X2Y2 Twitter Space: Prospects of SBT and DID

Author: X2Y2

Host (X2Y2): @alex_pengfei

Guests:

Co-founder of Port3 Anthonyx

Co-founder of Echoo Tiny Hand

Global Market Lead at .bit Vicky

Alex: Today we are discussing DID and SBT, so I warmly welcome our guests, who all have rich relevant experience and a good understanding of DID and SBT in the industry. I look forward to hearing everyone's insights. Thank you very much to the three guests for joining us. I am your host Alex, and I am honored to invite three outstanding guests to share their thoughts on SBT and DID, starting with the co-founder from Echoo Research.

Echoo Research: Echoo Research is an NFT research platform, currently focusing on paid reports and data analysis. Today, we are mainly here to provide some benefits to everyone, including some ER memberships that offer paid services such as on-chain data and market analysis, as well as the latest trends and buying/selling signals. You can learn about the ways to profit from NFTs through this membership. I am very happy to be invited here today.

Alex: Thank you very much, Echoo Research. Next, let's invite Vicky from Bit domain Market Lead to briefly introduce herself and her project. If not, we can skip to OxAnthonyX.

OxAnthonyX: Hello everyone, I am the co-founder of Port3, responsible for supporting research and development as well as product aspects. We are currently building a protocol that aims to aggregate data from Web2 and Web3 for third-party applications while generating user identities.

Alex: Okay, let's discuss first and then invite Vicky to introduce herself. The topics we are discussing today are quite relevant. One guest is from the domain space, another is from PORT3 which focuses on social networks, and Echoo Research is also related to NFTs and closely tied to SBT. I wonder how the guests view the relationship between SBT and DID?

The concept of DID was proposed much earlier than SBT. The rise of SBT is mainly due to a research paper that mentioned SBT would become a crucial part of social relationships in the future. What do you all think about the relationship between SBT and DID? Is SBT an extension of DID?

Echoo Research: The SBT and DID space is not our main focus, but we are here to chat with everyone. I think we need to distinguish between SBT and DID. As mentioned earlier, SBT emerged after DID, and before that, DID was actually a concept that predates Web3. What we are discussing now are concepts within the Web3 context, and the concept of DID feels more like a blind man touching an elephant stage, which is about defining the product concept.

Some application domains now claim that DID is their own domain, and the DID space is competing to create a LinkedIn-like platform on Web3 to build personal resumes. CyberConnect claims to be a social network, stating that DID is a social network that needs to connect one's social graph. This definition is quite vague, but overall, there are two major categories to address in this field: what DID aims to do is self-assertion of one's identity.

First, it addresses the need to bind digital identity with online identity, which is a philosophical question of how to verify that a digital identity is indeed yours. This space will have many Web3 applications, including some I have personally experienced, such as requiring you to make a phone call to verify that you are a real person before binding it to your wallet. This addresses the issue of self-assertion of identity, binding offline identity with online identity through DID.

The social network built on that layer actually addresses more of the application issues on that infrastructure, which is why SBT logically follows after DID. The scenarios mentioned for SBT are quite grand. We can imagine that in Web3, extensive interactions will yield a large number of SBTs, which are called soul-bound tokens, for example, interacting with a project.

This is still quite difficult to understand. It can be seen as living in Web3 from birth, where the proof of birth is given to SBT, and going out to eat also requires an SBT. A large number of SBT interactions will form a stable digital portrait, which can be quantified through on-chain data analysis, constituting the so-called self-assertion of identity on social networks. How to depict you in the social network is not about how you prove yourself, but how the network perceives you, which is through extensive SBTs for data analysis, ultimately depicting your digital image.

The relationship between SBT and DID is that SBT addresses the upper application scenarios of DID, solving more future-oriented problems. Currently, Web3's DID applications are more inclined to solve the issues of traffic entry between Web3 and Web2 and identity self-assertion.

Alex: Thank you very much. I think the discussion is quite profound, especially regarding the mutual proof relationship between SBT and DID. SBT seems more like an application layer, or closer to practical applications, while DID leans more towards the underlying or conceptual aspects, lacking tangible elements. I would like to throw this topic to Vicky and ask her to introduce herself while sharing her views on SBT and DID.

