Reading the "DeSoc" Paper Thoroughly

Seo Seungchul
May 13
14 min read

Updated: 3 days ago

From the series: Demophronesis

In the previous three articles, we have explored the concepts of DeSoc (Decentralized Society) and SBT (Soulbound Tokens) proposed by Vitalik Buterin and his co-authors. While the earlier discussions covered theoretical concepts, challenges, and implementation possibilities broadly, this time we return to the original source—the paper "Decentralized Society: Finding Web3's Soul," published in May 2022—and examine it thoroughly.

This paper is not merely a technological proposal. Rather, it ambitiously goes beyond the question "how technology changes society," asking instead a more fundamental question: "What kind of society do we want to achieve through technology?" Symbolically, the paper opens with a quote from Lao Tzu's Tao Te Ching:

"The Dao is the hearth and home of the ten thousand things. Good souls treasure it, lost souls find shelter in it." — Laozi, #62

This quote suggests that the Tao (the Way), which is the essence and fundamental principle of all things, is a treasure for good people while also being a value to be protected by those who err. It concisely illustrates how the foundation of the decentralized society proposed in the paper is a network of trust and relationships shared across diverse values and positions.

The Vision of Decentralized Society (DeSoc)

DeSoc is a comprehensive vision that goes beyond technological evolution to redesign social structures themselves. The main characteristics of DeSoc proposed by the authors are:

Relationship-based economy: An economic structure centered on trust and human relationships rather than asset ownership
Pluralistic ownership and governance: Governance systems that incorporate diverse values beyond centralization and market principles
Integration of real society and digital space: Mechanisms to recreate social trust relationships and identity in digital space

Core Concepts of the Paper

The core of the paper consists of two concepts: "Soul" and "SBT (Soulbound Tokens)."

Soul

Definition: A non-transferable, public digital account linked to a specific individual or entity
Characteristics: Similar to a wallet, but the SBTs stored within cannot be transferred
Role: Serves as an "anchor" indicating an individual's social identity and relationships

The authors appear to have intentionally chosen the term "Soul." This emphasizes the "non-fungible uniqueness" of individuals and aims to restore human-centrism in Web3.

SBT (Soulbound Tokens)

SBTs are non-transferable tokens linked to Souls, explained in the paper as follows:

Definition: Non-transferable tokens "bound" to a specific Soul
Issuance: Issued by other Souls and permanently linked to the receiving Soul
Content: Express affiliations, qualifications, commitments, relationships, etc.
Non-financial nature: Express social value and human relationships rather than monetary value
Privacy: Basically operated as public information, but "programmable privacy" design is also considered

The critical feature of SBTs is their "non-transferability," which is considered essential for building a continuous and stable digital space that forms the foundation for trust relationships and responsible behavior.

Structure and Key Points of the Paper

The paper consists of 10 chapters as follows:

§1. Introduction

The introduction points out the gap between Web3's potential and its current state.

While the DeFi ecosystem has made significant progress in expressing financial transactions, mechanisms to express social trust and human relationships remain insufficient. As a result, Web3 still depends on centralized Web2 platforms like OpenSea (for NFT marketplaces) and Twitter (for promotion and community building). Additionally, the lack of social ID means DeFi cannot adequately support everyday economic activities like unsecured loans and contractual relationships.

To address these issues, the authors propose the concept of SBTs. SBTs are an attempt to incorporate relationship structures into Web3 as units of non-transferable, trust-based identity expression. The authors call the new social structure realized through this mechanism "Decentralized Society (DeSoc)."

§2. Outline

This chapter provides an overview of DeSoc. The basic units of DeSoc are wallets called "Souls" and the SBTs stored within them. SBTs express affiliations, qualifications, and contracts, functioning like resumes or credit histories.

The authors list various applications made possible by SBTs:

Provenance verification for artwork
Unsecured loans based on social trust
Community-based distributed key management
Governance resistant to Sybil attacks (when one person creates multiple accounts)
New market designs based on non-unitary division of rights

What the authors ultimately envision is DeSoc as a new social model. It aims to build a pluralistic and co-creative network based on trust and solidarity, centered on social values and human relationships.

