The future is here and tech spiritualism is now: NFTs that attach to your soul.
I jest, but Soulbound NFTs are pretty freaking cool. They might not literally become a part of your soul (if you have one), but they do stick to your wallet like glue, offering new utility to the much revered NFT.
Project founders who want to ensure their earliest members receive the greatest benefits will be especially enthused. We covered just how to use them during your token launch in our recent token launch strategies report, so make sure you check that out after reading this article.
What are Soulbound NFTs?
Okay, the name sounds crazy, but the concept will rock your socks. Soulbound NFTs are non-fungible tokens that are tied to a specific person. They cannot be transferred or exchanged.
Vitalik Buterin describes Soulbound NFTs (aka. SBTs) in his 2022 blog post on the topic. The concept originated in gaming, where a player may pick up or earn an item that cannot be sold or transferred to any other gamer. They are yours, forever. However, Idexo claims to have issued the first SBT in 2021 on Binance, the year before Buterin’s blog post.
In Web3, SBTs open doors to rewards and earned tokens. A typical NFT can be bought and sold (so may or may not represent your personal activities). A Soulbound NFT, however, directly correlates to your activities onchain rather than your buying power.
That shifts the crypto playing field from something purchasable to something earnable — more closely aligning to real life. “Such tokens would be like an extended resume, issued by other wallets that attest to these social relations,” Vitalik and his co-authors explained in a later article.
The rise of Soulbound tokens in Web3
You’ll probably recognize the term POAP — Proof of Attendance Protocol. These are non-transferrable (aka. Soulbound) NFTs that can only be earned by personally attending an event (or, I suppose, you could send someone with your phone to add the POAP to your mobile wallet… but why?).
When I first encountered POAPs, I thought they were just a shiny badge. A nice checkbox. Then I noticed Web3 jobs and speaker applications utilizing them as proof of activity in the industry. It’s easy to embellish on a resume — impossible to embellish POAPs.
How Soulbound NFTs are changing the token launch landscape
Soulbound NFTs are particularly exciting for token launches. There are a few particular use cases that I’m enthused about (and I think you will be, too). Let’s take a look.
Scenario 1: You have a team that onboarded long before you could pay them, and they deserve to be well-compensated. However, a one-time token distribution might skew the balance of equity or token value.
Soulbound NFT solution: You can issue an SBT at launch to act as a homing beacon and ensure that tokens are directed to the right wallets. Better yet, you could issue the SBT early as a placeholder and a promise to those early teammates.
Scenario 2: You have some early adopters whom you want to play an active role in a DAO or other decentralized governance model.
Soulbound NFT solution: An SBT offers reputation-based governance, ensuring those that have earned a vote, can. This is especially useful in an airdrop to reward early users. As we covered in our 2025 Predictions Report, NFTs with utility are on the rise and should be considered for your launch.
Scenario 3: You want your launch to be Sybil-attack resistant.
Soulbound NFT solution: SBTs are tied to one wallet and one identity. They are 100% unique and cannot be spoofed. Since they too can be used as keys to access critical data, infrastructure, and treasuries, they add an extra layer of security to early-stage projects. This makes them especially important for DAOs who are concerned about identity fraud.
Soulbound NFTs beyond ICOs: New use cases
You’ve probably noticed that SBTs offer utility outside launches and events. Let’s have a look at some of the other ways you can bind their use to your project.
- Reputation management — SBTs can hold proof of event attendance, achievements, and other important individual milestones. If you want members with certain credentials to apply or interact with various levels of your project, SBTs guarantee that.
- Decentralized identity — Since the token is tied to an individual’s wallet (presumably KYC verified), the SBT stands in for other DID protocols. There have been concerns raised about revealing one’s personal identifying information in using SBTs this way, however; this is lately being addressed through zero-knowledge proofs.
- Gaming rewards — It would make no sense to exclude a gaming use case when it is the cradle that birthed SBTs. Web3 games can use Soulbound NFTs in the same way as their predecessors: to deliver exclusive and individualized rewards that increase the value of the profile.
The benefits and challenges of Soulbound in the Web3 world
Soulbound NFTs may seem like a no-brainer. They:
- increase the trustlessness of Web3, ensuring that individuals can move freely without a review board breathing down their neck.
- ensure one’s history and activities in Web3 aren’t lost. No more shuffling around your calendar history wondering when that class or event took place.
- provide peace of mind to projects that are looking for security and better rewards for their members.
However, Soulbound NFTs are still relatively new to Web3. Their use cases aren’t fully fleshed out, and some still need attention. These include:
- concerns for wallet security — if one loses access to a wallet, does one also lose SBTs?
- if someone gains access to another’s wallet, do they gain access to the SBTs representing keys to a DAO (for example)?
- can SBTs accidentally reveal one’s identity when verifying credentials?
The smartest minds in Web3 are currently addressing these questions. Already, the latter is less of a concern thanks to the engineering of zero-knowledge proofs applied to SBTs. The rest will surely be resolved due to the strong use case SBTs offer projects.
The future of Soulbound NFTs in Web3
As a project founder, I’m particularly interested in how Soulbound NFTs can apply to our ICO as assurance that my early members receive the airdrop they deserve. I think you will be equally interested.
We outline how SBTs can be used, alongside a deep-level marketing plan, for upcoming token launches in our latest report. I suggest you have a look so you can launch on the cutting edge.