The CRAZIEST Paper You HAVE TO SEE! Soulbound Tokens 👻

Crypto’s Evolution has been exponential But there’s one element that’s been Holding the industry back and that’s the Ability to verify Unique Individuals and Institutions in a decentralized manner a Recent paper penned by prominent Personalities in crypto and big Tech Proposes a decentralized digital Identity based on non-transferable nfts That could serve as the foundation for Crypto’s future Today I’m going to give you a bit of Background about the paper summarize What it says in simple terms and tell You what I think it could mean for Cryptocurrency [Music] Before we get scary I need to be wary I Am not a financial advisor quite the Contrary education and entertainment are The only things my words carry so please Contact a financial advisor if your Portfolio is looking pallid If this is the first time you hear my Voice my name is guy and I think crypto Is Nice That’s why I create high quality crypto Content that makes people rejoice Coins tokens news and reviews with lots Of facts and stats and zero ploys If this is the kind of stuff you enjoy Subscribing to the channel and pinging That notification Bell is a logical

Choice So now that you know the nature of my Labor let’s examine this crypto paper The crypto paper I’ll be unpacking today Is called quote decentralized Society Finding web 3’s soul and was published To the social science research Network On the 11th of May It was authored by three individuals the First author is vitalik buteran the Creator and co-founder of ethereum the Second largest cryptocurrency by market Cap besides being ethereum’s co-founder Vitalik is known for his insightful Articles blog posts and papers about Crypto related Concepts such as Scalability tokenomics consensus Mechanisms and governs As far as I can tell today’s crypto Paper has its roots in a blog post that Vitalik published on his website back in January and I’ll leave a link to it in The description if you’re interested The second author is e Glenn whale who Holds a doctorate in economics from Princeton University and currently works As a social technologist at Microsoft Must be an interesting job to put it Mildly Anyways Glenn is also the founder of Radical exchange a quote Global movement For Next Generation political economies Which seeks to quote upgrade democracy Free markets and personal identity

Interestingly vitalik is one of the Board members of the non-profit behind Radical exchange which has received Donations from various crypto projects Such as ocean protocol as well as other Prolific non-profits such as the Rockefeller Foundation The third author is Puja olhava a Stanford law school graduate Who Currently serves as strategy Council to Flashbots a crypto project that provides Products and research related to minor Extractable value or Mev if you have no Idea what Mev is be sure to check out my Video about cryptocurrency transaction Fees when you get a moment that will of Course be in the description Anyhow the crypto paper opens with an Abstract which reiterates what I Mentioned in the introduction there are Many use cases in cryptocurrency that Currently can’t be accessed because There isn’t a way to identify unique Users The example the authors give is under Collateralized lending which in plain English means the ability to borrow more Money than you currently have For those unfamiliar most borrowing in Crypto is currently over collateralized Meaning you must deposit an amount of Crypto that’s worth significantly more Than the crypto you’re borrowing in Dollar terms

The solution the authors propose in the Paper involves so-called soul-bound nfts Which are nfts that can’t be transferred Out of a user’s crypto wallet The authors state that soul-bound nfts Could be connected to real-world Credentials such as education and work Experience which effectively makes them De facto decentralized digital Identities According to the authors the issuance of Soul-bound nfts two crypto users makes It possible to create a new kind of Decentralized society which they call Wait for it Decentralized Society or d-soc for short Now the abstract ends with quote with Such augmented sociality web3 can issue Today’s hyper financialization in favor Of a more transformative pluralist Future of increasing returns across Social distance In other words it makes it possible to Do more stuff in crypto that doesn’t Involve Finance Now the first part of the paper is the Introduction and here the authors argue That the absence of the ability to Identify Unique Individuals and Institutions in crypto has resulted in a Reliance on centralized solutions for Many crypto projects the best example They give is the fact that many crypto Holders keep their coins and tokens on

Centralized exchanges even though this Presents a material risk to their assets The authors believe this is ultimately Because there is a lack of decentralized Solutions to crypto custody The authors then pivot to the second Part of the paper which provides an Overview of the concepts the paper will Cover these are the aforementioned Soul Band tokens the use cases that could be Unlocked by these kinds of tokens what a Decentralized society based on these Kind of tokens could look like the Potential problems associated with Implementing these ideas and ways to Turn these ideas into reality The third part of the paper assesses the First primitive in the decentralized Society the author’s Envision which is Quote publicly visible non-transferable But possibly revocable by the issuer Tokens which are of course Soul band Nfts with each wallet holding these nfts Being called a soul -bound nfts can represent anything from A person’s affiliation with a crypto Project or Community to the kinds of Real-world credentials I mentioned a few Moments ago the key takeaway is that There are or rather will be many Different types of soul-bound nfts that Can be held by Souls Note that I’ll just use crypto wallet in Lieu of Seoul from here on out since