Vicky.bit: I am Vicky, currently responsible for the global market work of .bit and related work for NameDAO. As for whether SBT will become…

Alex: Am I lagging? It seems a bit stuck.

Vicky.bit: The discussion around SBT or Decentralized Society has gained traction in recent months after writing articles about SBT and Disorder, helping people understand the importance of credit, reputation, and decentralized society. Some audience members may not be familiar, so let me briefly explain SBT, the soul-bound token.

Why is this particularly important? Why do people feel the need for it? For example, many DAOs issue tokens right away because they need governance. To use the token, it must be issued. Can governance tokens be tradable? Many believe governance does not equal trading, but the act of issuing tokens now has properties that cannot fulfill the needs of DAOs, making the concept of tokens particularly necessary.

Issuing a non-tradable token that cannot be traded is crucial for governance. This is why we believe the combination of SBT and DID is a way to genuinely solve practical problems in the future, or why we think the object that SBT should bind to is DID identity rather than a string of public key addresses. The key reason is that private keys can be lost. If a public key is used as an identity identifier, it means that when you lose your private key, all SBTs bound to that private key will be lost, along with all social relationships and reputations. This binding method is clearly illogical.

SBT is a form of accumulated social reputation that requires a name, an identity, and reputation to bind together; otherwise, no one can recognize you. We remember all of Jack Dorsey's achievements under his name, but we would never remember what the corresponding hash is. The combination of SBT and DID is inevitable; the future social attributes of Web3 will complement each other.

Alex: I think it represents an extended relationship between them. Without SBT, people's understanding of DID might still be stuck in a more traditional concept, perhaps just the idea of an ID card. However, SBT has changed the way of understanding, allowing people to visualize the differences between Web3's DID and traditional DID. This is quite practical and closely related to the .bit project.

Vicky.bit: We have always been thinking about the combination of SBT and DID, and we are particularly willing to incubate some SBT projects. I previously tweeted that any developer interested in starting a project in the SBT direction is welcome to reach out.

Alex: I will write a white paper right away.

Vicky.bit: Yes, we are very eager to communicate with teams that have ideas about SBT. DID and SBT will have a very strong binding relationship in the future.

Alex: I wonder what Anthony thinks about this?

OxAnthonyX: The previous two guests have provided great analysis and sharing on DID and SBT. In fact, the proposal of DID is not necessarily from blockchain. Some Web3 standard setters have already begun to establish DID standards, dividing them into foundational layers and application layers, covering a wide range. It involves authenticating user identities without leaking user privacy, and there can be multiple ways to achieve this, with blockchain technology being a necessary part.

SBT is precisely non-transferable and soul-bound because many things are only gained through experiences you have gone through. This cannot be bought with money, unlike ordinary tokens. What are the benefits of such tokens? They can continuously accumulate various reputations and experiences, proving you are that kind of person. It serves as a data space, a dataset, similar to domains, but domains are for parsing, while Soul-bound Tokens can be a dataset describing what a user is like, which can be recognized and empowered everywhere. Once Binance issues a token, various applications and scenarios can be integrated.

Holding it proves you are a Binance-certified user, granting you certain privileges or identifiers, reducing a lot of work in identifying and filtering users. Currently, we are researching the Web3 direction to expand data sources as much as possible, such as scraping data from Discord and Twitter. More data is meant to feed third parties and label users with Soul-bound tags, better defining a user. This is my understanding of DID and Soul-bound; DID is a broad concept, while Soul-bound is a very good practice encountered in current DID practices, thus facing an explosion.

Alex: I want to follow up on this question. You mentioned this is a label-like thing. We can see that many projects are emerging, including DID and SBT. While there aren't as many SBT projects yet, DID projects are popping up everywhere.

Just looking at domains, recently SpaceID's DID domain has gained traction. During the previous bull market, people might not have paid much attention, but in the bear market, even .bit domains have appreciated significantly. How do you view the phenomenon of so many domains appearing in the market at the same time? Does it represent speculation? Or do you think these things might not hold much value? What is your perspective on this phenomenon?

OxAnthonyX: The reason why there are more domain projects now, whether it's SpaceID, .bit, or established ones, is that domains have several points: traditional users and investors can understand them, as they are scarce outside the domain, making them suitable for speculation and trading, especially as an NFT.

