Decentralized Society's Next Stage: The Soulbound Token by@authorityjoel

Decentralized Society's Next Stage: The Soulbound Token

This article delves into the emergence of a decentralized society powered by blockchain and web3 technologies in the form of tokenized society. Soulbound tokens ($SBT) are non-transferable publicly transparent tokens that acts like real-life achievement badges and serves as proof of reputation, authentication, or completion. The advent and emergence of blockchain technology have paved the way for the tokenization of identity as proof. The application of proof of ownership of historical records and personal credentials becomes inherently important in society to maintain consistency and transparency in on-chain record keeping.
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Olusegun Joel Titus

Ph.D. Candidate. Blockchain Researcher, web3 technical writer, developer, and Audio platforms researcher.

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The application and the implication of a decentralized society through tokenization

Warning*: Brace yourself before you embark on the endless journey of reading this article, please be aware of what you are getting yourself into, this is probably going to be the longest read here, hence, I advise you to get some popcorn, soda, and your 3D glasses ready*

· Abstracts

· What is a soulbound token ($SBT)?

· Introduction

· What are decentralized societies and their applications?

· Why is a decentralized society important?

· What are the Real-world applications and implications of a decentralized society?

· Differences between soulbound tokens ($SBT) and regular non-fungible tokens (NFT)


This article delves into the emergence of a decentralized society powered by blockchain and web3 technologies in the form of tokenized society where personal records and credential becomes proof of reputation to authenticate historical data. Furthermore, the advent and emergence of blockchain technology have paved the way for the tokenization of identity as proof of reputation, verification, and authentication. Thus, the application of proof of ownership of historical records and personal credentials becomes inherently important in society to maintain consistency and transparency in on-chain record keeping. Thus, by leveraging the infrastructural advancement and the immutability of blockchain technology and decentralized storage mechanisms, a new form of real-life applications in which values can be stored emerges. However, the process of tokenized and decentralized society requires more technical know-how and how value could be derived from personal identification. Thus, it’s essential to understand what soulbound token ($SBT) is and how the process of tokenized society works.

What is a SoulBound Token ($SBT)?

Before we delve into understanding the implication and application of soulbound tokens, let’s first look at the definition.

To simply put it, a soulbound token (SBT) is a non-transferable publicly transparent token that acts like real-life achievement badges and serves as proof of reputation, authentication, or completion akin to what you will get in a video game upon completing a certain task or achieving a milestone, as highlighted by (Vitalik & Weyl et al, 2022).

Consequently, a soulbound token could be used as proof of attendance and history to authenticate participating in a certain event with a proven record. The application of soulbound token goes beyond its potential uses as a proof of record of ownership, it also serves as a proof of historical data used to authenticate credentials in form of non-fungible (NFT).

Source: cryptotimes

Source: cryptotimes


There is an exponential growth in the real-life applications of emerging blockchain and web3 technologies and the transformation of participatory technology using distributed ledger technology. However, besides its cryptographic data encryption application, cryptocurrency, distributed ledger, and digital asset. The blockchain utility provides endless possibilities and limitless in its ability to transform our social interaction. Thus, the diverse application of blockchain goes beyond creating digital assets or creating a more interactive immersive digital environment.

Consequently, with the advent of blockchain, web3, and distributed ledger technologies’ adoption growing exponentially, it becomes obvious that blockchain technological innovation will impact social activities, and how personal information is stored, protected, and distributed. Our culture is heavily influenced by technology and thus, we are evolving into a more addictive technologically determined environment that will change how we interact.

Furthermore, tokenized identity possesses dualistic attributes, such as social and digital proof of verification and reputation. Other characteristics include but are not limited to proof of authentication, ownership, and historical record of credentials.

The proposed use of a soul-bound token as a measure of transparent, public visibility and as a non-transferable but revokable token by the issuer highlight the technological importance and significance of a non-fungible token. However, with the introduction and implementation of “$SBT” NFT as a bridge that connects the physical identity and decentralized digital reputation by assigning value to individual persona by using distributed blockchain protocol to store individual earned value and reputation on-chain.

The application of the underlying NFT technologies as proof of reputation and method of identification in the creation of a decentralized society, thus creating immutable non-transferable identification on the blockchain. This indivisible and noninterchangeable proof of reputation, open a new way for how social information and record is permanently stored on the blockchain.

What are a decentralized society and its applications?

Vitalik, the co-founder of the Ethereum network, recently co-authored a 37 pages research paper publication titled “Decentralized Society: Finding Web3’s Soul” where the cohort proposed the extrapolation of the importance of decentralized society (DeSoc) using tokenization as a proof of reputation and identification to assign on-chain value to participants real-world credentials and resume in a decentralized environment while enforcing a high level of privacy, Sybil attack resistance, and provenance through non-transferable but revokable method (Weyl et al, 2022).