Otherwise all this Soul Talk will get Confusing really quickly Now the authors emphasize that they are Very interested in preserving privacy But that a proof of concept must first Be tested in a public manner before Quote programmable privacy can be Introduced The authors also stress that quote there Is no requirement for a crypto wallet to Be linked to a legal name or for there To be any protocol level attempt to Ensure one Soul per human which is Certainly good news Now the fourth part of the paper Explains what the authors call the quote Stairway to dsock or put differently all The use cases unlocked by Soul bound Nfts and how they can become the Building blocks of a decentralized Society The first use case unlocked by Soul Bound nfts is quote social provenance Which means the ability to prove the Origin of something be it a photo or Video for instance The authors note that this will become Extremely important as deep fakes become More advanced look no further than the Recent deep fake of Elon musk’s Ted Talk For an example of that I’ll leave a link To the video in the description The Second Use case unlocked by Soulbound nfts is the ability to use

Credentials as collateral for a loan Instead of a credit score which the Authors warn would inevitably lead to a Totalitarian social credit system Using credentials as collateral is Exactly what it sounds like rather than Providing a history of your previous Activities to secure a loan you would Essentially put your credentials on the Line in the form of a soul-bound nft That represents say your University Degree The authors go as far as to suggest that A borrowing and lending system based on Tokenized credentials would eventually Lead to even better measures of what Makes someone credit worthy and it would Also open the door to community Borrowing not just individual borrowing The third use case unlocked by Soul band Nfts is the ability to recover your Crypto wallet if you lose the private Keys now while the easiest way of doing This would be to give key recovery Powers to people you know and trust the Authors say a more robust alternative Would be to give these key recovery Powers to the different communities and Entities Your Soul band nfts are Affiliated with The fourth use case unlocked by Soul Band nfts is the ability to conduct Better cryptocurrency air drops as it Would be possible to assess which wallet

Is most affiliated with a crypto Community by just checking which Soulbound nft it holds The authors call these better airdrops Soul drops and speculate on all the Different types of Soul band nfts that Could be used to determine airdrop Eligibility including physical Attendance of certain crypto conferences For example on that note you can check Out the full live stream of the recent Coin Bureau conference using the link in The description I digress The fifth use case unlocked by soulbound Nfts is better voting in decentralized Governance particularly in the context Of decentralized autonomous Organizations or dows As some of you will know most Decentralized governance structures use A one token equals one vote mechanism Now this is a problem for many reasons Namely that someone with a lot of money Can buy up the tokens they need to pass The proposals that benefit them rather Than the community Not only would Soul band tokens make it Possible to move away from this one Token equals one vote model but it would Also make it possible to reduce or even Eliminate the impact of ideological Echo Chambers to paraphrase the authors quote Votes coming from wallets which hold the Same soulbound nfts could mean these

Voters share the same bias and so should Reasonably be weighted less than a vote With the same numerical level of support But from wallets that hold different Cell-bound nfts the authors also propose A correlation score based on this idea Which could be leveraged by Dows looking To maximize the diversity of their voter Bases and note that a similar metric Could be used to programmatically assign Different roles to entities within Decentralized government structures The sixth use case unlocked by Soul band Nfts is similar to The Fifth and that’s The ability to determine how Decentralized a crypto project truly is This would involve identifying which Soul-bound nfts a wallet holds and Whether these Soul band nfts are Significantly different from the Soul Band nfts being held by other wallets That are involved with a crypto project Be it a D5 protocol or smart contract Cryptocurrency The authors admit that this would be Much easier said than done but the very Presence of soul-bound nfts would make It possible to analyze data and assess Exactly how soulband nfts could be used To measure decentralization Speaking of which you can find out what All the different layers of Decentralization are by using the link In the description now back to the paper

The seventh use case unlocked by Soulbound nfts is the ability to quote Decompose property rights which is not Nearly as dystopian as it sounds The easiest way to understand Decomposable property rights is to Imagine a world where things like land And real estate are tokenized meaning You can buy and sell fractions of land And real estate in the form of well Tokens There have actually been a few use cases Of tokenized real estate already but the Catch with these is that they don’t give Any actual rights to their holders the Actual owner of the property still has The ability to say renovate rent or sell The property Soulbound nfts would make it possible to Confer property rights to Holders of Tokenized real estate primarily because Soul band nfts can’t be transferred this Lack of transferability is important if You want to give someone the right to do Something like access your tokenized Property because you obviously don’t Want them trading that access away to Someone you don’t know Funnily enough the author’s caution that There’s no shortage of dystopian Scenarios that could arise from using Soul band tokens for property rights but Stress that these scenarios would be Quote more transparent and therefore

