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Soulbound Tokens (SBTs): Pioneering Digital Identity in the Blockchain Era

Written by Feng Zhou  Senior Market Analyst Feng Zhou

Soulbound tokens (SBTs) represent a groundbreaking concept in blockchain technology, championed by Ethereum co-founder Vitalik Buterin and inspired by mechanics from the popular fantasy game, "World of Warcraft." The initial whitepaper, "Decentralized Society: Finding Web3’s Soul," envisions a decentralized society where SBTs serve as pivotal digital identity markers.

Despite being a revolutionary concept, the intricacies of how Soulbound tokens function and their potential impact on the future of Web3 technologies are not widely understood. This article aims to demystify SBTs, exploring their mechanism, applications, and potential to reshape digital interactions.

What Are Soulbound Tokens (SBTs)?

Soulbound tokens are unique in that they are non-transferable and permanently linked to a private wallet, or a "soul." They are designed to validate and represent an individual's credibility and qualifications in various domains, using blockchain technology as the underlying framework. These digital tokens can encapsulate a wide range of personal data, including medical records, educational backgrounds, professional certifications, and membership statuses. They function as tokens of Proof of Knowledge, establishing a robust and verifiable digital identity.

Types of Soulbound Tokens

SBTs can be categorized into two primary types:

The Mechanics of SBTs

The hallmark of SBTs is their non-transferability, a concept derived from item-binding mechanics in "World of Warcraft." In the game, certain items, once acquired, are irrevocably tied to the player's character and cannot be transferred or sold. Similarly, once an SBT is assigned to a wallet, it becomes inseparably linked to that wallet, reflecting a commitment to the integrity and sustainability of the token's purpose.

Crucially, as SBTs cannot be traded or monetized, they don't carry a financial value, emphasizing their role in authenticating identity over economic transactions.

Practical Applications of SBTs

SBTs have diverse potential applications, addressing various challenges within and beyond the Web3 sector:

The Advantages of SBTs

One of the key benefits of SBTs lies in their potential to transform DAO governance. By assigning voting rights based on the quality of community interaction rather than token quantity, SBTs could foster more equitable and transparent decision-making processes. Despite their potential, SBTs face challenges, particularly concerning the security and management of private keys. The "Decentralized Society" whitepaper suggests a community recovery model to mitigate the risk of lost keys. Additionally, SBTs must navigate potential Sybil attacks, where malicious entities could manipulate community voting.

While SBTs are often likened to non-transferable NFTs, they differ fundamentally. NFTs represent unique ownership and can be traded, whereas SBTs are non-transferable and focus on identity verification over asset ownership.

The Evolving Landscape of SBTs

As of mid-2022, SBTs remained largely theoretical, though their implementation began with Binance's Binance Account Bound (BAB) token, aimed at addressing identity verification issues.


The Soulbound token concept introduces an innovative approach to digital identity and trust in decentralized environments. Despite the challenges inherent in blockchain technology, the growing interest and early adoption by major market players suggest a promising future for SBTs in various domains, from art and gaming to finance and governance. As the technology evolves, we anticipate seeing more practical applications and widespread adoption of SBTs in the digital world.

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