Conversely, a large part of society now understands how crucial data privacy is and how big tech has managed to commodify users’ data and consumers’ digital behavior using algorithms. Thus, the importance of data composability and viability now becomes essential more than ever, and using the tokenized method as a metric to measure on-chain reputation is significantly important to enforcing data ownership, integrity, and “programmable privacy” by staking against your reputation and identity with the help of blockchain tokenization.

The concept of tokenizing societal and individual identity using on-chain reputation as a metric to assign non-transferable value and unique attributes that are directly connected to individual digital and social identity is not a new phenomenon, however, if the introduction of the soulbound token is properly implemented, it will become a paradigm-shifting and disruptive digital credential to the measurement identity, on-chain value proposition, and individual digital attribution.

The concept of DeSoc could be used as Proof of reputation, identity, historical record, and data ownership. On a larger scale, soulbound tokens could serve as a metric where on-chain identity will be measured based on individual credentials and reputation.

Furthermore, the immutability of those on-chain data will be crucial in attending or participating in activities that can be issued by the counterparty and used as proof of relationship attestation by other counterparties holding the token. The counterparty could be institutions, companies, or organizations issuing the “soulbound token” to others as proof of connection and relationship.

Synthesizing multi-layer information provides data composability in anticipation of collective “programmable privacy”, thus, the consensus blockchain protocol enables decentralized participation and individual engagement that serves as proof of reputation, verification, and identification in the new digital environment.

Conversely, the homogeneous application of decentralized ledger technologies and the composability of blockchain digital components could be used as a method of data verification and authentication. The representation of historical credentials on the blockchain and the flexibility of record-keeping enables easy access to individual track records transparently and securely while maintaining their privacy. However, the criteria used in measuring digital identity and reputation are based on transparency and immutability of blockchain data integrity.

Subsequently, one might ask, what is the real-world application of decentralized society and its implication? The wide adoption of decentralized ledger technology and the real-life application of tokenized society using a distributed state machine such as a blockchain has become prevalent in recent times, with many legacy institutions and government agencies exploring the possible application of blockchain into an existing system, however, the real-world application of the blockchain transcends the cryptocurrency and the storage of digital assets thus, provide a decentralized mean of storing digital identity and enables programmable means of data integrity through the cryptographic method of encryption.

Real-world data and information will be securely and transparently stored on-chain while providing an avenue for the exchange of reputational value align to a real-world identity. Staking against one reputation and identity as a colleterial is a new phenomenon made possible by decentralized society and the introduction of “BlockID” as a verifiable mechanism to authenticate which reputation and identity are attached to on-chain assets.

The scarcity and authenticity of digital assets will be tied to an individual reputation and digital identity using a tokenized method. These tokens could be issued by counterparties such as companies, universities, organizations, sports clubs, and others as proof of membership, identification, ownership, authentication, and reputation. The concept of soulbound token could also be used as a proof-of-personhood system (as discussed by Fred Ehrsam).

Why is a Decentralized Society Important?

In recent times, we have witnessed centralized entities and big tech companies monopolize and commodify consumers’ data, and censor social interaction, with high sovereignty over users’ data and monetizing those data. However, with the introduction of a decentralized society, users have ownership of their data.

To achieve a decentralized society, data and information composability are significantly important in creating unique identifiers as proof of reputation, authentication, and verification that enhance digital integrity.

The triangulation of real-world social data, digital identity, credential provenance, and decentralized plural intelligence in creating a comprehensive rewarding system based on unique identifiers, programmable privacy, and communication of oneself beyond physical space, thus, highlighting the emerging phase of how technological innovation determines and shape social change and future interaction, according to technological determinism theory or reductionist theory as some preferred.

Technological Determinism Theory as hypothesized by Langdon Winner stated that

  1. The technology of a given society is a fundamental influencer of the various ways in which a society exists
  2. Changes in technology are the primary and most important source that leads to change in the society

The conceptual introduction of tokenized identity as a store of historical credentials and reputation is a paradigm-shifting social and technological phenomenon that encapsulates socio-cultural significance, economic attributes, and the relevance of digital identity in current society and beyond. However, this phenomenon comes with its implications in the establishment of cultural application; thus, it requires critical evaluation and thorough assessment before implementation.

What Are the Real-world Application and Implications of a Decentralized Society?

Mapping real-world information with its purported equivalent digital identity and reputation in a decentralized form as proof of verification signifies the emergence of a paradigm-shifting ecosystem propagated by blockchain technologies to advance the provenance of data integrity, programmable privacy, and censorship resistance environment that protects reputation and identity in web3.0 environment.

Subsequently, the convergence and the integration of real-world individual data to on-chain, provides an intersection fusing identity, reputation, and scoring system used as digital collateral that cross-certified social connection, technological innovation, and participatory applications of an emerging ecosystem. The exploration of the emerging possibility of deploying and implementing a decentralized proof of reputation and identification to authenticate and verify individual activity and historical data in correlation to their on-chain credential using the tokenized mechanism.

