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Paper background
Soulbound was proposed by Vitalik in his column in January this year, exploring the possibility of non-transferable NFTs on the chain mapping peoples non-transferable relationship networks and personal reputations in social activities. Because of their non-transferable nature, they are called soul-bound tokens.
This concept comes from the online game World of Warcraft. Most of the powerful items in the game have the property of soul binding. The acquisition of these items usually requires the player to complete a complex task or kill a very powerful monster.This mechanism is mainly for players to experience the challenge and fun of the game, and to prevent players from directly obtaining game rewards in the form of krypton gold.
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Current issues with Web3
The current web3 mainly revolves around financialization and transferable assets, and lacks a kind of coding of social trust relationship. But much mainstream economic activity depends on non-transferable, trust-based social relationships. For example: NFT artists need to establish trust through the certification of a centralized platform, DeFi applications lack credit loans, etc.
DAOs voting governance faces challenges such as Sybil attacks (depending on web2 applications), capital monopoly, etc., and loses decentralization.
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concept explanation
In order to solve the above problems, Vitalik proposed the concept of soul-bound tokens in his thesis, hoping to build a decentralized society (DeSoc) on this basis.
soul: A synonym for account, wallet, etc., representing the different on-chain identities of a person/company/institution. A subject can have multiple souls (which can be pseudonyms), such as family souls, professional souls, political souls, etc. Its characteristics are that the information on the chain is publicly visible, non-transferable, and revocable under certain circumstances (but possibly revocable-by-the-issuer).
Soul Bound Tokens (SBT):A programmable, non-transferable but revocable and retrievable token (NFTs) with verifiable information held by the soul, similar to an ever-expanding personal resume, through the soul associated with its social relationship (wallet) for verification. SBTs may be self-issued by Souls, attested to by other Souls who are counterparties to these relationships.In essence, SBT is a non-transferable identity and reputation token, like the achievement badge in real life, using blockchain technology to verify the authenticity of all information.Among other things, it can be linked to other characteristics and personal information, including education, work history, credit scores, professional certifications, and more. This information can be combined or disassembled into individual NFTs.
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possible use cases
1. Artists and NFT projects
Artists can use their soul to issue NFTs, betting their reputation on their works, artists can also create their own SBTs for different purposes, such as linking their NFTs to on-chain collections to deepen provenance, Prevent plagiarism. Taking Azuki as an example, through SBT, the community can check the past project experience of the founder, check whether a person/project can be trusted, and avoid participating in projects with a history of rug pull.
2. Unsecured credit loan
At present, DeFi lending is mainly over-collateralized, lacking a trust mechanism and a credit system, making it difficult to realize traditional credit loans, resulting in low capital efficiency. SBT can be used to create a censorship-resistant, bottom-up alternative to a decentralized credit system that allows people to use their reputation as collateral to obtain loans. For example, loans and lines of credit can be represented as SBT until they are repaid, after which the SBT is burned or replaced by a proof of repayment.
3. Social relationship recovery mechanism
Losing the keys to the wallet will result in the lost user permanently losing access to the wallet (losing the soul). In the DeSoc environment, users can retrieve their souls by transferring control of lost accounts to new keys through social connections such as friends, family, and other contacts.
4. Soul airdrop
Web3 projects can accurately airdrop contributors (such as holding a specific POAP) by detecting SBT and gathering the community at the unique intersection of souls, avoiding the Juno giant whale controlling multiple false wallet addresses to receive airdrops Wool event.
5. DAO governance and evaluation
By checking the relationship between the SBTs held by the souls, it is possible to prevent one entity from manipulating multiple false souls. In the governance of DAO, it can be used to prevent Sybil attacks (that is, a single user has multiple wallets to increase voting rights). In addition, by giving different weights or restrictions to SBT, giant whales can be prevented from monopolizing governance rights by pooling capital.
At this stage, there is a lack of standards for evaluating the degree of decentralization. When evaluating a DAO, it can be evaluated by the diversity and importance of the SBT held by its members to establish a sound reputation mechanism for the Web3 community.
6. Flexibility of virtual property rights
Using SBT, functions such as authorized access and rental can be added to the web3 world. For example, users who hold a certain SBT are allowed to access metaverse properties. Since the current NFT PASS is usually transferable and circulated, the visitor may be a user who purchased later than was initially trusted to enter.
In addition, in most cases, the current NFT grants its owner the right to use, destroy or profit from the asset once, while SBT can create the ability to split property rights.
7. Evidence of negative reputation
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Developmental Disabilities
1. Privacy Protection
The blockchain system is open by default and immediately visible to anyone in the world, simply putting SBTs on the chain will result in a large amount of personal information being made public. SBT can be used to store data off-chain, leaving only the hash value of on-chain data to solve. Zero Knowledge Proofs can also be one of the solutions.
2. Fraud and bribery
Summarize
Summarize
Web3 is not only an innovation of the financial system, but an innovation of social structure and production relations. The absence of persistent identities, models of trust and cooperation, and composable rights and permissions will lead to problems such as Sybil attacks, collusion, and over-financialization.
SBT is an innovation that augments and connects our sociality in virtual and physical reality, empowering souls and communities to encode rich social and economic relationships.
In addition to opposing excessive financialization, V God also hopes to move the off-chain scenarios to the chain, trying to solve the pain points of some projects that can only reach consensus under the chain through the application of the chain. This vision has a huge imagination space and narrative ability.
In the future, projects with concepts such as soul-bound tokens, reputation systems and social relationships on the chain may emerge in an endless stream, but it is expected that most of the projects have no actual needs and application scenarios. In addition to such projects, more attention should be paid to infrastructure projects such as data capture and analysis on the chain. Such technologies are the cornerstone of a decentralized society.
Note: JZL Capital currently has a Cosmos ecological theme fund. The opinions in this article may have a high degree of interest correlation with the company. This report should not be used as investment advice.
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Note: JZL Capital currently has a Cosmos ecological theme fund. The opinions in this article may have a high degree of interest correlation with the company. This report should not be used as investment advice.
