Masa Finance has launched the first soulbound identity protocol for the Ethereum mainnet, according to a January 17 press release shared with Cointelegraph. The protocol will allow standard soulbound tokens to be minted on Ethereum for Know Your Customer verification, credit scores and other use cases.
Soulbound tokens are non-transferable tokens from one wallet to another. The concept was popularized through a blog post from Vitalik Buterin, who stated that the token could be used to sign governance rights for decentralized finance protocols (DeFi) or to prove that someone is participating in an event.
Speaking to Cointelegraph, Masa Finance co-founders Brendan Playford and Calanthis Mei argued that soulbound tokens will expand opportunities for DeFi users to build credit and obtain loans. May explains it like this:
We want to help people [an] on-chain credit system with Web3 credit score, with data sources that have been collected on Web2 and Web3 that represent and help people build credibility on the chain. We are currently working with a number of lending partners to expand DeFi loans to those who have created a Masa credit score report.
He emphasized that Masa soulbound tokens are not just attached to traditional credit scores. The protocol goes beyond traditional finance to integrate Web2 and Web3 activities. Mei said more than 10,000 data points are used in Masa’s credit score, including users’ FICO scores, Plaid transaction data for credit and debit cards, Web3 wallet transaction history, centralized exchange balances, and other data.
May believes that this system will lead to “risk-based underwriting” in DeFi, which he previously said was impossible due to the lack of an identity protocol in the blockchain network.
The founders also said that there are other use cases currently available for the protocol. In addition to representing credit scores, a second use case for the protocol is the .soul domain name. This is similar to the name ENS, but with the added benefit of being able to connect to the various characteristics of Masa’s identity. Playford explained that “users can associate different attributes, use pseudonyms to verify themselves, showing that they are verified on Web3 without doxing. [their] full name, for example.”wo 80 / ch 501
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Playford notes that .sol domain names can be transferred from one wallet to another. However, the attributes associated with them will be unlinked if the domain is moved. Therefore, users cannot “buy” another person’s identity or credit score.
According to the founders, the third use case is identity verification, a feature the company launched under the name “Masa Green.” It will allow users to mint Masa Green tokens to prove their identity, which the company believes will help users to prove they are real people, not bots. According to May, this will help eliminate bots in play-to-ear games and other applications where the community only wants to engage with real humans. The company said Masa Green will be available as “quick follow in the coming weeks.”
Masa is not the only soulbound token protocol to be implemented on the blockchain network. Binance has released its own version, called BAB, which can be used to prove the user’s identity. However, BAB is currently only available on BNB Chain. Masa appears to be the first soulbound token protocol available on Ethereum.