The Soulbound ID project's concept is to link personal data to a decentralized blockchain wallet in order to ensure regulation and compliance processes in the DeFi market. This is especially true in the case of the circulation of security tokens, where anonymity is technically prohibited. All securities must be placed on blockchain addresses that have already been associated with a specific person.
Soulbound ID ensures that a number of necessary compliance standards for trading and circulating security tokens and digital assets in general are met.
What is Soulbound ID
Soulbound ID is a decentralized application for issuing and managing Identity Tokens or Soulbound Tokens (SBTs).
Soulbound Tokens (SBTs) are Non-Transferrable Tokens (NTTs), and are similar to Non-Fungible Tokens (NFTs), except that they cannot be transferred once minted. They cannot be purchased, sold, or traded. SBTs may be used to store verifiable credentials, such as personal identification and social data.
On-chain identity validation - Blockchain addresses are anonymous by default. Without the personal validation of wallet owners, the development of the industry is impossible. This is about more than just controlling the cryptocurrency market; it's also about expanding the functionality of existing systems. Blockchain validation is the next significant step in Web3 growth. dApps may utilize Soulbound ID to ensure that their users meet the required criteria.
Access to regulated environments - Most financial transactions are highly regulated to prevent fraud and chaos. Regulations apply to both currencies and cryptocurrencies, as well as the issuance and secondary circulation of securities. Thanks to Soulb ID, it is now possible to access regulated assets via decentralized applications. Using a global ID on the blockchain, for example, will considerably simplify access to the security token market.
Permissioned access to communities - Decentralized networks must include permissioned access to closed communities. Currently, access is provided through tokens that are not linked to individuals. They can be sold and transfer the right to participate in a closed group, which may be contrary to its concept. Soulbound ID and soulbound tokens ensure the participation of unique persons in DAOs or other decentralized organizations and communities.
Social rankings - Soulbound tokens, which cannot be sold or exchanged, can be used as lifetime user ranking systems. Building a DeFi mechanic using such tokens transfers the accumulated qualities of the user into a non-transferable asset directly to the user himself. A user who is an active participant in a dApp, for example, can be awarded a Soulbound ID token, which determines their superiority over other participants at the blockchain level.