Popular cryptocurrency exchange platform Binance announced on Monday the roll-out of Binance Account Bound (BAB), the first-ever Soulbound token (SBT) built on the BNB chain. The company noted that only users who have completed the Know-Your-customer (KYC) are eligible to own the BAB token. The BAB token has been rolled out as a pilot project, which is accessible by qualified users via the Binance mobile app.
What are Soulbound Tokens?
Soulbound tokens (SBTs) are non-transferable tokens that are visible to the public. This implies that they cannot be traded on the crypto market like non-fungible tokens (NFTs) and other crypto tokens. SBTs are stored in a wallet called Soul, where the credentials of an individual user are stored.
According to a whitepaper explaining SBTs, the tokens are to be stored in a wallet called Soul. However, Binance noted that users get to store their BAB tokens in an existing wallet address on the platform or use the provided option to store the BAB token in a new wallet address.
Changpeng Zhao (CZ), CEO of Binance, commented on the launch, noting that the company will join forces with crypto projects to build the applications of BAB tokens.
“We foresee numerous use cases for the BAB token, and we will actively collaborate with the community to develop this revolutionary vision of decentralized society,” CZ said.
In the early stages of its issuance, BAB tokens will serve as a verification badge for KYCed Binance users. However, as time goes on, the company may roll out more types of BAB tokens to serve extensive use cases.
SBTs were designed to modify the current mechanism implemented in crypto airdrops, removing the Matthew effect which is actively in play in the crypto industry. The Matthew effect occurs when users with financial advantage get more wealth due to their existing advantage. With SBTs, more users who might not have the economic advantage will be able to benefit from airdrops.
Binance may develop on this use case as it indicates that various projects built on BNB Chain may utilize BAB tokens in the future as a criterion to claim airdrops. NFT-based projects can also devise a means through which only BAB token holders are qualified to mint an NFT, thereby eliminating bots.
Another use case of SBTs is their utilization in voting processes in a decentralized autonomous organization (DAO). With BAB tokens, DAOs can conduct voting and decision making, with a low risk of Sybil attack, where bad actors create multiple accounts to manipulate voting processes.
