Soulbound tokens (SBTs) are non-transferable, non-sellable NFTs that are permanently attached to a specific wallet address (a “Soul”), representing credentials, achievements, or affiliations that cannot be commodified. Proposed by Vitalik Buterin, E. Glen Weyl, and Puja Ohlhaver in their 2022 paper “Decentralized Society: Finding Web3’s Soul,” SBTs are designed as the missing primitive for on-chain identity.
The Soulbound Concept
The name “soulbound” comes from World of Warcraft’s “soulbound” items — gear that permanently binds to a character and cannot be traded or sold. Buterin applied this metaphor to blockchain tokens:
- A standard NFT (transferable): diploma that can be sold
- A soulbound token: diploma that can’t be sold — it IS you
The key distinction: SBTs encode who you are, not what you own.
What SBTs Can Represent
| Category | Example |
|---|---|
| Education | University degree, bootcamp completion |
| Professional | Work history, certifications, licenses |
| Medical | Vaccination records, doctor credentials |
| Community | DAO membership, hackathon participation |
| Financial | Credit history, loan repayment record |
| Social | Long-term community contributions |
How SBTs Differ from Verifiable Credentials
| Feature | SBT | Verifiable Credential (W3C) |
|---|---|---|
| Storage | On-chain (public) | Off-chain (user-held) |
| Privacy | Publicly visible | Private; disclosed selectively |
| Revocability | Issuer can burn | Issuer can revoke |
| Transferability | Never | Never |
SBTs are public by default; VCs are private by default. Together they represent complementary decentralized identity tools.
Applications
Meritocratic DeFi:
- Credit scores based on on-chain loan repayment history
- Under-collateralized lending using SBT-based reputation (no personal data needed)
DAO Governance:
- Weighting votes by contribution history (SBTs tracking past participation)
- Sybil resistance (one entity can’t hold identical credentials in multiple wallets)
Decentralized Society (DeSoc) Vision:
Buterin’s paper envisions a future where dense networks of SBTs create a rich social graph — enabling trust, community, and governance without relying on centralized platforms.
Limitations
- Privacy concern: Public blockchains make SBTs potentially surveillance-friendly
- Key recovery: If you lose your wallet, you lose your credentials
- Adoption: SBT standards are not yet widely adopted — the concept is still theoretical at scale
Sources
- Buterin, Weyl, Ohlhaver (2022): “Decentralized Society: Finding Web3’s Soul” — ssrn.com
- POAP: A proto-SBT attendance proof system
- Ethereum EIP discussions on non-transferable tokens