As we enter a new stage in Web3, people are increasingly aware of DID, their reputation, and how they present themselves. A good domain is actually a representation of reputation. This can symbolize a person's identity, serving as a layer of expression. Currently, domains are among the more playable elements because they have an inherent mechanism.

Although there is some bubble-like quality, as the number of Web3 users increases and scenarios multiply, for example, future applications will present a domain, there may also be subdomains. If I create a product, I might distribute many subdomains to users, forming an internal identity system. There are indeed many applications, and it seems that Web3's development direction is quite active in this area.

Alex: It seems we are still in a very early stage. Although the differences between domains may not be significant, each domain has its opportunity. We are still in a land-grabbing phase, given the world's population. We can't say that ENS alone will dominate this space; new things will certainly emerge to challenge or supplement from different angles. Next, I will throw this question to Vicky. How do you view the role of your project in this complex competitive environment, and what direction do you think the focus of the entire Crypto world on domains will take?

Vicky.bit: Recently, many DID projects have been released, and people's attention to the DID space is increasing. However, to be honest, .bit has never referred to itself as a domain. Under this concept, many projects that claim to be DID are actually quite different. When people talk about decentralized identity, what exactly are they discussing? DID literally translates to decentralized identity, and decentralization is a prerequisite. Does this project achieve open-source? Does it achieve decentralized storage?

In my personal understanding, projects that need to collect user information clearly do not meet the first standard of decentralization or DID. Such projects are more like on-chain compliance identity verification, and we do not consider them our direct competitors. Additionally, many project parties and developers are pondering what identity is. What should the ultimate form of DID look like? What should on-chain social interactions look like in the future?

Based on these questions, different projects provide different answers. The uniqueness of .bit that we emphasize the most is cross-chain functionality; it is the only DID project on the market that achieves cross-chain attributes. Therefore, we always say that cross-chain is the future we believe in. Our first response to the questions raised by the previous guests is cross-chain. We are different from ENS, SpaceID, or .Soul. The new future blockchain world will definitely be multi-chain, and users absolutely need and must have an identity system that can be used across different chains. This is our answer to the above questions. We are completely decentralized and fully open-source. Our thinking about identity is first cross-chain, and second, a unified name. This characteristic is also based on our thoughts about the ultimate form of DID.

Many DID projects do not provide names; they are just long strings of codes. However, we believe that a human-recognizable name is a prerequisite for future social attributes. For example, a name is our first choice to introduce ourselves to others. As a symbol of identity, it has been bound to a person since childhood, allowing that person to be recognized. By remembering different names, we are actually establishing our connections to the surrounding world, embedding ourselves into social networks, and building our related social graphs. A name symbolizes identity, serving as a medium that binds identity and symbolism.

I will remember Vicky as part of the .bit project, but I will never remember 06681 as part of the .bit project. An address has no meaning; it is just a hash. However, DID is definitely not just a user label; it is a self-interpretation of a person in Web3. Today, I can register a .bit domain, tomorrow I might use Freedom, and the day after I might use LGBT. These names strongly express my values, which is something a hash cannot possess. This is also the value of identity. Public keys are very long and complex, and this characteristic does not allow others to recognize them. The identifiable and meaningful names created through DID help us construct our relationships with others and society as a whole in the Web3 world.

Today, I registered an English .bit domain identity, and tomorrow I might register a .bit identity in Korean. Registering .bit in different languages can allow similar people to establish social relationships. These characteristics are not possessed by public keys. We always believe that why .bit achieves cross-chain is that it must provide a unified name.

The ultimate form and manifestation of DID will be like this. Whether it is a public key or a single on-chain deployed identity solution, it will not be the ultimate choice for Web3. The emergence of DID fills the gap in the demand for Web3. A simple public key does not satisfy the attributes needed for social interaction. This is the form of thinking about Web3 DID that led to the creation of .bit.

Alex: You are indeed quite different from other projects.

Vicky.bit: Speculation certainly exists. Why do people confuse DID with domain names? In fact, the potential of DID goes far beyond just domains. People's understanding of the term domain comes from traditional domains, where IDs can be speculated upon. Therefore, the initial understanding of DID is often to speculate on it, hoping to sell it at a higher price later, which does not preclude more possibilities.

