Soulbound Tokens (SBTs) are non-transferable blockchain tokens representing an individual's or entity's commitments, credentials, and affiliations. Unlike conventional tokens, SBTs cannot be sold, traded, or moved once issued. They are permanently bound to the recipient's blockchain account, making them a proposed foundation for decentralized digital identity.
The concept was formally introduced in May 2022 through a whitepaper titled "Decentralized Society: Finding Web3's Soul," authored by Ethereum co-founder Vitalik Buterin, lawyer Puja Ohlhaver, and economist and social technologist E. Glen Weyl. The paper argued that Web3 had been predominantly focused on transferable and financialized digital assets. The authors proposed SBTs as a way to move beyond pure finance toward building genuine social trust on the blockchain.
The term "soulbound" comes from the mechanics of the online game World of Warcraft, where certain powerful items, once picked up by a player, become permanently bound to that character and cannot be traded or mailed to others. Buterin referenced this mechanic in a January 2022 blog post, noting that applying a similar principle to digital identity could unlock a new design space for non-financial blockchain applications.
SBTs operate through blockchain accounts called "Souls." A Soul is essentially a wallet holding a collection of SBTs and is used to establish provenance and reputation on-chain. Souls can be associated with individuals, organizations, or other entities. A single person may maintain multiple Souls for different aspects of their identity, such as professional credentials and civic participation.
The minting process involves a trusted issuing party, which holds its own Soul, transferring an SBT to a recipient's Soul. For example, a university's Soul could issue a diploma SBT directly to a graduate's Soul, creating a publicly verifiable, tamper-resistant record of that achievement. Once issued, the token becomes an immutable part of the recipient's on-chain identity and cannot be removed or reassigned.
SBTs are related to non-fungible tokens (NFTs) in that each is unique and indivisible. The key difference is transferability: while NFTs can be bought and sold on secondary markets, SBTs have no market value by design and are permanently tethered to their recipient.
Within the framework proposed by Buterin and his co-authors, SBTs serve as the building blocks of a Decentralized Society (DeSoc). DeSoc envisions a Web3 ecosystem governed bottom-up by its participants and grounded in real-world social relationships rather than financial ones. SBTs encode trust networks of the real economy, allowing individuals to establish on-chain reputations reflecting genuine affiliations and accomplishments rather than purchasing power.
This contrasts with many Web3 ecosystems, where influence and participation rights often depend on the amount of a token a user holds. SBTs introduce a credential-based layer tying participation and reputation to verified history rather than wealth.
The range of proposed applications for SBTs is broad and spans multiple sectors.
In education, institutions could issue SBTs for completed degrees, certifications, or courses. A prospective employer could verify a candidate's qualifications directly on-chain without contacting the issuing institution.
In employment and professional credentialing, SBTs could serve as a persistent on-chain resume, recording work history, endorsements, and achievements that are publicly verifiable and cannot be falsified.
In decentralized autonomous organizations (DAOs), SBTs offer a governance mechanism not purely token-weighted. Voting rights or participation privileges could be tied to SBTs representing genuine community involvement, reducing the influence of large token holders and making governance more democratic.
In lending and credit, SBTs could represent a borrower's credit history on-chain, making lending more transparent. Instead of relying on centralized credit bureaus, lenders could assess a borrower's Soul directly for relevant financial history.
In event participation, SBTs could serve as proof of attendance or membership, similar to the POAP (Proof of Attendance Protocol) standard, but with a non-transferable guarantee built into the token.
In community formation, the concept of "Souldrops" has been proposed as an alternative to traditional airdrops. Instead of distributing tokens broadly and attracting speculative participants, projects could target users whose Souls hold relevant SBTs, assembling communities based on genuine shared interests or credentials.
Standard fungible tokens, like ERC-20 assets, are interchangeable and equal in value, making them suited for financial transactions. NFTs, built on standards like ERC-721, are unique and non-fungible but remain transferable and tradable. SBTs occupy a distinct category: they are non-fungible and unique like NFTs but explicitly non-transferable and non-monetizable.
The Binance Account Bound (BAB) token, launched on the BNB Chain, stands as one of the earliest real-world implementations of the SBT concept. It is issued to users who have completed identity verification (KYC) on Binance, carries no monetary value, and is non-transferable. Third-party protocols can query the BAB token to prevent bot activity, facilitate governance voting, or restrict access to verified humans only.
The permanent, public nature of SBTs raises serious privacy concerns. Sensitive attributes like medical history, religious affiliation, or legal records, if encoded as SBTs on a public ledger, could expose individuals to discrimination or harm. Critics compare this to social credit systems where a persistent, public record of a person's history could restrict access to services or rights.
Buterin and his co-authors acknowledged the need for mechanisms that allow users to selectively conceal their SBTs. However, as of the time of the original proposal, no comprehensive privacy-preserving specification had been finalized.
Wallet recovery presents a challenge. If a user loses access to their Soul's private keys, they could permanently lose all associated credentials. The whitepaper proposed a community-based recovery model where a user's designated guardians from their Soul network collectively authorize access restoration. This works best for users embedded in active crypto communities but poses difficulties for newcomers with limited on-chain social graphs.
The question of who controls the minting process and how erroneously issued SBTs might be revoked or corrected also remains an open area of development, as the governance structures required for such decisions have yet to be formally specified.
The idea of non-transferable on-chain credentials predates the formal SBT proposal. The Proof-of-Humanity protocol creates non-transferable profiles that are linked to a unique real-world individual, using a revocation mechanism adjudicated by a Kleros court to prevent ownership transfers. POAP tokens similarly represent event attendance without financial value, though they do not technically block transferability at the contract level. These projects demonstrated the feasibility of the non-financial token model and informed the broader SBT framework.
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