Soulbound Tokens (SBTs) are non-transferable, identity-centric digital tokens that uniquely represent the traits, credentials, and affiliations of a person or entity on a blockchain. Proposed by Vitalik Buterin in 2022, the concept is explicitly inspired by the 'soulbound' items in the video game World of Warcraft, which cannot be sold or traded to other players once acquired. While standard Non-Fungible Tokens (NFTs) are perfect for representing tradable digital property like art or real estate, they fail completely at representing reputation - if a university issues a degree as a standard NFT, the graduate could simply sell it to someone else, completely destroying its validity. SBTs solve this by locking permanently to a specific wallet address (the 'Soul'). This enables a rich, verifiable on-chain reputation system. A user's wallet can accumulate SBTs representing conference attendances, work history, skill certifications, DAO voting participation, and credit scores. By building a non-financialized web of trust, SBTs are theoretically required to move Web3 beyond hyper-financialized trading use cases and toward decentralized societies, enabling use cases like localized community governance, reputation-based uncollateralized lending, and provenance tracking for artists.
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