Ethereum co-founder Vitalik Buterin has published an opinion piece on non-transferable NFTs, arguing that there are some use cases in which token transferability is counterproductive.
Vitalik Buterin thinks Ethereum users could benefit from non-transferable tokens.
Vitalik Buterin published a blog post today in which he ruminated on the possibility of “soulbound” NFTs, or NFTs which are truly non-fungible in the sense that they cannot be sold or separated from their owners.
Buterin also suggested that governance rights may make more sense as non-transferrable, “soulbound” tokens. Rather than allowing the outright purchase of governance tokens—which can easily result in the wealthiest or most power-hungry accumulating an undue proportion of them—Buterin suggests that governance tokens could be bound to key stakeholders in a network or organization. Citizenship or residency NFTs, for example, could bear voting powers, similar to CityDAO’s “citizen” NFTs; however, unlike CityDAO’s NFTs, which are still transferable, the governance NFTs Buterin envisions would “soulbound,” and only available to real-world residents of the city.
Buterin was careful to cite privacy concerns, noting that it would take some technological innovations to ensure that the totality of a person’s on-chain data does not get publicly mapped to their name and face.
However, he noted that “a few fairly simple technical options are possible,” including the use of zk-SNARKs.
The Ethereum co-founder closed his post by pointing out that, while most blockchain innovation and research is performed with the goal of maximum transferability in mind, there are real use cases for NFTs that would perform their functions more efficiently if they were more truly non-fungible.
He ended the post with a simple call to the crypto community to focus attention on the points he had discussed. “If we can, this opens a much wider door to blockchains being at the center of ecosystems that are collaborative and fun, and not just about money,” he wrote.