§3. Souls

This chapter explains the core concepts of DeSoc: "Soul" and "SBT."

A "Soul" is an account that holds non-transferable, public SBTs. Importantly, real-name authentication and the principle of one Soul per person are not necessarily prerequisites. This means individuals can have multiple Souls, and relationships between Souls can be multi-layered and multi-dimensional.

Individuals can create multiple Souls without revealing their real names, and these Souls can authenticate each other and issue SBTs to one another. This mechanism allows for building identity reliability without depending on centralized authentication authorities.

This approach is expected to achieve highly reliable identities rooted in social contexts while protecting privacy. While SBTs are basically operated as public information, the paper also proposes "programmable privacy" design to finely control the scope of information disclosure.

§4. Stairway to DeSoc

This chapter discusses specific potential applications of SBTs in eight sections. As this part is particularly important in the paper, let's examine each section in detail.

4.1 Art & Soul

A new mechanism to guarantee the provenance and authenticity of artwork through the integration of NFTs and SBTs is proposed.

Current NFTs are transferable, which tends to dilute the relationship between the artwork and its creator as the work circulates in the market as an object of speculation, causing the message and context originally intended by the creator to be lost. However, with SBTs, artists can clearly prove their social context (community affiliations, educational background, history of past works, etc.) on the blockchain and retain it as information integrated with the work. This allows viewers and collectors to understand more accurately the background and intention behind the creation of the work.

Furthermore, SBTs guarantee that works are permanently linked to specific artists, strengthening the relationship between creators and their works and serving as a means to ensure the authenticity of artwork. While AI-generated art may be visually difficult to distinguish from human-created works, if the social context and relationship network of the creator linked to the work are verified, it becomes possible to clearly distinguish between AI-generated content and works actually created by humans within a social context, making it effective as a countermeasure against deepfakes.

Thus, SBTs have the potential to function as important infrastructure for establishing authenticity that includes not just a simple digital signature but the social and human background from which the artwork emerged.

4.2 Soul Lending

The paper presents a vision where SBTs representing educational history, employment history, etc., function as credit information, enabling unsecured loans.

In traditional DeFi, excessive collateral exceeding the loan amount is required due to high anonymity. However, if an individual's credit information is visualized through SBTs, loans with less collateral or even unsecured loans become possible.

The important point is that SBTs function as "non-transferable history" and can be used as social collateral that cannot be seized. They are also said to potentially serve as a foundation for Grameen Bank-type community lending models (microfinance based on joint guarantees).

4.3 Not Losing Your Soul

One of the important challenges in decentralized systems is the loss of access to accounts due to the loss of private keys.

The conventional social recovery (guardian model) is a method of recovering keys by majority vote of "guardians" chosen by the user, but this method has several challenges, such as the difficulty of selecting guardians and changes in relationships.

Instead, the paper proposes community recovery based on SBTs. This is a recovery system that utilizes an individual's SBT network (community affiliations, qualifications, relationships, etc.), where the breadth of social connections enhances the recoverability and security of private keys.

4.4 Souldrops

Instead of general airdrops (free token distributions), the concept of "Souldrops" is proposed, which can select recipients based on SBT ownership history.

This makes it possible to distribute tokens based on specific qualifications, activity histories, or community affiliations rather than simple wallet addresses. For example, it enables precise community formation targeting "people with specific degrees" or "people who have contributed to specific activities," and also functions as a spam countermeasure.

4.5 The DAO of Souls

Here, methods to revamp DAO governance using SBTs are proposed.

In current DAO governance, a mechanism that allocates voting rights based on token holdings is common. However, this method carries risks such as domination through wealth concentration and Sybil attacks (attacks where one person creates multiple accounts to manipulate voting).

In response, the authors propose the following improvements using SBTs:

Sybil resistance in voting: SBTs make it difficult to create multiple accounts as they prove an individual's consistent history
Trust-based vote weighting: Adjusting the weight of voting rights according to factors other than token holdings, such as expertise in specific fields or contributions to the community
Correlation score adjustments for excessive homogeneity: Appropriately adjusting the voting power of groups with similar backgrounds or activity histories to maintain diversity of opinions

Through these, the realization of a dynamic and balanced governance model centered on "intersectional" participants who belong to multiple communities and have diverse perspectives is expected.