Alex: This is indeed similar to how, seven or eight years ago, people's first reaction to blockchain was to ask if you were talking about Bitcoin or Ethereum. Blockchain technology is far more than just Ethereum and Bitcoin; there are many other applications. When it comes to DID, it may not just refer to domains, but many other types, including applications and scenarios we cannot even anticipate now. These are all points worth exploring in the future. Is the simultaneous existence of so many domains good or bad for us? Can this phenomenon last long? Will most domains die out, leaving only a few at the top?

Echoo Research: Vicky just spoke very well. Those authoritative institutions may not represent the final form of DID, which is also what I want to discuss, combining my own feelings to chat in a more grounded way.

Alex: Do we need so many domain projects? Will they survive to the end?

Echoo Research: My feeling is that DID is currently a traffic entry point. Many people treat it as a way to use Web2 combined with Web3, including many identity verification DIDs. This is somewhat like the development of public chains, where we can find many traffic entry points. We can provide identity verification or even user profiling, thus offering verified user groups to projects for greater Web3 applications.

These needs exist for emerging projects in Web3, which aligns with the current state of DIDs. There are multiple existing DIDs, resembling a coexistence of supply chains. Starting from user needs and product design, we do not need many DIDs. Beyond just seeking airdrops or exploiting benefits, we need to weaken the presence of third parties and the current forms of these DID products, possibly focusing more on direct interactions with a project without needing to spend more on DIDs.

DIDs will definitely be something with relatively low costs. If we push from a first-principles perspective, future DIDs will certainly be low-cost and more suitable for scaling. They will ultimately present themselves similarly to public chains in relation to Ethereum, making them more suitable for Web3. Additionally, many Web2 DID methods exist. The conclusion is that there will certainly be many DIDs competing at this stage. Current projects need DIDs as traffic entry points, so the demand exists in the market. In the future, there may emerge DIDs that are more suitable for users, lower in cost, and better suited for Web3, leading to a possibility of a monopoly.

I remember there was also a domain; speculation has gone through two rounds: the first round was actually the speculation of domains before DAOs. I remember I wrote an article analyzing why it became popular, including the latest trends, and then returning to the underlying value of how to empower NFTs and the functional role of identity, returning to the usage scenarios of DIDs. Indeed, the second round of speculation was sparked by the Vision SBT concept, which naturally led to the rise of DID, and thus people began to promote SBT. This forms a great trio, creating an ecosystem of identity verification, social networks, and self-owned public chains, which has led to the hype of this concept.

In fact, this speculation is a relatively late development. Currently, the basic transfer utility of DIDs is very low. I think very few people directly transfer using ENS domains. The actual utility value is still relatively low, except for voting that I personally use. The utility cannot support the speculative value; people are more influenced by concepts, including the SBT and ENS, and ETH combination that they are brainwashed by. This is likely the current situation.

Alex: I think both rounds of speculation have a background, but I believe the recent round has an additional context, benefiting from the current market lacking hotspots. Because the market lacks hotspots, people will choose scenarios with higher probabilities. The value of domains may change, but the scenarios led by ENS should not change. At least for now, it seems difficult to have competitors in the same field. There may be new domains emerging in other supplementary areas, but I think that is quite challenging, a last resort in a sense.

Echoo Research: Both rounds of ENS speculation occurred during deep bear markets. The first round was driven by OpenSea, which had a particularly high share. Only in a deep bear market do people contemplate future matters, and then speculate on recent and future potential trends.

Alex: Not every application is a garbage coin; meme coins can surge. ENS seems to have been somewhat misunderstood. I think it ultimately depends on how people view this, whether they recognize the value of domains. If they recognize the value of domains, it is akin to buying blue-chip stocks; when to buy is crucial. If you believe blue chips will exist, you should buy at the low points, trusting that they will eventually rise. Some people believe Bitcoin will eventually break $100,000, so buying now or at $60,000 is similar; they might choose to dollar-cost average. This is understandable. I wonder how everyone views how SBT, this soul-bound concept, will change our future lives and what specific application scenarios might emerge.

Vicky.bit: I agree with parts of what everyone has discussed regarding DID and the industry. If SBT changes lives, I once read an article that questioned what real problems blockchain applications solve after removing financial attributes and secondary market attributes. The author's conclusion was that blockchain applications, from DeFi to NFTs and DIDs, do not solve any real problems. The author, a significant holder of Bitcoin and Ethereum, still posed this question and even negated himself.

