Soulbound Tokens from World of Warcraft started trending after being quoted by Buterin. Can we spot the next crypto buzzword within the online game?
The founder of the Ethereum network, Vitalik Buterin, made waves in the Web3 space when he released his thesis about a new type of digital asset called Soulbound Tokens, or SBTs, in May 2022. In his paper titled “Decentralized Society: Finding Web3’s Soul”, he highlighted that SBTs were key to the next phase of creating a richer Web3 ecosystem known as a Decentralised Society, or DeSoc for short. The new asset could create beneficial complex functions such as social recovery of wallets via anointed guardians and preventing the creation of multiple pseudo-identities to name a few.
But what is a Soulbound Token (SBT)? It is essentially a type of non-fungible token (NFT) that cannot be transferred out of one’s digital wallet. Let’s recap what an NFT is – they are digital pieces of information that has its own unique identification, and it is encoded on the blockchain. Unlike cryptocurrencies, where one token is the same as another and is considered fungible, no two NFTs are exactly alike which makes it non-fungible.
While standard NFTs can be traded and transferred with other users, SBTs take the idea further by locking the asset within a digital wallet and making it non-transferable. The wallets or accounts are identified as ‘Souls’, and a person may have multiple ‘Souls’ which correspond to different facets of their life. The ‘Soul’ could be related to their education, their employment history, or even a membership for club access.
The term comes from the fantasy massively multiplayer online role-playing game (MMORPG) World of Warcraft, where soulbound items were prevented from being traded, sold, or transferred to another character. Interestingly, the idea of Soulbound Tokens first appeared in January 2022 where Buterin posted his musings about the concept on his blog.
Needless to say, the Web3 space has been all abuzz about Soulbound Tokens as the next big thing and Ethereum proposals have been raised to take the idea further. Interest in the term spiked in May when the paper was released, and it has been trending ever since. It must have been a confusing time for World of Warcraft players too; imagine searching for more information about in-game soulbound items and being directed to crypto sites instead.
Buterin’s history with World of Warcraft
It’s no secret that Buterin was an avid player of the World of Warcraft MMORPG before he started his foray into the world of cryptocurrencies.
The crypto lore around Ethereum’s birth by Polygon media states that Blizzard Entertainment nerfed Buterin’s game character by removing a damage mechanism from his warlock’s “Siphon Life’ spell. In his about.me bio, he said “I cried myself to sleep, and on that day I realized what horrors centralized services can bring. I soon decided to quit.”
This trauma led him to find another purpose in life which he found in Bitcoin. With a newfound passion for cryptocurrencies, he went on to develop the Ethereum network.
Or so the story goes. While Buterin did join the MMORPG in his younger days, he was not as obsessed with the game as we would like to think.
And while we would like to imagine he geeked out and nameed his newly developed network “Ethereum” after the sub-faction of astral travelers within World of Warcraft, he has clarified that the term comes from the word ether, or luminiferous ether specifically, which is an outdated scientific concept for a medium that propagates light.
It’s a shame, since we prefer the lore of a nondescript gaming update inspiring a genius to create the future.
Yet despite his clarifications about his past with World of Warcraft, there are occasional references to the game from time to time within the crypto space. One of them are Soulbound Tokens, which as mentioned are in-game items that cannot be given or traded to others and referenced by Buterin for NFTs with the same mechanics. The other one is the name of the Ethereum developer community termed the Fellowship of Ethereum Magicians, which to be honest gives a fantasy-like connotation found in World of Warcraft or Lord of the Rings.
This leads to the next question – could the next crypto buzzword be found in World of Warcraft? While there aren’t many commonalities between an MMORPG and a blockchain, the hype around Soulbound Tokens certainly implies so. After spending countless hours pouring over the WoW wiki pages and forums, I believe we’ve found our next potential crypto buzzwords.
