Binance is set to issue ‘Binance Account Bound (BAB), the first-ever Soulbound Token (SBT) built on BNB Smart Chain.
Binance Account Bound (BAB) tokens will be displayed on user wallets to underline that they have successfully completed KYC. The token will, in effect, certify the user’s verified status on Binance and will be available for use by third-party protocols. The token is non-transferable and can only be revoked or cancelled by the user in question, as it is a unique token that can only be minted upon completion of KYC.
But what does this mean for general users and what are the inherent possibilities?
Practically speaking, the initial implementation will serve as a pilot project whereby BAB will only be accessible via the Binance mobile app, allowing KYCed Binance users to mint their very own BAB directly on the wallets they use on Binance. When minting, users will be required to select a wallet address - either a current one or an option to create a new one - where the SBT will reside.
The potential of Soulbound Tokens however goes far beyond the initial early phase implementation. Fleshing out a decentralized society requires more than just the financial concerns we have seen thus far. For blockchains to remain at the center of ecosystems that are collaborative and exciting, there is a need for other initiatives and use cases that go beyond money.
SBTs will be non-transferable meaning users will be unable to transfer their token from one address to another. This will initiate a sense of accountability, whereby the tokens represent something more than a monetary sum, they will underline the relevant Web3 credentials they represent.
For example, Binance’s BAB tokens will serve to outline that users have successfully passed the KYC process. This means a BAB token will function as a Binance identity that can be used and verified by third-party protocols for a variety of purposes. This will help eradicate familiar issues relating to airdrops and even bots, helping establish a safer and more accountable space.
This is a key element to remember in Binance’s initial pilot of BAB tokens, with dApps also able to utilize the tokens in determining how they interact with users. This will open up a host of possibilities in relation to the tasks they set for users and their attempts to build a community.
Binance’s initial use case however represents just one- indeed the first- avenue that this technology can undertake. When we begin to think about governance mechanisms for example, SBTs can have a hugely beneficial impact. Transferability is problematic when it comes to the distribution of governance power. Issues can arise when the aim is to adequately distribute governance power and transferability begins to influence and concentrate interests. Transferability can often be initiated by buying power, which is not in the best interest of decentralization.
As we begin to explore how credentials will function in Web3, whether it be in the form of a verifiable skillset or an earned title, further use cases for the BAB token will arise. This sense of accountability paves the way for a more efficient decentralized community and space.
Soulbound tokens are a new type of tokenized credential, identity, or affiliation. SBT’s are non-transferable and non-financialized. Ethereum creator, Vitalik Buterin first introduced the idea along with E. Glen Weyl and Puja Ohlhaver, earlier this year.
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