Returning to this question, what do you think DID can solve in practical terms under blockchain technology? Beyond ENS, should other projects look forward to the future of blockchain DID? Or how should SBT change lives? A series of preconditions hinge on whether you believe in Web3 or decentralization. If you don't believe, discussing these matters is pointless. If you believe in these things or the so-called features, then we have something to talk about. Otherwise, discussing SBT is irrelevant; you might as well speculate according to secondary market thinking. The question of how SBT will change lives has nothing to do with you; that is the premise.

We are still in a very infancy stage of this industry, very early, like a small baby, or even earlier. If we haven't reached infancy, we are still in a very early stage with vast exploration space. I don't think ENS will necessarily be the future; it might be from a competitor's perspective.

Alex: It should be open; indeed, no one can definitively defeat anyone.

Vicky.bit: I'm not blindly confident about .bit. Today's significant event is ETH's Merge. I think today is a particularly interesting day for discussing SBT and DID. In fact, the ETH Merge marks a point of comparison between POS and POW, determining which is superior. The competition or comparisons have long been underway, but what will ETH look like post-Merge? Is POS better or POW? There will be a conclusion.

As for ENS's future, one evening, while casually listening and learning about our competitors, a brilliant 15-year-old developer posed a question that truly impressed me. He asked if, after the ETH Merge, or given the current issues on the ETH chain, the Merge could change these problems. If not, it would be worse. Does ENS have any other way out on ETH? ENS somehow depends on ETH, so it relies on the future of the king. You can believe this is the future, or you can believe there are many possibilities beyond Ethereum, so it doesn't have to be ETH or ENS.

Returning to how SBT will change lives, we must believe that SBT is a possibility worth exploring at this stage. Why do we understand it this way? Besides the potential combination of DID and SBT in the future, our thoughts on this matter are based on credit and reputation. Our financial system in the real world is built on credit, whether for enterprises or individuals, establishing credit value through economic behavior, thus enabling lending, insurance, and other financial activities. The social system in modern society is built on reputation, where people build social graphs in reality and on the internet. The more reputation accumulated in social interactions, the more voice one has. In the current Web3 world, credit and reputation are zero. How do we accumulate credit and reputation? There are no methods or channels.

Therefore, unrestrained lending behavior has led to a massive DeFi bubble, even threatening the healthy development of this industry. A social system without reputation cannot attract more users to participate. The carriers of credit and reputation can only be DID and SBT. A person's reputation needs an identifiable name for recognition. For example, when we mention Lei Feng, we know he is a good person. Recognizable names are indispensable for establishing a reputation system. The credit system in Web3 requires a unified cross-chain identity to meet the diverse economic and social behaviors of a person across multiple chains. How can we combine these elements?

Just as we can have bank cards from different banks, in Web3, we need one card to use across different public chains. The cross-chain identity in Web3 makes this hope a possibility. Ultimately, a name encompasses a person's transparent and inalienable status and contributions in Web3. This is how I understand this matter. A decentralized society requires a unified identity in Web3 to establish such a trust system and credit system, ultimately shaping a trust system based on distrust. This is why I personally understand how SBT can change the Web3 world, even if what I said earlier was somewhat unrelated.

Alex: We have always been very open in this Space, and sharing our viewpoints itself symbolizes the spirit of Web3, so I think it's fine. Next, I will throw the topic back to Anthony. How do you see SBT or DID ultimately changing our lives? What are your thoughts on this matter? Or are there any forms you hope for that may not necessarily be realizable, but you think could improve things?

OxAnthonyX: The previous speakers have shared many future visions. I will be more specific. Recently, we have been researching what role SBT can play in Web3 life. We issued an SBT to users, which can be understood as some labels or descriptions of users. There are still many potential application scenarios in the future.

The most direct one is intelligent airdrops. If I want to airdrop to members of a certain DAO who have held certain roles in the past, I can simply airdrop to those holding these identities rather than doing indiscriminate airdrops. Of course, we can also do some identity verification. Currently, Discord or some software can assign different channels and roles to users. How do we implement the assignment of different roles?

