Ethereum co-founder Vitalik Buterin recently proposed a new form of tokenization standard that aims to address many existing shortcomings in Web 3 architecture, leading to increased adoption/experience of the user.

What is a Soulbound token?

Vitalik Buterin, known as one of the co-founders of Ethereum, has a big new Web3 project in the works. In a white paper titled "Decentralized Society: Searching for the Soul of Web3", Vitalik detailed the vision for a fully decentralized society (DeSoc) and how we can make it happen - create something called "Soulbound Tokens."

Soulbound was born based on a feature in the game World of Warcraft. A soulbound in the World of Warcraft is an item that, once picked up, cannot be transferred or sold to others.

Following that, the Soulbound token was born and is considered a non-transferable form of NFT. Once owned by the wallet, it will forever be associated with that wallet.

How does the Soulbound token work?

The process of how soulbound token work
How do the soulbound tokens work? Source:

The most distinguishing feature of Soulbound tokens is their non-transferability, in contrast to the more popular token standards being used today, such as the ERC-20 token standard, followed by a fungible token like ETH or the ERC-721 standard, followed by NFT (non-fungible token) like Bored Ape Yacht Club.

Soulbound tokens will be like an extended resume issued by other wallets attesting to these social relationships. Only SBT creators can issue them to other addresses, known as soul addresses. When these tokens move to Soul, they stick to that wallet address for the lifetime of their existence.

E.g. unlike non-fungible tokens (NFTs), SBT cannot move on the secondary market like OpenSea.

Why are soulbound tokens needed?

SBT can help solve the issues surrounding trust in the emerging decentralized society by providing a means of verification. This can reduce the risk of fraud and manipulation in Dapps.

These tokens have some particular features as:

Ownership of NFT

The most important value advantage of the SoulBound non-transferable NFT is the proof of origin of the NFT. SoulBound NFT can solve this problem because creators can own SoulBound NFT to prove their credibility.

DeFi Lending

Popular DeFi lending platforms like Aave do not offer unsecured lending services because of the high risk involved. The soulbound token, on the other hand, could enable DeFi protocols to provide decentralized loans by leveraging the proof of credibility through the properties that the soulbound token demonstrates.

Sybil's Resistance Attacks

One of the biggest problems in voting for different DAOs is the possibility of systemic risk. Sybil's attack is one of the most notable systemic risks in crypto voting with the DAO. A particular individual can buy about 51% of DAO tokens to gain control of the protocol. Soulbound tokens will minimize this when one has to prove credibility with a single wallet address.

Soul Drops

Soulbound tokens can prevent a user from using multiple accounts to receive multiple airdrops from a project. Thereby projects can create a better community and improve the attraction of users to use the Dapp.

For example, some projects on quest3 now also require users to own a bab NFT of Binance to minimize users using multiple wallets to receive airdrops.

Academic Credentials or Digital CV

SBT can be used as academic credentials for special occasions, events, web conferences, seminars, or others.

What happens if you lose your Soul?

Vitalik has proposed the widespread adoption in the community of what is known as the "social recovery model." With social recovery, users can designate a group of individuals or organizations as "guardians." Thanks to the consensus of these guardians, it is possible to change the private keys in the user's wallet if it is compromised.

Social recovery vs. community recovery

However, this doesn't exactly solve the problem. If a guardian has passed away or if relationships have broken down, things will be very bad. However, community-based guardians are able to partially overcome this problem.


[1] Soulbound,, accessed 29th November 2022.

[2] What Are Soulbound Tokens (SBTs) & How do they work?,, accessed 29th November 2022.

[3] SoulBound Tokens- The Non-Transferable NFTs,, accessed 29th November 2022.