In the game, heirlooms are a special class of items that can be purchased with in-game gold. The attributes of the heirloom scales with the level of the player’s character which gives a boost to their character’s skills, and the item can be upgraded to be equipped at higher levels once they reach their current level cap. Much like a soulbound item, heirlooms cannot be sold once purchased.
And how does that translate into cryptocurrency or Web3 functionality? Since heirlooms can scale their attributes with the player’s level, they are quite similar to dynamic NFTs that changes over time. Dynamic NFTs are essentially NFTs that change based on different conditions, and the change is specific to the automatic changes encoded in its metadata. Once the conditions to change are met, the smart contract executes the action and we see the NFT morph into a different form.
Dynamic NFTs can play a large role in bringing NFTs to real-world scenarios. In blockchain gaming, NFT characters could change their appearance as the player progresses and level up from a newbie to a veteran gamer. It can also track the changing prices and age of real-world assets like houses and cars.
And where do heirlooms come in? Well, we refer to the Moonbirds NFT project to see how an heirloom mechanics might come into play. For context the avian series was launched by PROOF collective, which is a private group comprising of 1,000 NFT collectors and artists. The Moonbirds NFTs have a unique feature known as ‘nesting’ which is a form of soft staking in the digital wallet. By holding the NFT for long periods without trading it away, it will automatically upgrade its tier by changing its form while awarding the holder with access to higher tiers in the PROOF Collective and enhanced rewards. If the NFT is traded away, it will reset its status to the original state and begin the process again.
Similarly, heirloom tokens could act as a long-term identity pass which can be traded away once the owner does not need it. This could be in the form of a VIP pass or insurance certificate that adds on more perks the longer it is held, and the pass could be traded peer-to-peer without a central organisation stepping in. Since the heirloom tokens would reset upon being traded, there is no way for the next user to leapfrog on the benefits accumulated by the previous owner. That’s one way heirloom tokens playing out in the Web3 space.
Also known as armour or weapon enhancement tokens in World of Warcraft, this in-game token will create an uncommon, rare, or epic enhancement for the player’s follower which boost their armour or weapon. The basis of the in-game function is simple enough, but how does that translate into Web3 functionality?
The answer is, enhancement tokens can be a form of add-on for NFTs to boost their customisability. Let’s go back to the idea of game weapons again to envision its function. Say I have a sword for example, and I want to modify its attributes to give me +5 strength which enables my character to deal more damage. But I don’t want to modify the weapon permanently so I’ll make a removable enhancement token, and I can replace it with another charm that gives me +15 strength sometime in the future.
The idea is transferable with game NFTs as well. While there aren’t add-on NFTs we could attach to a game item NFT at the moment, its introduction could open more avenues of customisability so that no two NFT game items are ever alike. Web2 games like Borderlands 3 may boast about having 1 billion different gun attributes and permutations, but add-on NFTs could easily let any blockchain game outstrip that figure with customisable attributes for game items.
Outside of blockchain gaming projects, enhancement tokens could play an important role in a variety of situations when adopting the behaviour of an add-on. Take fashion in the metaverse for example; these tokens could take the form of different skins or fashion accessories for game avatars. Much like trying out clothes at a clothes store, users can cycle through fashion enhancement tokens rapidly and link it to their metaverse avatars instantly. Once they are done with the fashion item, users can trade it away on NFT marketplaces.
And what about real-world situations? As companies like telecommunications, software businesses, and agencies offer more customised services to their clients and customers, add-ons are a quick way to add or remove components every time there is a change to the package. Companies could add or remove services from minted NFT identities of each client instantly when requested, and blockchain verification does away with tons of paperwork in the form of contract verifications.
With add-ons in the form of enhancement tokens, it could open a new world of utility for NFTs in the physical and digital world.
Ok, hear me out here. Love tokens may seem like a sexual allusion, but the basis behind its mechanics could play a larger role in decentralised communities. Love tokens in World of Warcraft are used in the game’s annual valentine-themed event called Love is in the Air, and they can be given to guards or civilian non-playable characters (NPCs) in return for event items called Pledges of Adoration or Gifts of Adoration.
