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Soulbound Tokens for Avatars

Soulbound Tokens (SBT) is a concept proposed in May 2022 by Ethereum cofounder Vitalik Buterin, lawyer Puja Ohlhaver, and E. Glen Weyl, an economist and social technologist. They are similar to NFTs, however soulbound tokens are non-transferable tokens. Much like NFTs, they can represent virtual assets, a person’s identity or an achievement. In general, this could include virtual trophies, medical records, work history, and any type of information that makes up a person or entity (character customization). When it comes to Arcomias metaverse, SBTs include assets, achievements and avatar data. For example, someone could have a “Credentials Soul” for their metaverse reputational history and an “Achievement Soul” for their achievements records. Souls and SBTs would allow people to build a verifiable, digital Web3 reputation based on their past actions and experiences. Furthermore, it allows us to store data in a more decentralized fashion; for example: normally one would have to store data such as a Nickname, either locally or in the cloud; but we can store it inside an SBT. 

The logic behind soulbound originates from the popular online game World of Warcraft. Once an asset is picked up or given through an achievement, soulbound assets are forever “bound” to the player’s “soul”. An asset being an SBT prevents it from being traded or mailed to another character or sold to the general public.” The implementation of SBTs prevents too much twinking or pay to win from occurring. Pay to win (P2W) is used in gaming to refer to games that allow players to purchase items or abilities (e.g., more powerful weapons, better looking outfits, additional benefits) by merely paying for them. Pay to win is a very controversial aspect of gaming, especially in MP (Multiplayer) games. Many players strongly object to people being able to pay to trump their own hard-earned rewards, experience or superior skills. That’s why Arcomia decided that higher-end users cannot give certain, older assets as hand-me-downs to their friends or sell them to the general public. This allows certain assets, such as rewards, to hold more value when showcasing them; as users can be sure they were not easily bought or given to by their friends; but were obtained through achievements.

A sustainable decentralized economy

There is minimal difference between Non-Fungible Tokens (NFTs) and Soulbound Tokens (SBTs). The differences, however minimal, create a significant difference in use cases. NTFs are transferable, while SBTs aren’t. While NFTs are digital certificates demonstrating ownership, SBTs are digital tokens storing non-transferable data about a specific entity. As a result, SBTs focus on the product’s utility as opposed to the perceived capital gains that have preoccupied many crypto projects and enthusiasts. Hence, it is important to make the right decision whether an entity should be an NFT or SBT. On one hand, we want to allow Play-2-Earn mechanics to work in full force; allowing players to earn rewards as they progress. Which means anything they earn should be transferable. On the other hand, we want to avoid Pay-2-Win mechanics; where new or “rich” players can simply buy the entities they want. Thus, there needs to be a fine balance between the transferable and non-transferable entities. Below you will find a decision-making table which is still work-in-progress as we listen to community feedback and make use of economists in the field for a sustainable economy.