Furthermore, the concept of a decentralized society powered by tokens such as soulbound (SBT) serves dual purposes in connecting off-chain data to on-chain reputation as a

· Proof of authentication

· Proof of History

· Proof of reputation

· Proof of participation

· Proof of ownership

· Proof of completion

· Proof of identification

· Proof of attendance

· Proof of certification

Fundamentally, aside from its digital application as a distributed ledger technology (DLT), one of blockchain’s prominent utilities is the tokenization of social interaction and its ability to add value to real-world activities with the possibility of staking against one’s reputation as lending collateral or serving as a decentralized oracle network that relays off-chain data to on-chain. The synchronicity of off-chain data to interoperate with on-chain data is one of the innovative implementations of blockchain technology known as oracles or decentralized API.

Pragmatically, consensus blockchain technology promised permissionless and inclusiveness, in a more decentralized fashion, however, to achieve these and unlock the unlimited possibility promised by blockchain technology, socio-cultural adoption needs to be promoted, thus, the real-world applications and implications of the technological innovation need to be re-established in a way that adds value to real-world events.

The socio-cultural trajectory of blockchain technology could be measured, based on the standard of the early adoption, use cases, and the incentives it provides. Take, for instance, the legacy web2.0, where big tech companies, commodify consumers’ data and track consumer behaviors using an algorithm while serving as a gatekeeper with high power concentration and dynamic, however, with blockchain, users control their information in a permissionless way, with a censorship resistance mechanism with peer-2-peer interaction.

The fragmentation and the scattering of consumers’ data over multiple platforms in the legacy internet have led to the innovative implementation of a decentralized society, where consumers control their data, and the data can be moved along with the user’s privacy. Big tech platform commodifies users’ data through algorithmic extraction and distributes that information to third-party advertisers without the user’s consent.

Potential Use Cases Of $SBT

The digital and social utilities of soulbound tokens are limitless if diligently implemented. $SBT could be used as proof of NFT ownership, Uncollateralized Lending in the decentralized finance ecosystem by staking against one’s reputation, used as a voting token in a decentralized autonomous organization (DAO), use to form a Sybil resistance against attack, and also as a historical record keeping such as university credentials, employment resume, and curriculum vitae.

Source: Cryptotimes

Source: Cryptotimes

Differences between soulbound tokens ($SBT) and regular non-fungible tokens (NFT)

· SBT is non-transferable and publicly transparent.

· NFT is non-fungible, non-interchangeable, unique identifier tokens that could be digital arts.

· NFT and SBT could be used as proof of authentication and identification of products or records.

· SBT can also be used as permission, authorization, and access to legal documents.

· NFTs can be used as passing tickets to access gated events without any identity verification.

Traditionally, identity, image, and reputation are a direct representation of individual social contribution and unique attributes that defines their societal status and value proposition in a peer-to-peer gathering. However, using reputation and identity as a lens through which an individual or collective is judged has a historical implication that transcended over time and predated its current application.

Fundamentally, the conceptual use of reputation as a proof of authentication and verifiable score to represent individual authenticity and identity predated blockchain, in the legacy and traditional finance environment, credit scores are used as a metric to assess individual financial status, economic viability, and credit history by assigning a scoring system that rates people financial stability and status as an uncollateralized lending mechanism.

However, “$SBT” is not the first to implement a similar approach in assigning value based on reputation through identity ratio. The “blockID” proof of concept introduced by Fresh credit uses decentralized credit score as an on-chain value proposition and on-chain lending mechanism to provide incentives to participants, where users can stake against their identity and reputation as a colleterial in a secure and privacy-centric environment and get rewarded for their honesty. Civic also offers a decentralized method of future proof of identity as a fundamental human right to access social services such as voting and financial services. using one's personality, liveness, uniqueness, and ID documents.


The core idea of a decentralized society is pretty much at its early stages, which some might consider too speculative at the moment, however, as we have witnessed the advent of blockchain technology and its rapid growth, nothing is cast one stone.

Conversely, as explained by Everett Rogers (1962) in the diffusion of innovation theory as the “process by which an innovation is communicated through certain channels over time among the members of a social system”.

Thus, the evolutional transformation of current society into a full decentralized society powered by soulbound tokens ($SBT) and NFTs is upon us, in which only the “Innovators”, “early adopters”, “early majority”, and the “late majority” will benefit greatly from.

Consequently, one of the use cases of a decentralized society is the tokenization of physical activities such as a participant’s unique identification, reputation, and historical credential to an on-chain system represented by a non-transferable token that serves as a representation resume.

The primitives of decentralized society as proposed are tied to on-chain technology such as a non-transferable wallet address holding a “$SBT” token as proof of history, reputation, and identification.

This article is also available here

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