Web3 Identity: Soulbound Tokens and zkMe's Impact
March 21, 2024 106

Introduction

When did you first encounter the term "soulbound"? Many may recognize it from the realm of "World of Warcraft," where soulbound items are locked to the player—they cannot be sold, mailed, or transferred to others, ensuring they are for the player's use only. Drawing from his experiences as an avid player of Warcraft, Vitalik Buterin, co-founder of Ethereum, introduced the concept of the Soulbound Token (SBT) in 2022, ingeniously adapting it to the innovative landscape of Web3.

What is Soulbound Token (SBT)?

SBTs represent a person's identity, credentials, and affiliations in a non-transferable way on the blockchain. The idea is to use these tokens to reflect a person's reputation, skills, or even certain attributes or accomplishments, which are valuable for various decentralized applications (dApps) and protocols in the web3 ecosystem.

There are two types of soulbound tokens:

Self-certified SBTs: these tokens contain personal information that the holder themselves considers important to others in their social network. For example, a person might create an SBT to show that they possess a particular skill or hobby.

Soul-issued SBTs: "Soul" in this context refers to an organization, company or other individual that can issue SBTs. These SBTs serve as evidence of a person's education, affiliation or membership. For example, a university may issue SBTs to prove that a person has earned a degree, or a company may issue SBTs to identify a person as an employee.

What is the difference between NFT and SBT?

NFTs - Unique Collectible Assets

Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. These tokens are associated with specific digital assets such as artwork, video clips, collectibles, or virtual real estate, and represent proof of ownership of these digital items.

Each NFT is unique and cannot be split into smaller denominations, ensuring the authenticity and scarcity of the digital item it represents. Since the data of NFTs is recorded on a blockchain, it provides an immutable record of ownership.

  1. Digital Art: NFTs provide a way to verify the authenticity and ownership of digital artwork. They have revolutionized the art world by enabling digital artists to sell their work in a way that was not previously possible. For instance, “Everydays — The First 5000 Days,” by the artist known as Beeple, set a record for a digital artwork in a sale at Christie’s.
  2. Collectibles: Items like trading cards, virtual pets, or rare in-game items can be tokenized as NFTs, ensuring their uniqueness and ownership. In addition, Tokenized sports highlights or virtual trading cards of athletes can be collected and traded as NFTs.
  3. Gaming: Gamers can truly own in-game items (skins, weapons, characters) as NFTs, which they can trade, sell, or use across compatible games.
  4. Virtual Real Estate: In virtual worlds or metaverses, NFTs can represent ownership of virtual land parcels, which can be developed or resold.

SBTs - Non-Transferrable Credentials

SBTs (Soulbound Tokens) are a type of non-transferable digital credential used on blockchain technology to represent individual identity, qualifications, or relationships. Similar to NFTs (Non-Fungible Tokens), SBTs are unique, but unlike NFTs, SBTs cannot be traded or transferred to other users. This non-transferable nature makes SBTs ideal for proving personal identity, achievements, memberships, educational qualifications, etc.

  1. Community governance rights: To preserve the decentralization and fairness of project governance, many crypto projects issue governance tokens with voting rights to their community members in the early stages. When these tokens are minted as non-transferable soulbound tokens, they ensure that only the original recipients can participate in decision-making.
  2. Identity Credentials: Users have the ability to link Soulbound Tokens (SBTs) to their online profiles, email addresses, domain names, and various other digital assets likely owned by them. This process establishes a verifiable link between their identity and their digital possessions in a manner that can be conveniently carried across different platforms.
  3. Credit History: Financial institutions could use SBTs to represent credit scores or borrowing history, making this information readily available and verifiable for lending purposes.
  4. Anti-Sybil/ Anti-Bot Protection: Soulbound Tokens can help address the issues of fake identities and bots commonly associated with airdrop events in the cryptocurrency community. Since SBTs are non-transferable and tied to the "soul" of an individual's wallet, they can be used to create a more trustworthy and fair distribution mechanism.

Key Differences

What are the benefits of Soulbound tokens from zkMe?

As discussed above, SBT has diverse usage scenarios in the web3 domain, which is highly similar to the use case of zkMe.

zkMe is a secure, decentralized Self-Sovereign Identity (SSI) wallet utilizing Multiple-Party-Computation (MPC) cryptography, enabling users to store and manage anonymized identity information, including Vertified Credentials (VCs) from trusted entities. This allows identity or attribute proof without disclosing any personal data. MPC distributes private keys across multiple devices or nodes, reducing unauthorized access risk.

With zkMe, the Holder's verification proofs (in form of Soulbound Token or SBT) are minted from the SSI wallet, accessible via the zkMe App or Widget, onto the Holder’s asset wallet. The asset wallet being a digital wallet that Holders use to interact with web3 dApps, typically self-custodial, granting users full control over assets and private keys. If a Holder participates in multiple chain ecosystems, an SBT delegated copy is minted for each. This ensures a seamless Holder dApp user experience.

zkMe provides diversified user scenarios

zkMe DID

The principle of "one face, one digital identity" serves as a formidable defense against automated scripts and Sybil schemes. Utilizing zkMe's facial recognition for identity verification, users are assigned a distinct digital identity (DID), greatly complicating any malicious attempt to flood the system with fraudulent accounts. This approach fortifies businesses against the risks of dealing with inauthentic entities, providing assurance that their engagements are with legitimate human participants.

zkMe zkKYC

With zkMe's zkKYC solutions, institutions can confidently join DeFi while meeting KYC compliance requirements. zkMe employs ZKPs and MPC to protect and secure user identity information while providing necessary KYC information. This way, institutions can maintain their regulatory standards while participating in DeFi. By bringing their trust and reputation to DeFi, institutions help create a more secure and efficient financial system for all involved.
As of now, zkMe offers four types of zkKYC credentials:

  1. Proof-of-Location (zkPoL)
    The zkLocation service offers a significant advantage to the crypto industry, especially DeFi protocols, by marrying regulatory compliance with user privacy. It allows for precise geolocation verification using zero-knowledge proofs, enabling protocols to adhere to local laws without sacrificing inclusivity or exposing sensitive user data. This approach not only mitigates legal risks but also opens up global liquidity opportunities, allowing for expansion into new markets

  2. Proof-of-Citizenship (zkPoC)

  • Liveness: Use biometric live checks to eliminate bots.
  • Face Match: Compare your users to identify duplicates.
  • Document Check: Identify forged documents quickly and accurately.
  1. AML Check (AMLMe)
    Sanction, Watch, and Wanted List Checks; Politically Exposed Persons (PEP); and Adverse Media Checks.

  2. Know Your Transaction (KYT)
    KYT's primary objective is to keep all transactions in line with applicable laws and compliance standards. It achieves this through live monitoring of user wallet activities.
    With the help of KYT, the zkMe Dashboard enables real-time tracking and analysis of transaction data, making it possible to spot and tackle any suspicious activities promptly. At present, zkMe Dashboard offers the capability to explore wallets on various networks including Ethereum, Polygon (MATIC), Arbitrum, and Base among others (see KYT Supported Scope for the full list). with confidence.

Vision & Mission of zkMe

Vision

To build the zk-credential layer of web3. In the trust-less world of tomorrow, credentials are only shared when, where and strictly as irreducibly needed.

Mission

We build the leading infra for presenting verified credentials in a trust-less and private manner. Issuers, Holders and Verifiers around the world trust and employ the zkMe protocol to leverage Identities’ value.

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