A group of panellists at the Consensus 2023 event have said that the Soulbound token created for digital identity in Web3 is unnecessary and can be done away with. Soulbound tokens are designed to be “soulbound” to a specific user or entity.
This means that the token can only be used by the designated owner or group and cannot be transferred or sold to anyone else. They are often used in gaming and blockchain-based applications, where ownership and control of digital assets are important.
While Soulbound tokens are one of the propositions of Vitalik, who is also the co-founder of Ethereum, it has come under scrutiny by other Web3 enthusiasts. Daniel Buchner Head of Decentralized Identity at Block, opposed the idea by saying that “SBTs are largely a fraudulent meme.”
He backed his statement by revealing that decentralized identities can be created and initiated without using the blockchain or tokens on the blockchain. Meanwhile, Binance released its first Soulbound tokens, BAB, for its users in 2022.
Be careful of Soulbound tokens
The co-founder and CEO of Disco, Evin McMullen, explained at the session that it is important for Web3 users to not be forced to use products such as SBTs without their consent, especially when they are connected to a key or important asset. “If an NFT map to your key, I can’t tell if that NFT is wanted or unwanted, airdropped or a gift.”
He suggested that to avoid the loss of identity profiles with the use of Decentralized Identities, users can initiate key rotation instead. Key rotation occurs when a signature key is retired and replaced by a new cryptographic key. Key-rotation is an industry-standard that adheres to cryptographic best practices.
The Head of Blockchain at JP Morgan, Tyrone Lobban in agreement with others, encouraged developers to seek other better options that will solve the problem of identity in Web3 highlighting that they can also experiment with verifiable credentials.