Balancing Freedom and Trust in the Age of Soulbound Tokens (SBTs)

In previous entries, we have explored the concepts of Decentralized Society (DeSoc) and Soulbound Tokens (SBTs) as proposed by Vitalik Buterin and his collaborators. This time, we will delve into the various responses and criticisms following the publication of the DeSoc paper, as well as the inherent duality of SBTs.

The Co-authors of the DeSoc Paper: At the Crossroads of Diverse Expertise

The paper “Decentralized Society: Finding Web3’s Soul,” released in May 2022, was co-authored by Vitalik Buterin, Puja Ohlhaver, and E. Glen Weyl. Their distinct areas of expertise converged to create a multilayered vision for DeSoc.

Puja Ohlhaver, a legal expert and innovator, brought insights from institutional design and legal frameworks. She is a member of the “Getting Plurality” research group at Harvard’s Edmond & Lily Safra Center for Ethics and has also founded a women’s healthcare company, contributing a practical and multifaceted perspective to the paper.

E. Glen Weyl is a political economist known for his roles as Principal Researcher at Microsoft Research and lecturer at Princeton University. He founded the RadicalxChange Foundation, aiming to build a “radically equitable and cooperative society.” His work fuses economic theory and blockchain technology to explore new social systems.

The collaboration was motivated by a shared concern that Web3 had become overly financialized and insufficiently expressive of social value. By combining Vitalik’s technical lens, Ohlhaver’s legal-institutional perspective, and Weyl’s socio-economic analysis, they were able to propose a new societal model. Vitalik and Weyl had already established a working relationship through RadicalxChange, and Ohlhaver’s participation enabled more concrete institutional design.

That said, in the author’s personal view, the current framework still lacks a sufficiently grounded perspective on the real dynamics of human society—an absence that underlies much of the criticism discussed later. The addition of sociologists and political scientists could help evolve the model to better match real-world needs.

Reactions to the DeSoc Paper

Following its release, the DeSoc paper drew diverse reactions, particularly from the Web3 community. Notably, there has been a marked difference in how people have responded to the technical concept of SBTs versus the broader and more abstract DeSoc vision.

Interest in SBTs and Progress in Implementation

Because SBTs are relatively easy to grasp as non-transferable tokens, they have attracted significant attention regarding their implementation.

For example, Binance, the world’s largest crypto exchange, announced “Binance Account Bound (BAB)” as an SBT-based digital verification solution to meet Know Your Customer (KYC) requirements. Similarly, Goldfinch has adopted SBTs to verify investors in a system connecting real-world finance with DeFi.

While these implementations primarily digitize existing verification processes, they demonstrate that SBT technology is beginning to function in the real world.

Challenges in Responding to the DeSoc Vision

In contrast, there has been less momentum and more divided opinions regarding the broader and long-term DeSoc vision. Critics argue that DeSoc remains abstract and exploratory, lacking immediate applicability or practical use. In a Web3 ecosystem heavily driven by short-term gains, concepts that lack concreteness or rapid ROI are often deprioritized.

Still, some have noted that the DeSoc framework presents a valuable opportunity to steer Web3 away from financialization and toward social value. From this perspective, even if SBTs themselves do not succeed, the issues DeSoc raises remain meaningful.

Varied Evaluations of the DeSoc Paper

The paper’s reception has varied significantly depending on the observer’s position or community.

Positive Reception

The DeSoc paper generated major buzz on SSRN, one of the world’s largest academic paper platforms. As of May 9, 2025, it has been downloaded over 80,000 times and viewed over 270,000 times—numbers that far exceed the average academic paper, which typically garners only a few hundred downloads. These statistics point to an influence extending beyond academia into society at large.

SSRN hosts millions of papers across disciplines, from social sciences to technology. The DeSoc paper ranked as high as 30th overall, placing it in the top 0.01%. Even accounting for Vitalik’s fame, this is an extraordinary achievement.

Researchers from economics, political science, sociology, and law have all shown interest. Through networks such as RadicalxChange, scholars are engaging in interdisciplinary study of how decentralized social structures like DeSoc could interact with existing systems.

Vitalik’s critique of identity being represented by tradable NFTs has also resonated with proponents of Self-Sovereign Identity (SSI). SBTs, by being non-transferable, are seen as a step toward rethinking identity in digital spaces.

In the decentralized science (DeSci) community, SBTs are being considered as tools to evaluate and track scientific contributions. DeSoc is expected to become a foundational layer for information sharing and cooperation across various decentralized protocols.

Critical Perspectives

Yet criticism of the DeSoc paper has been substantial.

Cryptocurrency critic David Gerard called DeSoc “a bizarre economic and social theory stemming from Californian ideology,” accusing it of being detached from real human needs. This reflects a broader concern that the idealism of tech-driven solutions often lacks societal grounding.

From the decentralized identifiers (DID) and verifiable credentials (VC) communities, there is worry that SBTs may be incompatible with existing identity frameworks. While SBTs propose a new approach, DID/VC systems have years of research and standardization behind them. Harmonizing and achieving interoperability between the two is a key challenge.

