Are Soulbound Tokens (SBTs) the New NFTs?

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The future of Ethereum includes a “different type of NFT”

The Co-Founder of Ethereum, Vitalik Buterin, reveals how Soulbound tokens (SBTs) are the new solution for building positive reputations among Web3 and decentralized finance (DeFi) communities.

Buterin’s whitepaper report explains how SBTs represent the future of Ethereum by enabling services missing in Web3. The non-transferable tokens showcase social identities to assist ethical contracts and undercollateralized lending.


Buterin understands that today’s DeFi ecosystem is yet to support necessary advantages that affect real-life economies, and that tracing social provenance on-chain can save the reputation of the Web3 ecosystem.

SBTs overcome these limitations, establishing a Web3 world that reflects community relationships and trustworthy documentation.

Soulbound tokens are 100% non-transferable tokens, similar to NFTs but without buying, selling or trading abilities. Like NFTs, members can issue their tokens to other cryptocurrency addresses. However, the tokens can only be held on the marketplace “Soul”.

Soulbound stores its tokens solely on “Soul” to help fight scams. Other SBT advantages include:

  • Supplying ‘hard-to-fake’ membership accounts
  • Weeding out fake users by providing easily accessible user history
  • Offering access to shared assets and data
  • Making DAOs trustworthy by focusing on governance through community incentives
  • Allowing universities and institutions to issue degrees, and event organizers to verify attendance

Surpassingly, the tokens can also strengthen reputations. For example, Soul members can publicize their educational backgrounds, work history, and noteworthy achievements among DAOs, NFT marketplaces, and protocols.

SBTs are helpful for those wanting to scope people’s backgrounds to better grasp motives before making business deals and relationships. Following this, people can make more informed decisions regarding which projects are worthy of support.

Note: NFT curators and collectors can link Soulbound tokens on other marketplaces, as long as proof of ownership is authorized and detectable.


Trust factors within traditional financial systems have been problematic for years. Although Web3 uses decentralization tools to function, it’s essential to delve into how blockchain technologies are still dependent on Web2 governance. For example:

  • NFT curators and collectors rely on OpenSea and Twitter to source and market their cryptocurrency collections
  • DAOs attempts to move beyond coin-voting often rely on web2 social media channels to create multiple identities
  • Most DeFi players store their digital assets on centralized platforms, like Binance or Coinbase, over being more user-friendly (although DeFi is far more sophisticated)

Soulbound has the potential to override Web2 challenges as more NFT creators build a positive reputation solely using Web3 technologies. The platform represents the first of its kind.


Further bringing security solutions to the surface, users can select a group of members to support them if losing the keys to their Soul account. In addition, either people or organizations can act as “guardians”, to determine whether or not the request for a new key is legit.

Buterin believes SBTs will be available by the end of this year, creating an “entirely decentralized society” by 2024.

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