Soulbound token project by MetaMask Institutional, Cobo, and Gnosis DAO

When establishing a digital identity, soulbound tokens (SBTs) are quickly becoming a standard in the Web3 ecosystem. Digital asset custodian and blockchain technology developer Cobo announced a new SBT project on December 13 that brings together crypto industry heavyweights to support users' evolving digital identities.

Cobo, MetaMask Institutional, and Gnosis DAO collaborated on the SBT project “Evolution,” a platform that allows users to establish their identities in the virtual world and keep tabs on developments in the sector.

Since SBTs are not for sale, a Cobo representative expressed that this facilitates communication between Web2 and Web3 regarding user identity.

"This provides assurance to the token provider and allows them to give exclusive access and benefits to their targeted users by giving them an identity."

The rise of SBTs as a means of digital identity marking does not mean that NFTs and the utilities associated with them will become obsolete.

However, a representative from Cobo suggested SBTs could replace NFTs in the future to achieve more granular levels of exclusivity. For example, holders of the Evolution collection will gain access to quarterly reports on the decentralized finance space that will not be made available to anyone outside the SBT community.

"Although the tokens can be used to identify and reward certain users, they can also be used to limit and exclude users from certain projects or benefits."

A Cobo representative has speculated that SBTs could “dissuade users from changing wallets or rotating keys for security purposes,” which is problematic from the standpoint of either brands or wallets.

While the introduction of SBTs has caused a shift in the market, this development from major Web3 players has come at the perfect time.

These novel digital assets are currently considered a catalyst for the future metaverse, in which users have citizenship as part of their digital identity.

Sumitomo Mitsui, a major Japanese financial institution, has recently announced that it will be experimenting with SBTs to serve better the communities in which it operates.