4.6 Measuring Decentralization

In decentralized systems, measuring the "degree of decentralization" is important for preventing centralization, enhancing system security, ensuring the legitimacy of decision-making, and strengthening fault tolerance. However, simply counting wallet addresses or token distribution is not sufficient to capture actual decentralization.

The authors propose new decentralization metrics that measure social and organizational concentration using SBT correlations. These metrics evaluate "decentralization" more substantively and accurately by considering not just token holdings but the relationships and background diversity among participants.

4.7 Plural Property

Traditionally, ownership rights are often expressed in a simple binary of "own/don't own," but in reality, both historically and in many contemporary societies, ownership is pluralistic, with use rights, management rights, and revenue rights intricately intertwined.

Since it is difficult to express such complex and pluralistic rights relationships with NFTs, the paper proposes the possibility of flexibly implementing them through SBTs. This could realize more flexible forms of ownership such as "shared ownership" or "partial ownership," with specific applications including community currencies, access to public facilities, and decentralization of governance using SBTs.

4.8 Plural Network Goods

The supply and maintenance of public goods is an area that is difficult to properly function through state or market mechanisms alone.

The authors argue that by clearly visualizing individual contributions and reputations on the blockchain through SBTs, problems such as "excessive coordination" where homogeneity becomes too high, and "rent-seeking" by specific groups can be mitigated.

Elinor Ostrom, who won the Nobel Prize in Economics for her research on common-pool resource management, demonstrated that shared resources (commons) do not necessarily fall into the "tragedy of the commons" and that sustainable management by local communities is possible if participants create mutually acceptable rules and build trust relationships. However, in modern society, the challenge is managing larger and more complex shared resources (such as digital commons or the global environment) beyond small local communities.

By introducing SBTs, the objective visualization of how each participant has contributed to public goods provides a clear basis for appropriate rule-making and building mutual trust relationships. For example, by issuing SBTs to people who have contributed to environmental protection activities and making them socially recognizable, information about "who contributed and how" can be shared even between different communities, making trust more likely to emerge. Additionally, since SBTs can be evaluated from multiple communities and diverse perspectives rather than a single value standard, it is believed that more fair and inclusive public goods management incorporating diverse values can be realized.

§5. Plural Sensemaking

This chapter develops a discussion on the formation and utilization of collective intelligence. "Sensemaking" is a concept proposed by Karl E. Weick, referring to the process by which people find meaning and build understanding in uncertain and complex situations. This goes beyond mere information gathering and organization to include the dynamic formation of meaning and context through social interaction.

The authors first point out the following limitations in current AI and prediction markets:

Limitations of AI: Current AI systems learn from large amounts of data, but because this data is collected in a centralized manner, biases easily occur, and they are also limited in terms of value judgments and context understanding
Limitations of prediction markets: Conventional prediction markets where people bet tokens to make predictions tend to become zero-sum games (competitive mechanisms) while aggregating diverse perspectives, promoting competition and conflict rather than collaboration
Tendency toward "a single truth": AI and prediction markets tend to seek a single correct answer from diverse perspectives, which is often inappropriate for complex social problems that depend on values and context

In response to these challenges, the paper proposes the new concept of "Plural Sensemaking." This is an approach that aggregates perspectives from participants with their respective social backgrounds and contexts through SBTs, leveraging diverse knowledge to enable predictions and decision-making that are robust against biases. This is expected to promote new dialogue and collaboration even in polarized societies.

Specific mechanisms include the following elements:

Provision of perspectives by diverse Souls: Souls with different experiences and expertise provide diverse views and predictions on specific problems
Contextualization based on SBTs: The views provided are contextualized by the SBTs held by the Soul (education, career, field of expertise, past achievements, etc.), treating them not as anonymous opinions but as "opinions with specific contexts"
Correlation-based weight adjustments: Appropriate adjustments (correlation discounting) are made for opinions from groups with similar backgrounds to prevent excessive influence
Coexistence of pluralistic interpretations: Rather than aiming for a "single correct answer," allowing the coexistence of multiple interpretations based on different values and perspectives

The authors argue that this plural sensemaking goes beyond mere information aggregation to enable "translation" or "bridging" between people with different worldviews and values. This represents a shift from the "single truth" pursued by prediction markets and AI to promoting the coexistence of diverse knowledge and values. For example, for issues where there is no single correct answer and which depend on complex value judgments and contexts, such as climate change or social policies, comprehensive decision-making based on pluralistic perspectives becomes possible.

