Masa Finance has launched the first soulbound identity protocol for the Ethereum mainnet, as the protocol will allow for standardized soulbound tokens to be minted on Ethereum for Know Your Customer (KYC) verification, credit scores, and other use cases.
It has been reported that soulbound tokens are tokens that cannot be transferred from one wallet to another. The concept was popularized via a blog post from Vitalik Buterin, who argued that these tokens could be used to signify governance rights for decentralized finance (DeFi) protocols or to prove that a person has attended an event.
Brendan Playford and Calanthia Mei, the founders of Masa Finance, argued that soulbound tokens will expand opportunities for DeFi users to build credit and get loans.
"We want to help people tap into [an] on-chain credit system with a Web3 credit score, with the data sources that we have aggregated across Web2 and Web3 representing and helping people build their creditworthiness on-chain. We’re currently working with multiple lending partners in extending DeFi loans to those individuals who have minted a Masa credit score report.?"
However, she emphasized that Masa soulbound tokens are not merely attached to a traditional credit score. The protocol goes beyond traditional finance to incorporate both Web2 and Web3 activity. Mei said that over 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, Web3 wallet transaction history, centralized exchange balances, and other data.
The report said that Mei believes this system will lead to “risk-based underwriting” in DeFi, which she says has previously not been possible due to the lack of identity protocols on blockchain networks.
Likewise, the founders also said there is one other use case currently available for the protocol. Aside from representing a credit score, the second use case for the protocol is .soul domain names. These are similar to ENS names, but with the added benefit that they can be linked to various Masa identity characteristics.
"Users can link different attributes, use their pseudonym to verify themselves, show that they’re verified in Web3 without doxing [their] full name, for example."
Playford noted that .soul domain names can be transferred from one wallet to another. The attributes associated with them will become unattached if the domain is moved. Users cannot “buy” the identity or credit score of another person.
Thus, 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 to prove a user’s identity. BAB is currently only available on BNB Chain. Masa appears to be the first soulbound token protocol available on Ethereum.