Soulbound tokens, a new unstoppable trend in the crypto industry

Soulbound tokens, a new unstoppable trend in the crypto industry

A false good idea ? – Last January, Vitalik Buterin theorized a new type of NFT entitled Soulbound Token. These are none other than Non-transferable NFTs, linked to an address. Now, more and more projects are using these tokens. However, their use is not without risks.

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Soulbound Token (SBT): what is it?

The idea of ​​Soulbound Tokens was theorized by Vitalik Buterin in January 2022. Subsequently, accompanied by E. Glen Weyl and Puja Ohlhaver, Vitalik Buterin has published a scientific article that reviews this new type of token and its potential applications.

In practice, Soulbound tokens are nothing more than NFTs linked to the address on which they are issued. Thus, this notion of non-transferability opens the field to numerous applications.

Among the possible applications, the first to have been carried out on a large scale is closely linked to the notion of identity.

In fact, the initiative comes from Binancewhich created the Binance Account Bound, distributed to users who have completed KYC procedures. This SBT thus demonstrating KYC for an associated address.

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A few months after Binance’s initiative, other players have decided to embark on the SBT adventure.

Thus, on December 13, the company Cobo has announcement a collaboration with MetaMask Institutional and Gnosis DAO, to create the project entitled “Evolution”.

In practice, the Evolution project will aim to serve as proof of identity and certifications.

“Soulbound NFTs are a great way to prove identities and certifications. It has countless possibilities compared to a tradable NFT at present. »

In addition to this, Project Evolution SBT holders will enjoy benefits and rewards:

“The token includes two time-based rewards that will unlock a specific gift related to MetaMask Institutional and Gnosis Safe within the first three days. NFT owners will also be able to receive a quarterly research report developed by Cobo. »

SBT: what limits?

However, the use of SBT is not without risks. In fact, depending on their architecture, they can cause significant privacy issues.

Thus, if they are poorly thought out, they can reveal personal information in an immutable way on a blockchain.

Therefore, their use could make sense the day they are coupled with anonymity-preserving solutions such as zkSnark and other zero-knowledge proofs.

Finally, the latter push users to restrict themselves to a single address. An insecure practice that facilitates the traceability of funds through the reuse of the same address.

A few days ago, SMFG bank unveiled a partnership with HashPort for the development of an SBT solution.

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