To make such plural sensemaking function effectively, a "safe framework" in which participants can safely and flexibly participate is essential. This is provided by the concept of "Programmable Plural Privacy," which is a mechanism allowing dynamic and pluralistic control of the disclosure scope of information contained in SBTs according to situations and purposes.

"Programmable" means:
- The disclosure scope of information is automatically adjusted according to specific conditions or contexts
- For example, an SBT showing medical qualifications could be viewed in detail in a medical setting but only show the fact that "valid medical qualifications exist" in general situations, allowing flexible operation
"Plural" means:
- Not simply a dichotomy of "public/private," but being able to set different disclosure levels according to the type of information and viewer
- For example, the same SBT could show detailed information to specific community members and only an overview to other members

When participants share their own information, privacy concerns arise, but with this mechanism, participants can flexibly control the level of information disclosure themselves according to the situation and counterparty, allowing them to contribute to plural sensemaking more confidently. This is particularly important when expressing opinions on socially sensitive topics or specialized problems, as it avoids the risks associated with excessive personal information disclosure.

Technically, the following methods are proposed:

Zero-Knowledge Proofs: Technology that proves only that information meets specific conditions without disclosing the information itself
Integration with off-chain data: Mechanism for storing sensitive information outside the blockchain and appropriately controlling access
Secure Multi-Party Computation: Technology where multiple parties collaboratively execute calculations without disclosing their respective information
Differential Privacy: Method of making individuals unidentifiable while enabling collective analysis by adding statistical noise to data

By utilizing these, an environment is created where participants can confidently engage in plural sensemaking on their own, enabling more comprehensive and diverse decision-making.

§6. Decentralized Society (Philosophical Summary)

This chapter summarizes the previous discussions and addresses the overall picture and philosophical significance of DeSoc.

DeSoc (Decentralized Society) is an attempt to build a mechanism for social collaboration based on networks of trust, sense of belonging, and community. In particular, by introducing the concept of "social capital" in contrast to the design that emphasizes "full transferability" and "anonymity" represented by DeFi, it aims to move away from exploitative capitalist models.

What the paper particularly emphasizes is the new paradigm of ownership and governance called "partial and plural ownership." This approach goes beyond the simple dichotomy of "public/private" associated with modern property rights to form the basis for a more flexible and inclusive social structure. Specifically, by utilizing SBTs, there is an expectation to clearly express and manage complex and multi-layered rights relationships in digital space, realizing a more flexible and inclusive social structure.

To supplement from the author's understanding, mechanisms where diverse individuals and groups share different types of rights in a multi-layered manner, rather than having a single absolute owner, are historically not new. For example, in medieval European commons, villagers shared various partial rights to land, such as grazing rights, firewood collection rights, and passage rights. In Japan, traditional systems for managing iriai rights (common land) and water rights are typical examples of such pluralistic ownership.

This pluralistic form of ownership is also widely seen in modern times, especially in rural communities in developing countries. For instance, there are many cases where rights to resources such as forests and waterways are complexly shared by households and regions, and flexibly managed according to seasons and purposes.

However, such pluralistic ownership mechanisms have been dismantled as modern property rights systems spread, being regarded as "inefficient" or "pre-modern." This is because modern property rights have progressed in the direction of simplifying ownership relationships, idealizing "complete and exclusive control by the owner."

The "partial and plural ownership" proposed by DeSoc can be seen as an attempt to reconstruct such historically existing pluralistic ownership wisdom through modern digital technology.

§7. Implementation Challenges

This chapter examines the technical and social challenges in implementing DeSoc.

On the technical side, reconciling privacy protection with "correlation discounting" in governance is identified as a difficult challenge. In response to this challenge, the authors propose the technologies mentioned in the "Programmable Plural Privacy" section (zero-knowledge proofs, utilization of off-chain data, secure computation, etc.).

