In May 2022, the concept of the soul was addressed in Web3. These tokens are meant to be unique and non-transferable, specific to the user who minted them.
Although they have no intrinsic value in resale, they are poised to change the way Web3 works.
A triad of tech visionaries — E. Glen Weyl (Microsoft Research), Puja Ohlhaver (Flashbots Ltd.) and Vitalik Buterin (Ethereum Foundation) — released a co-authored paper titled "Decentralized Society: Finding Web3's Soul." In the paper, Buterin, Ohlhaver and Weyl introduce the idea of Soulbound Tokens (SBTs): digital identity tokens that reflect the distinct traits and characteristics of a person or identity.
The goal is to bridge the gap between decentralized technologies and their users who still very much rely on consistent, centralized relationships and identities.
Less than three months following the introduction of the Soulbound Token concept, Binance's BNB Chain announced the launch of a pilot program for Binance Account Bound (BAB) tokens. This week the program has been declared fully launched and ready as an opt-in feature for all users of Binance wallets.
Though Binance is a centralized exchange, it is the largest in the world with 28.6 million users in 2022. Making BABs available to the Binance and BNB Chain user base can go a long way toward testing the viability of the hypothesis behind SBTs.
"Soulbound Tokens will play a significant role in the way web3 credentials will work in a Decentralized Society (DeSoc). This will transform how we connect, as blockchain technology will give society greater authority to determine how communities interact based on their credentials or affiliations. We foresee numerous use cases for the BAB token, and we will actively collaborate with the community to develop this revolutionary vision of decentralized society," said Changpeng Zhao, founder and CEO, Binance.
BAB tokens are accessible only on the Binance mobile app as an optional feature, allowing Binance users to mint their BAB tokens directly on their wallets. BAB tokens will carry any KYC verifications from Binance for use as verification on other platforms.
BAB Tokens will certify the wallet owner's verified user status on Binance. Using BAB Tokens, users can carry their Binance verification to third-party protocols, working a bit like Facebook and Google's single sign-in.
Yet the vision of what SBTs can be is much broader, from empowering the user to creating stronger Decentralized Societies out of converging Web3 ecosystems.
In an exclusive interview with Benzinga, we spoke with Gwendolyn Regina, investment director at BNB Chain.
BZ: Are BABs driving toward a single ID system? Is there room for it to work with the Distributed ID concept of multiple identities for different purposes?
Regina: This is not a single ID system. ID systems in a decentralized economy should be open to either issuers of any organizations or smart contracts.
The idea of the BAB KYC is to avoid multiple identities and a large number of bots. It will end up making the system more secure because each user can only have one BAB token and can only receive it if he a) passes KYC and b) claims it. So, you have less room to game the system.
Is BNB Chain working toward a social credit system for positive participation using SBTs/BABs?
BNB Chain is a decentralized and open blockchain and encourages the community and dApp builders to develop any mechanisms or use cases based on BAB and other SBTs.
The Binance Account Bound token, on the other hand, will not become a social credit system, but rather a proof of KYC verification that can help to build trust and ensure security. It is an opt-in feature.
Does BABs provide any additional protection for the identity of the user? Do they potentially put users' personal info at further risk of exposure?
BAB are minted and can be revoked by users themselves, as they are based on their own decision. Nothing else is exposed beside the token itself. The identity is still protected in the same way that Binance always protects its users' identities.
Users will be given a token proving that KYC was completed, but no other user data will be shared, so there is no risk.
How many users have opted in to use BAB tokens since their introduction in August?
BAB has been successfully minted by over 5,000 users; we announced the concept of BAB in August, and it was launched today.
The Rewards of Membership
Binance has committed to proliferating the use of BAB tokens and promoting their implementation through projects using BNB Chain (formerly Binance Smart Chain). They launched with fourteen projects using BAB tokens, including ApeSwap, Apollox PearDAO, Project Galaxy, X World Games, Summoner's Arena, Ultiverse, Cyberconnect, P12, Mathwallet, Liveart, OpenOcean, TinyWorld and The Harvest.
These projects are the first to use the new tokens, and they are offering exclusive incentives to their users, including exclusive airdrops and VIP benefits to users of the new feature.
For those willing to opt-in to the new feature and mint their BAB tokens, bonuses from projects include:
- ApeSwap will create a claimable NFT that represents a raffle exclusively for BAB holders.
- Apollox will provide BAB holders with a privileged reward program.
- PearDAO will award GameFi tokens to BAB holders, so they have special voting rights in the ecosystem.
- Project Galaxy will use BAB tokens as a defense against Sybil Attacks, which require using many fake identities in a peer-to-peer network.
- X World Games will incorporate BAB token with all games on its platform and offer a one-time airdrop when users log in to each game.
- Ultiverse, a metaverse platform, will use BAB tokens for KYC and grant daily bonus points in the metaverse-based Terminus City.
- Cyberconnect will display the BAB token on a user's profile to signify real users and access a proof of attendance mechanism for Link3 online events.
- P12 offers admission to all BNB Chain and P12, P12 x BAB Exclusive OAT, premium user access, and token airdrops.
- Summoner's Arena, Mathwallet, Liveart, OpenOcean, TinyWorld, The Harvest will offer exclusive unspecified benefits for BAB token holders.
The Last Word
The concept of cryptocurrency owes its roots to gaming and in-game currency. So, it's not surprising that a "soulbound" token refers to World of Warcraft's soulbound weapons, which are non-transferable items unique to the character that carries them.
Just as WoW saw a need for special items unavailable on the secondary market, BABs and other SBTs are valuable and essential to the user without needing to command a resale value.
It's easy to see how this concept could go awry. For example, as other exchanges and platforms adopt their own SBT standard, a user could potentially have multiple tokens that are all meant to tie into the indelible value of the user's identity and preferences, which could create confusion.
BNB-based projects will accept BAB tokens for KYC verification. Still, it remains to be seen how they will handle it if Coinbase releases its own SBTs. Accepting SBTs from multiple protocols will help the experience of users trying to toggle between Web3 platforms without multiple sign-ins.
Owning multiple Soulbound Tokens might reduce their special value in the same way too many passwords hurt the Web2 user experience.
It is possible that SBTs could run into philosophical conflicts with supporters of a Decentralized identity (DID) who want stable, separate identities that users can use for different kinds of activities. That seems like a potential loophole to game the parameters of any social ranking system built on SBTs.
SBTs are likely an enduring part of any future decentralized Web3 ecosystem. Decentralized services have finally found a way to know their customers, reward its customers for positive interactions and maintain the user's autonomous identity.
Like the rewards that BNB projects offer to celebrate the launch of BAB tokens, the benefits are still being defined, but the potential is enormous.
Cover photo modified from an image by Michele Caballero Siamitras Kassube from Pixabay.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Visit Benzinga's Crypto Homepage - 1,000,000+ depend on Benzinga Crypto every month