Binance is presently one of the crypto platforms that is dominating the global market. The exchange became very user-friendly along with its specialty of the mechanical ecosystem. This top cryptocurrency exchange Binance is about to issue a soulbound tokens on the BNB blockchain. According to an official announcement, It is for all users who will complete their know-your-customer (KYC) procedure.
What Is Soulbound Token?
Last month, the world’s largest crypto exchange, Binance, announced that it is prepared to issue Binance Account Bound (BAB). BAB was introduced as the first-ever Soulbound Token (SBT), which is developed on the BNB Chain. BAB was planned to launch as a pilot project initially and is expected to only be accessible through the Binance mobile app.
The concept of soulbound tokens was first revealed in a blog post by Ethereum co-founder Vitalik Buterin in January. He explained this new asset class as non-transferable digital tokens. It represents social identity in a decentralized ecosystem.
Soulbound tokens will work as an identity passport across the BNB chain. These tokens are unique and non-transferable. The users who don’t want to share their identity across the entire network can avoid the token.
Binance’s soulbound token is named Binance Account Bound (BAB). According to the official release, it will allow enthusiast users to participate in developing projects while earning rewards.
The SBT concept was first made public by Ethereum Founder Vitalik Buterin. E. Glen Weyl and Puja Ohlhaver were also present at that time. Buterin disclosed the flaws of transferability and commercial viability features of NFTs.
Soulbound is a new and unique token standard that could potentially form an essential developing block for the Decentralized ecosystem. Buterin explained multiple ways of using SBTs. For instance, from university degrees to education credentials and web3 credit scores, this token can be utilized.
The use of KYC in the crypto market started with an intense investigation this week. It happened when decentralized exchange dYdX requested its users to complete a “liveness check” through webcam technology. Though, several users stood against the platform’s scheme. The questions raised regarding the relationship between decentralization and KYC.
How Would It Work?
The token was planned to be an opt-in feature that will allow only those Binance users in compliance with Know-your-customer (KYC). It will allow the users to mint their BAB directly on their wallets while using the platform.
BAB was mainly introduced to act as online identification for Binance. The token can also be utilized by third-party protocols to ensure BAB tokens for several activities such as airdropping NFTs, avoiding bots, and a DAO using it for quadratic voting, etc.
The official blog post noted the BAB token is the first-ever Soulbound Token about to launch on the BNB Smart Chain. It will focus on the issues of the user’s identity in the decentralized society. The token is a non-transferable and non-financialized token as earlier it was mentioned.
According to the official announcement, ‘transferability’ may not be the main attraction of decentralization. Because it can be troublesome considering the distribution of governance power.
Therefore, BAB is certainly unique from traditional digital assets like Bitcoin and Ethereum. These coins represent momentary sums.
According to the platform, “Since we begin to explore how identity proof will function in Web3, whether it will be in the form of a provable skillset or an earned title, further use cases for the BAB token will increase. This sense of responsibility paves the rudder for a more efficient decentralized community and space.”Binance believes that additional use cases for BAB will increase in the future as the web3 landscape rapidly starts to dominate the market.