As a social challenge, countermeasures against "gaming" in SBTs are necessary. The authors recommend building robust social channels through verification from multiple independent sources and utilizing negative correlation scores to detect unnatural relationship patterns.

§8. Comparison to Other Approaches

This chapter compares SBTs with existing ID systems (such as verifiable credentials, proof of personhood, pseudonymous economy, etc.) and discusses their advantages as a social ID foundation.

What is particularly emphasized is that while existing approaches mainly focus on "individual attributes," SBTs emphasize "networks of relationships." This relationship-focused design is said to enable richer authentication rooted in social contexts, beyond mere individual authentication.

§9. Future Directions

This chapter proposes a phased introduction strategy for DeSoc using "proto-SBTs" and "proto-Souls."

"Proto-SBTs" refer to transitional tokens that utilize existing technologies and systems before introducing full SBTs. For example, this could involve adding transfer restrictions to ordinary NFTs or creating tokens that can only be transferred under specific conditions. This method allows for the gradual introduction of SBT-specific properties while utilizing existing NFT infrastructure.

Similarly, "proto-Souls" refer to the method of gradually adding Soul functions to existing wallets or accounts before introducing fully autonomous Souls. Specific examples include adding functions to hold specific SBTs to conventional wallets or linking existing digital ID systems with SBTs.

The strategy of combining custodial and non-custodial Souls is also presented as an important proposal. "Custodial Souls" are Souls managed by specific organizations or institutions on behalf of users, allowing users to use them without technical expertise. For instance, a university might provide custodial Souls to students and issue and manage SBTs such as graduation certificates. In contrast, "non-custodial Souls" are Souls completely controlled by the users themselves.

There are mainly three advantages to this combined strategy. First, it can flexibly accommodate differences in users' technical proficiency. Users unfamiliar with blockchain technology can start with custodial Souls and gradually transition to non-custodial Souls. Second, it can keep the adoption barrier low. If existing organizations and institutions provide custodial Souls, the hurdle for general users to participate in DeSoc is lowered. Third, it enables flexible privacy management. SBTs containing sensitive information can be safely protected in custodial Souls, while information that can be publicly disclosed can be managed in non-custodial Souls.

The authors point out that these phased approaches allow for flexible introduction according to technological maturity and social acceptance. In particular, they present a vision of gradually building the trust network that forms the foundation of DeSoc through collaboration with existing organizations and communities.

However, although not explicitly mentioned in the paper, if the use of custodial Souls increases too much, user management load may increase, potentially making it more difficult to realize the self-sovereign digital identity that is originally aimed for. To avoid such challenges, it would be desirable to promote "hybrid Souls" with mechanisms for flexibly migrating and integrating information between custodial Souls provided by different organizations and between custodial and non-custodial Souls (information portability). Furthermore, it would be necessary to develop interfaces and standard specifications that allow users to centrally manage different Souls, creating an environment where users can proactively control their own identities.

§10. Conclusion

In the conclusion, the social significance of DeSoc is reemphasized. The authors entrust DeSoc with a future vision that prevents technological runaway and is deeply connected to social foundations.

However, many challenges and unresolved issues remain on this path. The paper presents the following important questions as future research agendas:

How can DAOs, while maintaining the public nature of their state, analyze patterns between Souls and correlations of SBTs to prevent Sybil attacks and ensure decentralization?
With mechanisms like correlation discounting, how is it possible to reconcile this with incentive designs for acquiring SBTs?
To what extent is there a trade-off between privacy protection and the mechanism of correlation discounting in DeSoc?
Is there a method to measure inequality in a contextually consistent manner while maintaining socially appropriate privacy?
Within the framework of community recovery, how should "inheritance" be designed?
Are there "red lines" (lines that should not be crossed) that should be embedded in protocols to avoid dystopian scenarios? Or should we simply promote competition to build the best scenarios?

Through a detailed explanation of the DeSoc paper proposed by Vitalik and others, this article has delved into its philosophical and social significance. I hope it serves as an opportunity to confront the more fundamental question of "what kind of society do we want to realize through technology," not just the technical aspects.

This article will also be posted on Medium soon.

If it resonates with you, I’d be grateful to hear your thoughts there.