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 enable the creation of standardized soulbound tokens on Ethereum for Know Your Customer verification, credit scores, and other use cases.
Soulbound tokens are tokens that cannot be transferred from one wallet to another. The concept was popularized via a blog post by Vitalik Buterinwho argued that these tokens could be used to signify governance rights for decentralized finance (DeFi) protocols or to prove that someone attended an event.
Speaking to Cointelegraph, Masa Finance founders Brendan Playford and Calanthis Mei argued that soul-linked tokens would expand opportunities for DeFi users to build credit and obtain loans. Mei explained it this way:
“We want to help people enjoy [an] on-chain credit system with web3 credit score, with the data sources we have aggregated on web2 and web3 representing and helping people build their on-chain credit. We are currently working with several lending partners to provide DeFi loans to people who have established a Masa credit report.
She pointed out that Masa soul-linked tokens are not simply attached to a traditional credit score. The protocol goes beyond traditional finance to integrate both Web2 and Web3 activity. Mei said more than 10,000 data points are used in a Masa credit score, including a user’s FICO score, Plaid transaction data for credit and debit cards, transaction history from the Web3 wallet, centralized exchange balances and other data.
Mei believes this system will lead to “risk-based underwriting” in DeFi, which she says was previously not possible due to the lack of identity protocols on blockchain networks.
The founders also said that there are two other use cases currently available for the protocol. In addition to representing a credit score, the second use case for the protocol is for .soul domain names. These are similar to ENS names, but with the added benefit that they can be linked to various Masa identity characteristics. Playford explained that “users can link different attributes, use their nickname to verify themselves, show they are verified in Web3 without doxing [their] full name, eg.
Playford noted that .sol domain names can be transferred between wallets. However, the attributes associated with them will become unattached 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 released as “Masa Green”. It allows users to mint a Masa Green token to prove their identity, which the company says will help users prove they are real humans, not robots. According to Mei, this will help weed out bots in play-to-earn games and other apps where the community wants only real humans to participate.
Masa is not the only soulbound token protocol to be implemented on a blockchain network. Binance has released its own version, called BAB, which can be used for prove the identity of a user. However, BAB is currently only available on BNB Chain. Masa appears to be the first soulbound cross-chain token protocol available on Ethereum and Celo.