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Last week, I reviewed the latest innovation proposed by the Ethereum co-founder Vitalik Buterin – Soulbound Tokens or SBTs.
As a follow-up, I decided to share with you 5 DApps that could use SBTs in the future.
If you are interested in SBTs and Web3, read on!
- 1. AAVE
- 2. Cryptonomica
- 3. Medicalchain
- 4. Crypto Tickets
- 5. Blockcerts
1.1. What is AAVE?
AAVE is a liquidity protocol that allows you to deposit crypto to earn interest & to borrow against your crypto deposit.
It is, in layman’s terms, a decentralized bank. As of the time of writing, more than US $16bn of liquidity is locked into AAVE.
1.2. How could AAVE Use SBTs?
SBTs will allow AAVE to develop protocols for lending and borrowing that look beyond the quality of collateral. In simple terms, as of today, the protocol accepts certain cryptos as collateral for lending against them.
However, it ignores the question as to “who” is the borrower.
Digital identities through SBTs will allow the protocol to know more about their customer, and this could lead to risk-based pricing – just like with credit scores.
For example, an SBT confirming the borrower is a highly educated Ivy League graduate makes the risk of default, all else equal, comparably less when compared to a person who is not offering up any information.
1.3. How to Integrate SBTs?
In terms of development, AAVE will have to establish protocols for SBT verification & consummate products to offer differentiated pricing.
Given the present infrastructure, this should not be too problematic for their development teams.
2.1. What is Cryptonomica?
Cryptonomica is an identity verification service & database for verified entities. They serve the KYC, electronic documents, and blockchain markets.
Specific to the blockchain, the service allows you to develop keys that verify your ownership of an Ethereum wallet address and your authority to conduct transactions with it.
This information serves the purpose of KYC documentation & can be used to create legally binding and enforceable documentation and contracts.
As of the time of writing, the service has more than 7,000 users and more than 7,800 private keys, of which 610 are verified online and 16 are verified offline.
2.2. How Could Cryptonomica Use SBTs?
With SBTs, the present system of obtaining and verifying keys will need an upgrade. For example, an Ethereum wallet holder applies for a key submitting their SBT, and post verification is issued a key.
This is not too different from the present model, except that disclosure is now verified, and the service does not need to undertake an elongated verification. Verifying the SBT itself would suffice.
2.3. How to Integrate SBTs?
This would represent a complete change of process for the service and could very well mean going back to the drawing board.
Effectively, the present electronic key infrastructure would prevail, but the allowance would be needed for SBT integration.
3.1. What is Medicalchain?
Medicalchain is a platform that uses blockchain technology to digitize patient medical records. The idea is to achieve a single, comprehensive source of medical information for every patient to reduce inefficiencies.
These inefficiencies manifest themselves in the form of fragmented information that is collected over time from different sources and is not curated. This makes it difficult for health professionals, researchers, pharmaceutical companies & insurance providers to work without a point of failure.
3.2. How Could Medicalchain Use SBTs?
At the moment, the project issues electronic reports to participating institutions. This is a limiting factor with respect to growth outside of their present ecosystem.
Adoption of SBTs in their case shall allow users to take their patient data to other nonparticipating institutions, who may be comforted in the verification of submitted SBTs directly on-chain.
For example, as an insurance provider not on the medical chain network, I would need to order the report directly from Medicalchain instead of taking the client’s submission of the same report. The report issued on-chain as an SBT would change that.
3.3.How to Integrate SBTs?
Medicalchain is already on the Ethereum network, so the prime development would be to develop the reporting format as an SBT. This together with a portal for Nonparticipating third parties to log in and independently verify the SBT should suffice.
4. Crypto Tickets
4.1. What us Crypto Tickets?
Crypto tickets allow the issuance of event tickets via blockchain technology. Utilizing their ticket wallet app, users can purchase tickets, simply show their smartphone at the entrance and gain access.
They also have a secondary marketplace where tickets may be resold in case you decide to skip the event.
4.2. How Could Crypto Tickets Use SBTs?
The protocol currently utilizes an algorithm that generates a unique ID for each ticket. The record is unalterable on the blockchain, so there exists a high level of security.
However, the whole process is made easier if they simply sign SBTs as records of identity for entry. The reason is primarily enterprise-driven.
At the moment, both event organizers & ticket buyers need to be part of the same ecosystem. SBTs would eliminate this need, allowing for wider adoption.
4.3.How to Integrate SBTs?
Again, this is a fundamental change to the existing process of the application.
Major changes would need to be made to their wallet and, keeping up with the essence of SBTs, they would need to forego the utility to resell the tickets. How effective that is as a proposition remains to be seen.
5.1. What is Blockcerts?
Blockcerts is a collaboration between Learning Machine & MIT Media Lab to develop an open standard format for the issuance of educational certifications on the blockchain.
5.2. How Could Blockcerts Use SBTs?
Blockcerts uses blockchain technology to issue immediately verifiable electronic records of academic achievement. SBTs could substitute electronic records, leading to wider usage in terms of DeFi applications such as AAVE (see above).
5.3.How to Integrate SBTs?
Again, the primary development is to mint a token as a record on the blockchain, the SBT, instead of extracting a data report. This won’t call for a major change to existing processes, except for the output file.
SBTs will be a game-changer in bringing verifiable and unalterable records of identity to the blockchain. Blockchain technology has so far proposed very little in solutions for maintaining verifiable digital entities.
Therefore, we find that the industry has been unable to resolve this issue in a manner that preserves anonymity and meets the requirements of our age.
An industry-standard will help formalize the process and lead to mass adoption as we enter the age of Web3.