What Soulbound Tokens Need to Break Out

Author: Joseph

Source: joseph's thoughts

In our previous article "What is a soul-bound token?" What are their prospects? " mentioned the question of "the chicken or the egg" in the field of soul-bound tokens.

“In order for users to seriously collect SBT, they need to derive value from it. However, in order for individuals, DAOs, and businesses to start providing value to SBT, there needs to be an ecosystem that provides meaningful SBT and users are willing to collect they."

In this case, how can soul-bound tokens explode?

SBT needs to make more sense

For this space to explode, future SBTs need to be more meaningful and provide insight into SBT holders.

What does this look like? Let's take a look at the following example.

Nansen

Nansen's wallet tags are a good example. Nansen is a blockchain analytics platform that yields a lot of useful insights. Part of their product is labeling wallets in various terms to help make sense of all this on-chain activity.

Looking at a user's tags allows us to understand user behavior. For example, based on their "Elite DEX Trader" tag, I can easily tell that the user is an active DEX trader, or based on their "Rare NFT Collector" tag, we can know that they hold some rare NFTs .

Nansen wallet tag example. Source: ankta's twitter

While these are simple tags on Nansen's platform, they are perfect examples of what SBT should be: deep and meaningful.

Flipside Crypto

Another example comes from Flipside Crypto. Flipside is a crypto analytics platform that issues SQL bounties. These bounties are done by their community analysts in exchange for cryptocurrency. In this model, Flipside employees judge each submission and decide whether it deserves to be paid.

Currently, completing bounties will only show up on their platform. But they're also another example of meaningful SBT.

Flipside bounty example

Turning these into SBTs allows Flipside's community of analysts to easily demonstrate their SQL skills and their "expertise" in the subject area. This data can serve as a data point for recruiters looking for SQL analysts and for companies looking for researchers in the field.

Spotify

If you notice, the first two examples are companies in Web3. Web2 companies, like Spotify, may also issue potential SBTs.

If you're an active Spotify user, you're probably familiar with "Spotify Wrapped." This is their annual review topic, which provides you as a listener with various music insights, similar to Netease Cloud Music's annual listening report. These data points are the possible application directions of SBT in the Web2 field.

For example, an SBT that stands for "I'm the top 0.001% of The Weekend listeners," essentially means you're a huge The Weekend fan.

The Weekend can use this data to reward its most loyal fans in a number of ways. He could release exclusive merchandise to SBT holders, or give them a chance to get early access to his next sold-out concert.

This data point is also useful for other artists looking to target die-hard The Weekend fans. Once this data point is open to everyone as an SBT, the possibilities are endless.

Who Issues SBT Matters

While having meaningful SBT is important, so is the issuer of the SBT. In the future, there will be countless SBTs, and what separates the signal from the noise will come from the credibility of the issuer. In this case, being able to verify the issuer will be crucial.

Before proceeding, it is worth clarifying that SBT can be broken down into on-chain and off-chain data. SBTs representing on-chain data include issuers like RabbitHole and Noox World. SBTs representing off-chain data include issuers such as POAP.

This is an important distinction because SBTs representing off-chain data will rely heavily on the trustworthiness of the issuer. This is because "trust" now rests with the issuer, rather than being able to verify data on-chain in a permissionless manner.

Standardization of Metadata

In order to find value in SBT, they need to be easily discoverable. While this can happen at the application level, it can also happen at the metadata level. Establishing some kind of standardization across metadata will allow individuals, DAOs, and corporations to easily sift through SBT.

While it's too early to tell what that will look like, it's likely that normalization will be done at the level of a category rather than the level of the entire SBT. This is because SBTs and NFTs in their simplest form are tokens that can represent anything.

Tools and Infrastructure

While many tools and infrastructure need to be built, the most notable of these include aggregators and minters.

Aggregators are important because they also improve the discoverability of SBT. This allows users to easily manage and display their SBTs in a meaningful way. It also allows individuals, DAOs, and companies to quickly identify SBTs that are important to them.

The minter is also important because it allows anyone to issue SBT easily. While there are a few people trying to profit from it, ideally it should be a public good that benefits the entire field.

in conclusion

As you can see, SBT has just started, and there is a long way to go. The points mentioned above are important, but not the only ones needed for an SBT outbreak. Other points include aspects such as privacy, which projects like Sismo are already working on.

Like other projects in Web3, there are countless things to build. The ultimate goal of SBT will be a vision worth building.