Potentially contestable The eighth use case unlocked by Soul Band nfts is the ability to determine What counts as a public good to which Community and ensure effective funding Of said public goods For those who don’t know public goods Are typically the sorts of things that Governments provide be it public Infrastructure emergency services or Health care The problem with public goods is that Even though everyone needs them it’s not Always easy to finance them without Using Force hence why we pay taxes Vitalik’s solution to this problem is to Use quadratic funding which involves Allocating pooled Capital to something Based on how many people are using it Rather than how much money they’re Spending on it although this novel Solution comes with its own set of Problems many of the problems with Quadratic funding can be solved by Throwing sold and nfts into the equation Specifically by assessing just how Affiliated or unaffiliated certain Crypto wallets are based on their Holdings of Soul band nfts Now if you want to learn more about Public goods and the power of quadratic Funding you can check out my video about Crypto governance using the link in the Description

Anywho the fifth part of the paper Starts to get into what a decentralized Society based on soulbound nfts would Look like starting with what the authors Refer to as quote plural sense making The short explanation here is that all The use cases unlocked by Soul band nfts Will create higher quality data that can Be leveraged by artificial intelligence To optimize stuff in society The authors talk about how this higher Quality data could be leveraged to Produce better predictions of outcomes Of various events and make it possible For people to have more control over What’s being done with their data on the Analysis side More importantly the high quality data Derived from soulbound nfts would give Extensive data related rights to the Associated wallets making it possible to Preserve privacy which the authors Define as relating more to consent about Information sharing rather than the Concealment of information This is especially relevant to the Issuance of soul-bound nfts that are Related to documents you wouldn’t want To make publicly viewable very often Such as a driver’s license or a passport You probably also wouldn’t want everyone To know how you’re voting on certain Sensitive proposals The authors again admit that all of this

Would be much easier said than done but Posit that it nonetheless presents the Perfect framework for addressing the Complexity of privacy within different Contexts This ties into the sixth part of the Paper which paints a clearer picture of The decentralized society we might soon Find ourselves living in This section begins with a brief Observation from the authors and that’s That by combining the best elements of Physical and virtual reality Specifically crypto related Technologies Like soulbound nfts it becomes possible To bring exponential growth and Efficiency to both This symbiosis of physical and virtual Is what makes up decentralized society Which the authors Define as quote a Co-determined sociality where souls and Communities convene bottom-up as Emergent properties of each other to Produce plural Network Goods across Different scales I know confusing In layman’s terms decentralized Society Is where individuals and groups organize From the bottom up and decide for Themselves which public goods to fund And how much better The authors then state that it’s Fundamentally networks which create Economic growth and that many of these Networks have been captured by corporate

Monopolies or powerful governments Naturally a decentralized society based On soul-bound nfts offers a viable Alternative to these two extremes which The authors foresee are rising in Cryptocurrency in the absence of such Alternatives Regarding defy the authors say quote Decentralized Society transforms defies Race to control and speculate on the Value of networks into a bottom-up Coordination to build participate and Govern them finally a normal sentence Jokes Aside the authors highlight the Fact that because Soul band nfts are Built using the same technology as defy This makes communities based on Soul Band nfts just as composable as D5 Protocols leading to a quote Intersection of politics and markets It’s not all sunshine and rainbows However the second half of this section Of the paper concerns the dystopian Scenarios that could result from the use Of Soul band nfts which the authors Alluded to earlier Oddly enough the authors call out the Incredible influence that asset managers Like BlackRock and Vanguard have on the Global economy and even seem to imply That the massive Stakes they have in Competing publicly traded companies Means the competition between them is an Illusion

More about Blackrock in the description Moving on What’s even more odd is that the authors Spend lots of time talking about how This means defy could be subverted by Similarly well-capitalized entities and Not much time actually going over the Dystopian scenarios that could arise From a decentralized society which seems To be limited to discrimination The sentiment of the authors can be Summed up in a sentence quote d-soc does Not need to be perfect to pass the test Of being acceptably non-dystopian to be A paradigm worth exploring it merely Needs to be better than the available Alternatives To add insult to injury they didn’t even Address how creepy it is to call crypto Wallets Souls Now to be fair the authors do spend Quite a bit of time discussing similar Themes in the seventh part of the paper Which deals with the challenges of Implementing a decentralized society The first challenge is privacy Especially since lots of information About soulbound nfts needs to be known To accurately calculate the correlation Scores required for robust Decentralization and governance The authors go on to present a series of Technical Solutions to the Privacy Problem which includes keeping sensitive

