In Brief:
- Ethereum co-founder posted a weblog to discuss use cases of “Soulbound” NFTs.
- Soulbound NFTs terms refer to non-transferable NFTs, only pierce to owners.
- He also urged the marketplace to focus on data privacy concern.
Co-Founder of Ethereum blockchain, Vitalik Buterin has published a weblog about non-transferable NFTs. In a blog, he briefly discussed requirements of non-transferable NFTs over transferable NFTs for some instances.
Vitalik applied the “Soulbound” term to non-transferable NFTs from the World of Warcraft game, which refers to merchandise or entities that can not be separated from participants who own it. He advised NFT marketplaces to think about Soulbound NFTs.
He illustrated the advantage of Soulbound NFTs for Ethereum blockchain users through real and hypothetical examples. He believes that in some cases transferable NFTs are not worth giving.
“While transferable NFTs have their place and can be really valuable on their own for supporting artists and charities,” Buterin wrote, “there is also a large and underexplored design space of what non-transferable NFTs could become.”
Vitalik tried to define his thought via the example of POAP- “Proof of Attendance” protocol. This protocol allows one to share NFTs of memorable moments, where they were presented. Meanwhile, these tokens are traded on the secondary market Opensea, which completely diminishes the identity of tokens, according to Vitalik Buterin.
Vitalik Buterin also counts the benefits of Soulbound NFTs for governance rights. Non-transferable NFTs prohibit the wealthiest buyers to purchase governance tokens rights and despite it, it will stitch with key stakeholders.
He deduced this approach through the CityDAO NFT example, which is still transferable. Citizenship or residency NFTs for instance, rather than keeping it transferable, should be Soulbound NFTs, which can reflect the identity of particular NFT associated with real-world residents of the city.
Also, he urged platforms to emphasize data privacy concerns and all the on-chain data should not go in public. However, he noted “a few fairly simple technical options are possible,” including the use of zk-SNARKs.
He ended his weblog with the request to focus on his point discussion. He said, “If we can, this opens a much wider door to blockchains being at the center of ecosystems that are collaborative and fun, and not just about money.”
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