While we won’t know if a decentralised Tinder project is next on anyone’s checklist, the mechanics of love tokens could be key to creating social communities centred around influencers and content creators. In fact, creator-focused tokens do already exist in the form of social tokens. These tokens are digital assets that a person or brand can issue to monetise their work, in addition to traditional avenues like sponsorships and advertising.
Currently, creators and influencers use a myriad of centralised social media platforms such as Youtube, Spotify and Twitch to build their brands. Unfortunately, these platforms often take a huge cut of the earnings that content creators make. Case in point, Youtube takes a 45% cut from ad revenue generated by said creators, and Twitch uses a tiered structure that takes 50% of the earnings.
With social tokens, creators and influencers can connect with their fanbase directly while taking back control of their own time and revenue, while avoiding the need to pander to repressive revenue cuts and rules implemented by centralised platforms. These could come in the form of creator tokens which allow fans to redeem the tokens in exchange for the creator’s time, or community tokens which grant holders special rewards and access to gated events.
Some protocols are already implementing use cases for such social tokens. For example, the blockchain-based content platform Rally.io lets creators such as artists, brands, and influencers create their own cryptocurrencies and NFTs to customise interactions with their own communities, and it makes the user interface a breeze by letting said creators do so without in-depth knowledge of blockchain coding.
And how does love tokens come into play? While the term would probably not catch on, the mechanics of love tokens could be the next step for social tokens. Currently, social tokens are still a one-sided event, i.e community members consume content and buy tokens from creators, but the token could evolve to become a two-way flow for creators and their community alike. Much like the two-way interactions between players and NPCs in the game, community members can also send gifts and contributions back to creators or initiate collaborative events such as fundraisers and festivals under the creator’s brand.
Soulbound Tokens 2.0
The idea of Soulbound Tokens has been expounded on numerous times after its mention by Buterin. To recap, Soulbound Tokens are non-transferable NFTs stored in wallets called Souls, and the wallet can belong to a person or institution.
But if we refer to the in-game description in World of Warcraft, we realise that there are certain conditions to an item being soulbound. These include:
- Bind on Pickup – the game item is soulbound upon being awarded during a quest or upon picking it up
- Bind on Equip – the game item is soulbound upon equipping
- Bind on Use – the item is soulbound upon using it
Translating the mechanics of soulbound items into crypto speak, there are two ways we could refine the idea of Soulbound Tokens further. The first is the token asset can be soulbound upon receiving it. This is the common use of Soulbound Tokens highlighted by Buterin, and these assets cannot be transferred upon receiving it.
The second case makes assets soulbound upon using it, which means the asset in question is tradeable until it is utilised. To visualise this, let’s take a concert ticket as an example. People buy concert tickets before the actual event, but they may sell it to others later because something cropped up and they cannot attend the event, or they may flip it by selling to others who did not manage to buy a ticket but wants to attend the concert. However, once the ticket is punched during the event it is neither usable nor re-sellable.
In that same logic, having assets that become Soulbound Tokens upon use can expand the functionality of the asset further. These bind-on-use tokens could take the form of NFT tickets such as the Alpha pass issued by The Sandbox, or for upcoming metaverse events where a pre-mint takes place before the actual event. They can be traded prior to the event but are locked once they are utilised.
Look for inspiration outside Web3
World of Warcraft has inspired a novel idea in the Web3 space, and these tokens could be the next buzzword in the crypto space. But the answer to building a successful Web3 ecosystem may lie in looking outwards to other social niches to see how people interact in a peer-to-peer or peer-to-group situation, then implementing the necessary tools to enable interactions within the Web3 space.
What do you think could be the next crypto buzzword? Leave your thoughts in the comments or on our social platforms below!
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