Soulbound, as introduced by Vitalik Buterin, is a concept for naming an earned asset that is non-transferable, which makes NFT technology suitable for implementing Soulbound Tokens (SBT). This type of token also helps to model credentials, as they can prove that you have done something to earn them (granted by a third party called an issuer) and intended to be permanently linked to your identity. Binance is using this approach to manage KYC (Know-Your-Customer) requirements aimed at regulatory compliance, but what are the implications of identity-bound tokens?
As we discussed in "The Future of DeFi" live session with Zilliqa, Soulbound Tokens have the potential to bring more control for authentication, so it is essential to give that control to the user with a self-sovereign identity approach. Thus, we are launching the first non-custodial soulbound wallet, SBTxWALLET, and you can create your own on the TYRON Network. The first SBT issued by Tyon is a verifiable credential for all users to comply with the FATF Recommendation (Travel Rule) to avoid money laundering and other harmful activities such as the financing of terrorism. We believe in following those standards developed by recognised communities such as W3C, which is why this new implementation of the Travel Rule implements the IVMS101 standard of the interVASP organisation.
On TYRON, an SBT is a non-transferable NFT, i.e. a Non-Fungible Token soulbound to the SBTxWallet that earned it. In this way, SBTs can represent traits, characteristics and achievements of a specific person or entity and therefore cannot be transferred and thus prevent scams on the Web3. Unlike the vast majority of NFTs, which are transferable and therefore, if we continue the comparison with an online game, there is the possibility that someone has made that merit and then sold the token to the highest bidder. Therefore, we have no assurance that the user earned the token or just paid for it. In short, an NFT that can be purchased does not assure provenance.
So, the usefulness of a Soulbound Token is pretty much about the authentication of a decentralized identity on Web3, especially for on-chain verification. With the Self-Sovereign Identity Protocol, Tyron gives you complete control to store your SBTs in your Soulbound xWallet on Zilliqa's blockchain platform, not in a centralized registry. And your SBTxWallet has the same Social Recovery as the rest of your decentralized identity!
In Decentralized Autonomous Organizations (DAOs), during a Sybil attack, an individual or a group of bad actors buy the majority of governance tokens looking to manipulate the decision-making. Those with majority voting power can decide the votes and steer the project's direction in their favour. The public and verifiable nature of SBTs can help detect and prevent these bad actors from entering a DAO and, in turn, prevent corruption and Sybil attacks from occurring. To join as an affiliate of the TYRON Governing and Profit Sharing Community, this dApp will authenticate your TYRON SBT to allow you access. In this way, the decision-making process will be supported by the authentication of Soulbound Tokens, enhancing the integrity of the vote.
SBTs, as non-transferable tokens, can serve as verifiable credentials for the Travel Rule and various purposes. Such as medical records, loan history tracking in decentralized finance (DeFi), diplomas, event attendance, community affiliations and any information related to a person or entity. Also, as soulbound items like in the term's originator, World of Warcraft, access to new gaming scenarios and future metaverses that can be more decentralized with SBT technology.
With the SSI Protocol, we are building a robust framework of respect for identities, nature and the whole set of all beings, and in this context, we developed the Soulbound xWallet. With this xWallet, you can acquire and store Soulbound Tokens, increasing the security of your data and access to different credentials.
New transactions with an SBTxWallet:
- Upload Travel Rule: store your IMVS101 message in encrypted form in your SBTxWallet.
This operation can be done by the user or with a third party with the user's authorisation. This third party is called an SSI Agent and, with this operation, performs a meta-transaction, which, to be successful, must present the DID Signature of the user:
- Mint SBT: to register a Soulbound Token, your SBTxWallet requires the issuer's DID Signature.
With your SBTxWallet, it is also possible to pause your smart contract and update the public encryption (to be an issuer of SBTs to other users):
If you wish to update the NFT Domain Name that controls your SBTxWALLET, it is possible with the Transfer Ownership transaction. You must then finalise the transfer by sending a Claim SBTxWALLET transaction with the DID Controller of the new NFT Domain Name.
Importantly, with an SBTxWALLET, you can also be the issuer of Soulbound Tokens for the community, further decentralising the implementation of the Self-Sovereign Identity Protocol. The more SBTs from different issuers an identity has, the more we can build a web of trust. Once businesses can verify that you have several SBTs from recognised organizations, they could stop asking to control personal data on their servers, mitigate data breaches and increase the security of their business models and the community overall.
Thanks for reading! You are welcome on the TYRON Network & more info is in the Social Tree of the SSI Protocol.
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