Soulbound tokens, or SBTs, are non-fungible tokens issued to a specific wallet address on a blockchain. They can represent one or several attributes associated with an individual or entity, such as credentials, certifications, memberships, age, affiliation or credit history — the specifics would depend on the issuer and the use case. A key feature is that they cannot be transferred; they “belong” to your wallet address. They can, however, be revoked should user characteristics change. The tokens would be issued by any entity that needs to verify information attached to an on-chain account. An example is asset manager WisdomTree, which issues SBTs to verified users of its WisdomTree Connect platform. This smooths the purchase and transfer of any of the firm’s tokenized funds, putting the “whitelist” at the wallet level and reducing the centralized compliance burden. It also enables the peer-to-peer transfer of assets, while ensuring they only occur between verified accounts. Looking forward, WisdomTree could enter into agreements with third parties to expand the token utility — allowing its SBT-identified wallets to be compatible with other asset managers and their funds, and vice versa. Approved decentralized applications could recognize WisdomTree’s SBTs and offer compliant peer-to-peer lending or swap services. Looking beyond institutional finance, SBTs could be used by decentralized lending platforms to assign on-chain credit scores, even for those without bank accounts. They could be used by protocols to automatically assign voting rights according to ecosystem activity, rather than just an economic stake. NFT platforms could give first priority for new series to accounts with an “elite user” SBT. By decentralizing compliance, SBTs leverage blockchain technology’s flexibility and “composability,” which refers to the relative ease with which different tokens and applications can connect and interact with each other, creating new services. They also potentially stem the escalation of compliance costs while offering a better client service and enabling new lines of business. And zooming out, they represent yet another example of how new technologies change the lens through which we view societal concepts and interactions we once took for granted. By encoding and fragmenting identity, SBTs change our understanding of the concept while enhancing our appreciation of its utility — in turn, this is likely to open up even further avenues of innovation.