Soul-bound tokens (also called soul-bound NFTs and often abbreviated as “SBT”) are a type of non-fungible token. Unlike regular NFTs, which can be bought, sold, or transferred, soul-bound NFTs are linked to a specific wallet.

Soul-bound tokens can be used to represent ownership or membership in a particular community or organization. For example, a soul-bound token might be used to grant access to exclusive content or events, or to signify a particular certification, credential, achievement or accomplishment. Used in this way, they indicate that a person is a certified expert in a certain field, or to signify that someone has achieved a particular milestone or goal. Once held, soul-bound tokens cannot be transferred to another individual.

One of the key benefits of soul-bound tokens that they provide a higher level credibility than regular NFTs. Since SBTs cannot be duplicated or transferred, they offer a more secure way of authenticating membership. Additionally, since SBTs can not be transferred out of a specific individual wallet, they can help to prevent fraud or misuse of the token. For example, SBTs guard against the situation where someone takes an exam on behalf of someone else to earn a credential, and then transfers the credential to an individual who has not earned it.

This concept of being “non-transferrable” is a core attribute of SBTs. (In fact, Unlock Protocol prefers the term “non-transferrable” to soul-bound.) By definition, non-transferrable NFTs cannot be transferred to another owner or account. This means that once the NFT is created either through minting or granting via an airdrop, it can only be owned and held by the wallet that initially holds it.

Non-transferrable NFTs are typically used for situations where the ownership or control of the underlying asset needs to remain with a specific account or entity. For example, an organization may create a non-transferrable NFT to represent a license, certificate, or credential that can only be held by a specific individual who has passed a certain exam or achieved a specific goal.