Masa Finance has launched the first soul-bound identity protocol for the Ethereum mainnet, according to a Jan. 17 press release shared with Cointelegraph. The protocol will allow standardized soulbound tokens to be accumulated 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 became popular 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 a person has attended an event.
Speaking with Cointelegraph, Masa Finance founders Brendan Playford and Calanthis Mei argued that soul-pegged tokens will expand opportunities for DeFi users to build credit and obtain loans. Mei explained it like this:
We want to help people take advantage of [an] On-chain credit system with a Web3 credit score, with the data sources we've added through Web2 and Web3 representing and helping people build credit on-chain. We are currently working with multiple lending partners to provide DeFi loans to those who have completed a Masa credit score report.
She emphasized that Masa's soul tokens are not simply attached to a traditional credit score. The protocol goes beyond traditional finance to incorporate 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, Web3 wallet transaction history, centralized exchange balances and other data.
Mei believes that this system will lead to โrisk-based underwritingโ in DeFi, which she says has not been possible before due to the lack of identity protocols in blockchain networks.
The founders also said that there are currently other use cases available for the protocol. In addition to 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. Playford explained that โusers can link different attributes, use their pseudonym to get verified, show that they are verified on Web3 without doxing [their] full name, for example.โwo 80 / ch 501
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Playford noted 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 โbuyโ someone else's identity or credit score.
According to the founders, a third use case will be identity verification, a feature the company will launch under the name "Masa Green." It will allow users to mint a Masa Green token to prove their identity, which the company believes will help users prove they are real humans, not bots. According to Mei, this will help eliminate bots in play-to-win games and other apps where the community only wants real humans to participate. The company says Masa Green will be available as "fast track in the coming weeks."
Masa is not the only soul-bound token protocol to be implemented on a blockchain network. Binance has released its own version, called BAB, which can be used to prove the identity of a user. However, BAB is currently only available on the BNB Chain. Masa appears to be the first soulbound token protocol available on Ethereum.
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