Efforts to address this have already begun. For example, Dig DAO is developing open-source tools to integrate SBTs with DID/VC systems. The Ethereum Research forum is also actively discussing ways to evolve credential design beyond SBTs and ERC721 tokens. The technical community is increasingly seeing these systems as complementary, though further discussion and experimentation are clearly needed.

A more serious criticism involves privacy and surveillance. Gerard warned, “Vitalik Buterin wants to permanently record everyone’s history on the blockchain. That’s the worst idea ever.” Journalist Jacob Silverman sarcastically remarked, “Please inscribe my soul on an immutable blockchain and trade it.”

Tech industry critic Molly White, known for her blog “Web3 is Going Just Great,” argued that the DeSoc authors underestimated the risk of real-world abuse. Blockchain’s immutability could result in permanent records of criminal histories or shameful personal details, thereby violating the right to be forgotten, obstructing rehabilitation, and fostering a surveillance society. These are critical concerns regarding what data SBTs record, how privacy is protected, and how individual identity remains flexible.

The Need for SBT-Free Spaces

The possibility of a digital surveillance society emerging through SBTs is a criticism that must be taken seriously.

Theoretically, SBTs are designed so that users themselves control which data they receive and disclose. Even the DeSoc paper emphasizes the need for users to be able to flexibly manage the visibility of their information.

However, at present, these features remain conceptual. No standardized implementations currently ensure this flexibility. Thus, SBT systems might pose privacy risks depending on how they are implemented.

A society where all actions and relationships are continuously recorded via SBTs could become suffocating. Just as in real life we need both spaces where we must be consistent and those where we can act freely and anonymously, the digital world must offer both structure and freedom. Anonymity and the right to be forgotten are essential for creativity and new social experimentation.

Therefore, it is crucial that DeSoc’s institutional design strikes a proper balance between what should be recorded via SBTs and what should remain free of such records. The “freedom not to be evaluated,” the “freedom to fail,” and the “freedom to be forgotten” are all vital for a healthy decentralized society.

Practical Steps for SBT Implementation

For SBTs to meaningfully contribute to digital embodiment and to the construction of social and political capital, several practical steps must be taken:

Establishing Standards and Interoperability

Currently, SBT issuance, management, and usage lack standardization. To enable cross-platform and cross-chain adoption, we need shared protocols and a robust technical foundation for interoperability.

For instance, academic degrees issued as SBTs would require protocols commonly recognized across employment sectors and professional domains.

Expanding Trustworthy Issuers

The value of SBTs depends heavily on the credibility of the issuers. Universities, companies, and governments must actively issue SBTs, with widespread recognition.

If institutions like the University of Tokyo began issuing degree certificates as SBTs or national qualifications were distributed in this form, public awareness of SBTs would increase significantly.

Designing Social Incentives

SBT usage must be tied to real social recognition, decision-making power, or economic rewards. For example, DAOs could allocate voting rights based on SBT ownership, or exclusive services could be offered to SBT holders to create clear incentives.

Enhancing User Experience and Privacy Control

Current blockchain technologies and wallets are not user-friendly. We need more accessible tools for managing SBTs and for flexibly setting information visibility and privacy levels.

Granular privacy settings—distinguishing between permanent and temporary data sharing—will be vital for broader adoption.

The Importance of a Gradual, Iterative Approach

Realizing innovative ideas like DeSoc and SBTs requires a step-by-step approach rather than rushing toward idealistic goals.

Initial experiments should begin in limited-use contexts, such as open-source communities or academic networks. This reduces risks while offering valuable insights.

Alongside technical development, it’s essential to deepen social and ethical discourse. Questions like “What is the self in digital space?” and “How do we build trust?” must be explored from philosophical, sociological, and policy perspectives—not just technological ones.

SBTs alone will not complete the vision of DeSoc. They are merely foundational elements upon which broader systems and supportive structures must be layered.

For example, transparent skill certifications via SBTs could improve labor-market matching. In local communities, SBTs could visualize contributions and convert them into recognition or rewards. By accumulating such use cases through trial and error, the ecosystem’s shape will gradually emerge—one grounded in practice rather than idealism.

Ultimately, it is this incremental, experimental process that will build resilience in the new society.

Conclusion: Facing the Dual Nature of SBTs

In this essay, we examined how the DeSoc paper has been received and critiqued, revealing the fundamental duality of SBTs. While they could become a key trust infrastructure in digital society, they also carry risks of surveillance and control.

This dual nature is similar to internet cookies—but unlike cookies, which are deployed by service providers to track users, SBTs ideally allow users to control what they receive and share. Yet due to their permanence, SBTs still raise concerns about indirect social monitoring and evaluation.

This makes careful institutional design and user control essential. As we face these dualities, we must reflect deeply on what kind of digital society we want to build. The debate must continue on how to strike the right balance between what should be recorded and what should remain free in the age of SBTs.

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