Panoramic Interpretation of the Current Status of SBT Development and Related Projects

Author: Joseph

Compiled by: Diamond, The SeeDAO

Earlier this year, Vitalik ushered in a new era of NFTs with his article on "Soulbound." This sparked many experimental projects utilizing the "new" use case of soulbound tokens (SBT). While some have gained attention, most have not. Before we dive deeper into the current state of SBTs, let’s quickly familiarize ourselves with what they are and the prospects they bring.

In simple terms, SBTs are non-transferable NFTs that can represent many things. The non-transferable nature allows SBTs to serve as reputation credit data points, including proof of employment, skill certificates, and more.

This ability to establish identity through the SBT ecosystem unlocks new possibilities for Web3. For example, it creates conditions for governance, not only experimenting with token voting and DeFi unsecured loans but also finding ways to prevent witch hunts.

Projects Worth Noting

Please note: Although some SBTs are not entirely "non-transferable," they exhibit other qualities of SBTs as reputation data points.

POAPs

Although the term "soulbound" was only introduced earlier this year, POAP has essentially been a type of SBT since its inception in 2019. Among all the risky NFTs that focus on scarcity and price, POAP takes a completely different approach by representing proof of attendance at offline or online events you participated in.

The idea gained significant attention once proposed. On the Gnosis chain (also known as xDAI), over 5 million POAPs have been minted since October 2020. Even during the bear market in recent months, there has been a steady demand for POAP minting.

Source: Dune Analytics - @salva

While POAP alone cannot showcase too much information about a person, it has laid the groundwork for the emergence of other SBTs.

Project Galaxy

As of now, Project Galaxy is one of the largest players in the SBT space, having minted nearly 1 million "OATs" (equivalent to SBTs on Galaxy). They use "OATs" as a way to build community (or growth hack), leading to their success.

Source: Dune Analytics - @echelon166

Ways to obtain OATs include "participating in AMAs," "following specific accounts on Twitter," and engaging in the recently popular "Arbitrum Odyssey," which incentivizes users to bridge assets to Arbitrum. Projects, DAOs, and companies have found this tool useful and have collaborated with Project Galaxy to release "OATs."

RabbitHole

Among the players in the SBT space, RabbitHole positions itself as a leader in the "proof of skill" category. It is a learning platform that educates users by guiding them through a series of on-chain operations specific to Web3. For example, its "Introduction to DeFi" guide includes on-chain operations such as staking ETH on Lido, providing stETH as collateral on Aave, and providing liquidity on Uniswap. After completing these on-chain operations, users become eligible to mint a "RabbitHole Credential," representing their skills in that specific area.

Since its launch in May 2022, RabbitHole has minted a total of 35,035 credentials, with 17,058 unique addresses.

Source: Dune Analytics - @gm365

Noox World

Among the projects currently on the market, Noox World may be taking the most straightforward approach to issuing SBTs. Each SBT on Noox is earned by completing specified on-chain tasks. For example, completing more than 10 token swaps on Uniswap earns you the "Uniswap Senior Interactor" badge.

Since May 2022, 4,250 different addresses have minted approximately 20,000 badges. It is worth noting that while all the SBTs mentioned above are free to mint, Noox charges a minting fee of 0.002 ETH for each badge, accumulating about 40 ETH in total.

Source: Dune Analytics - @gm365

Interestingly, most applications for Noox badges occurred in May. This is likely due to the hype surrounding SBTs triggered by Vitalik's article. Since then, the demand for minting Noox badges has begun to decline.

DeQuest

DeQuest has adopted a more niche strategy in the SBT space, focusing on the gaming sector. Similar to RabbitHole, DeQuest features "Quests" that guide users to learn and explore various games. In their "Quest" category, nearly 5,000 badges have already been minted.

The value objectives for users and games are quite clear. By completing these "Quests," users can earn SBTs, and sometimes even monetary rewards. For games, this can serve as a mechanism to guide their user base through DeQuest's community.

Personal Insights

At this stage, we can clearly see that the SBT space is still in its early stages, with various projects trying different strategies. While some projects have gained widespread attention, most face a similar issue of low demand.

In my view, POAP is the only project that has found product-market fit. While Project Galaxy has done well in attracting users and projects, this is mainly due to their outstanding business development capabilities rather than inherent demand. Since their launch, RabbitHole, Noox World, and DeQuest have all seen a significant drop in demand.

This raises a question: If SBTs are destined to become the next big trend, why haven't they emerged yet?

Simply put, current SBTs do not represent future SBTs.

If you pay attention, you will find that current SBTs mainly serve as access tools:

• SBT for "participating in AMAs"

• SBT for "bridging to X"

• SBT for "swapping X on Uniswap"

These SBTs ultimately do not provide much insight into a user. They offer relatively little information and are often meaningless. This means that when individuals, DAOs, and companies want to understand the information of users holding these SBTs, they often struggle to uncover it. This leads to the difficulty in realizing the value of SBT holders.

This puts the SBT space in a dilemma. To encourage users to seriously collect SBTs, there needs to be value derived from them. However, to start providing value for SBTs, there needs to be an ecosystem that accommodates meaningful SBTs and users collecting SBTs.

This is a classic "chicken or egg" problem. Until this issue is resolved, I believe SBTs cannot take the next step.