Information off chain and providing a Hash of that information instead and Using a bunch of complex zero knowledge Based protocols that I won’t even Attempt to explain The second challenge of implementing a Decentralized society is catching Cheaters or rather entities that are Acting in a way that makes them appear That they are a part of a crypto Community by acquiring the required Soul-bound nfts while secretly using Another crypto wallet as their primary Account The authors concede that addressing this Issue requires more research but propose A series of solutions including issuing Soul-bound nfts only to those who are Well known in a crypto Community Punishing any abnormal behavior from Crypto community members and encouraging Whistleblowers to identify any cheaters Lurking in crypto communities Obviously these Solutions aren’t exactly Ideal and it doesn’t help that they’re Quite dystopian themselves The eighth part of the paper Compares And contrasts soul-bound nfts with other Types of identity specifically Legacy Identity pseudonymous identity proof of Personhood and verifiable credentials Legacy identity is basically the Identity we all use from day to day Which generally consists of a set of

Government-issued documents that are Derived from the birth certificate which Was created at the request of the Doctor Who delivered us from our mother’s wombs Apologies for the vividness The authors acknowledge that the Legacy Identity we get from third parties tends To come with strong guarantees but it’s Not always accurate and they go as far As to claim that soul-bound nfts can Provide even stronger identity Guarantees than government-issued Identities due to their nuance Pseudonymous Identity or more accurately Pseudonymous economy is a term coined by Tech entrepreneur and former coinbase CTO Balaji srinivasan to describe all The different ways that people can Protect themselves against personal Attacks using pseudonyms mostly on Social media The authors acknowledge that the Pseudonyms we get on social media Protect us from unwarranted personal Attacks but claim that Soul band nfts Make it possible to prove the origin of The piece of media that’s often being Used as justification to attack a person And in doing so discredit the attacker Proof of personhood involves verifying The uniqueness of an individual through A mix of methods which can be as simple As having someone attest that a person Exists over video chat the authors

Acknowledge that proof of personhood can Be powerful but point out that it can Only identify individuals and not Differentiate between them as such it Can’t provide the information required To unlock all the Next Generation use Cases that are made possible by Soul Band nfts Finally verifiable credentials involve Providing real-world credentials to Crypto protocols using zero knowledge Proofs the authors acknowledge that Verifiable credentials are very viable But take issue with the fact that Revealing information with verifiable Credentials involves a single party Which is not ideal in situations where The private information involved Pertains to two or more parties Soul-bound nfts win again The ninth part of the paper addresses a Question I’m sure many of you who have Been wandering up until now and that’s How soulband nfts will be created The authors present three possible Answers the first possibility is the Creation of a so-called proto-solbound Nft which would be possible to revoke I.E destroy and issue to another crypto Wallet The second possibility is to create a Community-owned wallet that would have The power to issue soul-bound nfts to Community members revoke them if a

Community rule is broken or recover them If something happens to a community Member’s crypto wallet The third possibility is the creation of Protosoles I.E Proto wallet and it’s Honestly not clear what the authors mean By this in any case they admit that There’s more work needed on this front Now the 10th and final part of the paper Concludes with a series of questions About how decentralized Society should Be designed and one of them asks whether Provisions should be hard-coded into Protocols to prevent dystopian scenarios From arising a good question indeed In the closing paragraph the authors Appear to imply that the average person Is to blame for all the societal issues Being caused by technological Advancements and that the authors are Intent on creating quote Futures that Encode sociality to ensure human life Continues to exist bit dramatic I must Say And now for the big question what do the Ideas in today’s paper mean for Cryptocurrency well I reckon the authors Of the paper summed it up quite well Soul-bound nfts have the power to take Cryptocurrency to the next level by Optimizing governance and Community Directed funding Given that these soul-bound nfts will Have to exist on the smart contract

Cryptocurrency coins like eth Seoul Ada And avex could benefit greatly if Soul Band nfts start to gain traction I do have a few concerns though besides The unforeseen consequences such a System could bring it’s almost Guaranteed that Regulators will start to Step in if and when decentralized Society really starts to grow That’s because the government’s purpose Is to provide public goods and if a Technology arises that makes it possible To provide these public goods without The government’s involvement you can bet It’ll do everything in its power to Maintain its control There’s also the question of the Security of the smart contract Cryptocurrencies Soul band nfts will be Issued on especially as institutions Including asset managers start to Allocate more to proof-of-state Cryptocurrencies You can find out more about the pros and Cons of proof of stake and how it Stacks Up against proof of work by watching my Video about that and you can find it in The usual spot the description And that’s about all for today’s video If you enjoyed it smash that like button To let me know Don’t forget to subscribe to the channel And be sure to Ping that notification Bell so you don’t miss the next show

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