“Soul-bound” NFTs are the new proposal from Ethereum co-creator Vitalik Buterin

“Soul-bound” NFTs are the new proposal from Ethereum co-creator Vitalik Buterin

Decentralized identity in the network is one of the new proposals of the co-creator of Ethereum, Vitalik Buterin, and a group of specialists. This could be achieved by tokens soulbound (SBT) or “soul-bound”, whose objective is the creation of decentralized societies or “DeSoc” within Web 3.0.

In the introduction of paper of Soulbound, it is pointed out that, at present, Web 3.0 —which aims to create a decentralized internet ecosystem—, has not yet been separated from centralized entities in terms of identity validation.

Because web3 lacks primitive elements to represent such a social identity, it has become fundamentally dependent on the highly centralized structures of web2 that it seeks to transcend.

Decentralized Society: Finding the Soul of the Web3.

Based on this, the authors, including E. Glen Weyl, a Microsoft researcher, Puja Ohlhaver, a strategic consultant at the Flashbots firm, together with Buterin, propose the concept of «souls» (souls), that is, the representation each entity (can be a person or an organization) within the network.

Each SBT would be a non-transferable non-fungible token (NFT). that users would receive, either by sample of work experience, studies carried out, or even credit history.

The origin of the name of the Tokens, although it is not exposed in the mentioned document, comes from the game World of Warcraft. There, according to writes Buterin on his blog, is a type of non-transferable in-game item that provides special qualities.

Most of the very powerful items in the game are soul-bound, and usually require completing a complicated quest or killing a very powerful monster, usually with the help of between four and thirty-nine other players. So, to bring your character close to having the best weapons and armor, you have no choice but to take part in slaying some of these extremely difficult monsters yourself.

Vitalik Buterin, co-creator of Ethereum.

Likewise, SBTs use the basis of attendance testing protocols or POAPwhose development serves to give event attendees a participation token.

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“Stairs to DeSoc”

The document describes the possible uses that SBTs could have for the lives of users. The first of them is authenticity verification by NFT artists to his works. An artist could sign a work together with the SBTs that certify his experience, giving greater value to his creation.

Another important point made in the document is that of the unsecured loans. By serving SBT as a credit scoring system, lenders could certify that the user is not defaulting, and so to be able to offer credits without collaterals. Currently, these types of loans are impossible within the ecosystem of decentralized finance (DeFi).

Governance is also a stated objective within the paper of the Soulbound. Each SBT is assigned to a single person. This, in turn, is non-transferable and reduces Sybil attacks (in which a single entity controls multiple identities). The document indicates that SBTs could make use of the proof of humanity, which indicates that a person must attest to their identity within a decentralized network.

Soulboud Challenges

One of the main challenges that Soulbound will face is the issue of privacy. Since a wallet will carry all the information of a user, he may not have the need or desire to make it public.

To combat this privacy flaw, the authors propose an information verification system, just as they use non-fungible tokens (NFTs). The part of the SBT document that contains the information is stored in the cloud chosen by the user, while in the public network only the hash corresponding to that information will be kept.

“Soul-bound” NFTs are the new proposal from Ethereum co-creator Vitalik Buterin
This system allows maintaining a certain degree of privacy on the user’s information. Source: Whitepaper Soulbound.

Another important point is in the transfer of information from one wallet to another and the recovery of data. As described in the whitepaper, it is “deluded” thinking that a user will not transfer their information as he may lose access to his keys and therefore his SBTs. The proposal establishes a community recovery system based on two pillars: the first of these is the delegation of recoveryin which each person delegates to entities, who can attest to their identity.

The other is interaction, that is, the platforms with which a user interacts can serve as witnesses at the time of recovery, or rather transfer of SBT, taking into account that their principle is to be non-transferable.

Regarding the non-transferability of each SBT, it is under discussion whether the issuer must be the one who can assign and revoke the token, but not the user. This allows you to set up a recovery process.

Detractors of SBTs

Although the system seems to have noble goals, its weaknesses can represent serious flaws in terms of privacy and anonymity. Even within the document it is highlighted that one of the limitations is to fight against the culture of cancellation, where the principle of pseudonymous economy is given. This refers to the fact that users prefer to remain anonymous by using pseudonyms.

Privacy presents a key challenge for DeSoc. For one thing, too many public SBTs can reveal too much information about a Soul, making them vulnerable to social control.

Paper of the souldbound tokens.

Faced with this possibility, some people on Twitter they commented that soulbound tokens can end serving as a decentralized model of social control similar to the one used —in a centralized way— by the Government of China. This, taking into account that all the information of a person is at the mercy of the network.

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