One way is to share data, ultimately sharing a list with you, controlling user behavior or roles in the group through bots, and implementing certain permissions. A better way we thought of is using SBT to recognize a certain group of users who meet specific criteria, such as following our Twitter and being active in the group, distinguishing them from spam users or those just seeking benefits. After they join, we can issue an SBT to recognize this group, and based on this SBT, we can assign roles. If they are OGs, we can create an OG channel for them, granting them OG privileges.

We also have many aspects of verifying personal resumes. For example, if you have undergone certain training or education, I can issue an SBT representing your educational background. When I look at your resume, I can just input an address, and your entire history will come up, including which university you attended, where you worked, and what achievements you obtained. These details are useful for identifying what kind of person a user is and what rights they possess, which helps us differentiate how we treat these individuals. These are the use cases I can think of.

There may be even more use cases we haven't thought of yet, such as using SBT to prevent spamming. For example, users labeled with a spam tag would be kicked out of the group upon entry, making the cost of spamming very high. Would the community environment improve? There could be many such scenarios, potentially even in dating contexts.

Alex: How did the conversation take such a turn?

Vicky.bit: I think this scenario is particularly great, especially for dating, as I really need it.

Alex: It doesn't seem like it.

OxAnthonyX: There could be numerous scenarios; we just haven't opened our minds enough.

Alex: Does ER have anything to add?

Echoo Research: For dating, NFTs might be more useful. There is a slight difference between NFTs and SBTs; the monetary value of SBTs may lean towards zero, densely aggregating data images, while NFTs represent assets and property in virtual spaces that can be transferred, more about property rights and usage rights. In dating, NFTs might play a larger role, while SBTs are not particularly significant. Regarding how SBT can change our lives, the previous two speakers have covered it comprehensively. If SBT can be implemented, the scenarios it brings are vast. Unlike NFTs, SBTs focus more on human identity, with the most obvious binding being finance and loans.

In the real world, when we take out loans, we use our identity as collateral. Banks will issue loans based on your identity as collateral. Web3 currently lacks these elements. Now, borrowing often involves over-collateralization, where borrowing 100% requires putting up 150% of Ethereum value as collateral, severely diminishing capital utilization.

In the real world, the collateral for loans is very low; a bank may issue a million-dollar loan but only have 500,000 as collateral, which can stimulate social productivity. Therefore, if SBT is implemented in Web3, it will directly enhance capital utilization. The first scenarios to be implemented will certainly be in DeFi lending. Even now, most funds are in DeFi applications. The most practical aspect is where capital flows, which is the fastest part to land, similar to a social credit system, forming a basic application. Then there are more social network applications, such as the reputation of KOLs and influencers integrated into Twitter and Weibo.

SBT emphasizes relationships with these individuals, not relying on third-party platforms, proving social relationships and the trust others have in them. Thus, the value may not be carried by these third-party systems but will directly provide reputation to creators or influencers. This is how SBT works, while for DID, the potential is even larger. Currently, we are transforming interactions with servers into interactions with blockchains. In the future, we may use passwords, codes, or hardware devices in combination to meet identity verification needs, leading to more integration with DAOs in everyday scenarios.

As the previous two speakers mentioned, SBT can help deflate the DAO bubble. Currently, many DAOs have inflated numbers. Deflating the DC and increasing the credibility of DAOs will enhance their utility. Many Twitter followers are fake, and we all know that. Of course, we are also very concerned about this. SBT will be more native than NFTs, making the cost of impersonation very high. If SBT is used, it may even be impossible to impersonate, reducing the cost of filtering content. People will no longer need to conduct background checks, which will also enhance talent utilization. This evolution represents progress from the NFT era to the SBT era. I call it the deflation of DAOs, where the community DAO inherits and advances further, focusing more on applications and implementation.

Alex: Thank you very much. Let's see if other guests or the audience have any questions or want to echo? Thanks to ER for providing an eight-month membership experience. I have actually used it, so I have a say. They offer in-depth research reports, all in English. Everyone can try it out. If you are a player with a demand for NFTs, you can learn something, and this is also an advertisement for them.

Echoo Research: We are relatively small and focus on membership, so we do not pay much attention to a larger fan base. We will also have some Chinese promotions soon.

Alex: If there are no further questions from the audience, we will conclude for tonight. Thank you very much to the three speakers for their contributions.