What is a Soulbound token (SBT) & Why is it revolutionary?

Kana Labs
3 min readAug 5, 2022


Soulbound token in simple words is a non-fungible token which cant be sold or transferred. It derives from the concept of the soul — which is non-transferable and unique to each individual/singular entity. This was a concept jointly invented by Ethereum co-founder Vitalik Buterin, Radicalx Change foundation founder Glen Weyl and Flashbot’s Puja Ohlhaver in their bid to help revolutionise web3 and create a truly decentralised society (DeSoc).

In today’s market, NFT is mostly used in art forms and as a means to store, generate and yield wealth. But as explained in our previous article, NFT covers a wider range of real-world use-case scenarios. Soulbount token (SBT) would help primarily in areas focused on credential management, governance policies, and trust certification-related verticals. It even helps eliminate the severe influence of centralised and traditional financial service practices found in today’s DeFi market.

Blockchain has rendered the need to provide personal user details moot, resulting in a transaction management system with a high level of anonymity. While this may seem advantageous initially, the DeFi transaction record with only unique wallet private keys attached to transaction details lacks the trust concept found in traditional financial services resulting in an environment leading to over-collateralisation. SBTs help give a unique identity verification means helping improve the working mechanism behind various DeFi protocols.

How to differentiate SBT from NFT?

Even if an NFT cannot be sold or transferred directly, it can still be sold along with a wallet. To prevent such occurrences, an NFT is only deemed as an SBT if they are stored in a singular unique wallet called “soul wallets”. This type of wallet is usually generated and associated with only a single individual or entity forever since its creation. This helps create an NFT with a truly singular and unique digital signature helping authenticate a user’s identity or prove originality. Hence, SBTs can be used to identify individuals/entities and track a user’s activities in a blockchain network which will in turn help identify the trustworthiness of the individual/entity.

What are the applications of SBT?

SBTs help users in a decentralised environment create

  • Personalised business brands.
  • Provide uncollateralised lending and borrowing services via a trusted credential mechanism.
  • Build apps/products based on non-transferable relationships.

SBTs also help in achieving increasingly ambitious decentralised projects such as community wallet recovery, Sybil-resistant governance and novel markets with decomposable shared rights.

This helps in the creation of a rich and pluralistic ecosystem — a co-determined sociality where souls and communities get together bottom-up as emergent properties of each other to co-create plural network goods and intelligence at a range of scales which is termed by the founders of SBT as “Decentralised Society”.

While today’s decentralized environment is focused on hyper-financialisation and commoditisation, the founders believe that an alternative model built upon emergent networks by bottom-up communities with rich social identity in the blockchain ecosystem will help revolutionise advancement in web3 and metaverse.



Kana Labs

Web3 & Blockchain Tech specialist developing Cross Chain and Account Abstraction Smart Wallet solutions.