Bringing Web3 Gaming Into the Future With Soulbound Tokens

Soulbound tokens usecase

This is a guest article by Derek Lau, Game Director for Guild of Guardians,

Soulbound tokens offer a way to revolutionize the gaming industry, and they may hold the key to ridding the world of the pesky pay-to-win scheme for good.

Soulbound tokens are NFTs, but not just any NFTs. Soulbound tokens are bound to the wallet that first receives or mints them. They are both non-fungible, meaning they are unique, and are non-transferable, as in they cannot be transferred to or from the wallet that they are initially bound to. 

Soulbound tokens got their name from a video game called World of Warcraft (WoW). In the game, players complete quests, raids, or various tasks and are sometimes rewarded with items, commonly weapons or armor. On occasion, various items would be labeled as “soulbound.” This meant the item was permanently bound to that player and could not be traded, sold, or gifted to others. 

Vitalik Buterin, Ethereum co-founder and a co-author of the paper on soulbound tokens, was an avid WoW player. In fact, Buterin once said that an update to WoW that made his character weaker was the catalyst for him to create Ethereum. 

“I happily played World of Warcraft during 2007-2010, but one day Blizzard removed the damage component from my beloved warlock’s Siphon Life spell,” said Buterin. “I cried myself to sleep, and on that day I realized what horrors centralized services can bring. I soon decided to quit.”

It’s also worth noting that the “Ethereum” is a faction within the WoW universe and likely had some influence on the name of the blockchain of the same name, but I digress. What matters is the breakthrough that soulbound tokens represent. 

The paper on soulbound tokens notes how they can provide a method to create a decentralized society, or “DeSoc,” as it is referred to in the paper, by allowing the binding of identity, credentials, medical history, memberships and more to individuals through these non-transferable NFTs. This may have an untold increase in efficiency and privacy, but they could also revolutionize Web3 the gaming industry. 

NFTs have already made an impact on the gaming industry, but soulbound tokens will enable a far richer experience. A soulbound token can represent an individual’s gaming data like purchase history, gaming history, competitive stats, and more, while allowing the end user to control what, if any, data, they share with companies.

Ways SBTs will revolutionize gaming:

Non-transferable Utility

The primary benefit of soulbound tokens come from what is most unique about them, which is that they can’t be transferred. This becomes useful in web3 games when developers want to distribute rewards to its players. For example, web3 games can give their community members a whitelist token that cannot be traded, and makes them eligible for future early access to the game. Or for example, players may be gifted a powerful mining pickaxe which doubles their rate of resource gathering, but unable to trade it to limit the impact that this item has on the economy. 

Gaming Identity

While a soulbound token could be used to represent an individual in-game asset that permanently belongs to a user, they could also be used to represent the actual player’s gaming identity. Rather than all of this data such as names, numbers, email addresses, payment information, home addresses, and more being stored in private servers run by gaming companies, they can be represented as soulbound tokens on a blockchain. 


Imagine a situation where a gaming company would like to reward players of a certain skill level with specific in-game items. Rather than the company itself holding all of this data and verifying who should get what item, a player can use their soulbound token and verify their gaming achievements and credentials to receive it. Or perhaps a game wants to reward the oldest community members with a new NFT in-game item and grant more  rights in governance voting; players could use their soulbound tokens to prove their history in the community. 

It would also be possible to use certain achievements from one game to unlock something in another. Say for example, a player unlocks an item or earns an achievement in one game, giving them access to something else in a sequel or different game entirely. 

Reward Distribution

SBTs have the potential to disrupt the gaming industry by being a tool that can be used to allocate rewards. For example, instead of distributing in-game rewards to the strong players or  those who have spent the most money, soulbound tokens can be used to distribute them to those with the longest history with the game or the most accolades. SBTs add a new layer of player identification which can become part of the design of the game. 

Enhanced privacy

Combining the power of zero-knowledge proofs and soulbound tokens could make it so that the process of proving you are who you say you are or that you are the holder of a particular asset does not reveal any information publicly. 

This creates a privacy paradigm shift emerging in Web3. Instead of the gamer having to opt-in to some privacy agreement to play their favorite game, they can be more selective about which data is taken, stored, or used by the company. This control gives the holder of the soulbound token the ability to profit off of their data by allowing a company to harvest it, rather than a company harvesting it by default and profiting off of it without consent. 

The use of soulbound tokens will reduce the dependency on third parties and allow the users maintain their data themselves while easily proving they are who they say they are with their credentials.

That said, there are still open questions around SBTs that need to be solved. For example, integrating the actual technology into games will be demanding and come at the expense of other features. Developers will also need to decide when to use SBTs, and when to use NFTs, but read the blockchain to get to a similar outcome. Nevertheless, the potential is there, and with continued development, SBTs stand to revolutionize the way we experience gaming, from both the interaction with in-game assets as well as protecting user data. 

About The Author

Derek Lau is Game Director for Guild of Guardians, a ‘play-and-earn’ mobile RPG where players turn their gaming passion into NFTs. The game is published by Immutable and developed by Stepico Games. He has a unique blend of experience in gaming, product and start-ups, with long and sustained exposure to the NFT space since 2017.