately build your online reputation. Since they are not transferable, there is less chance of individuals upsetting the ecosystem by misrepresenting their level of achievement or purchasing power.

NFTs are growing progressively, with new iterations and spin-offs like tokenized domains, SBTs, and Yats coming to the forefront. Since this industry is growing massively, it is advisable to do deep research on it to ensure that you stay up to date with what’s happening.