In May 2022, Vitalik Buterin co-authored a paper proposing “soulbound tokens” (SBTs) — non-transferable NFTs that represent credentials, affiliations, and commitments. The name came from World of Warcraft, where “soulbound” items can’t be traded between players. In crypto, SBTs would represent things like university degrees, employment history, credit scores, and community memberships — all verifiable onchain but not buyable on secondary markets.
The paper envisioned a “Decentralized Society” (DeSoc) where SBTs formed the building blocks of onchain reputation. Instead of trusting a centralized credit bureau, a lender could check a borrower’s SBTs: do they have a degree? Employment history? A track record of repaying DeFi loans? SBTs would make undercollateralized lending safer by providing verifiable reputation without centralized gatekeepers.
Implementation has been slow. Several projects launched SBT-like tokens: Gitcoin Passport (for Sybil resistance), POAP (Proof of Attendance Protocol, for event participation), and various onchain credential systems. But broad adoption hasn’t materialized because the chicken-and-egg problem is severe: SBTs are only useful if many institutions issue them, and institutions won’t issue them until many users demand them.
SBTs remain one of crypto’s most intellectually compelling ideas that hasn’t found product-market fit. The vision of a self-sovereign identity layer where your credentials are portable, verifiable, and owned by you rather than by LinkedIn or Equifax is genuinely appealing. Whether it requires blockchain specifically, or whether simpler identity standards (like W3C Verifiable Credentials) can achieve the same thing without crypto’s complexity, is the open design question.
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