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Vitalik Wants To Make Some NFTs Untradeable, Similarly To ‘World Of Warcraft’ Items

Ethereum’s bright-minded co-founder has had another World-of-Warcraft-inspired idea for the Ethereum ecosystem. He recently posited that some NFTs should become untradeable to people who haven’t met the item’s conditions.

While hurting the marketability and speculative side of NFTs, this could increase their value as signifiers of specific achievements/ value.

“Soulbound” NFTs

Vitalik aired his thoughts on the subject in yesterday’s blog post titled “Soulbound”. Soulbound items in World of Warcraft refer to those it cannot trade to other players. These are usually the game’s most powerful items. Users can only obtain them by completing complicated quests or defeating powerful monsters.

Vitalik argues that some NFTs should utilize this property. This way, they could reliably signify personal achievement in the same way that soulbound items reward WOW achievements.

“While transferable NFTs have their place and can be really valuable on their own for supporting artists and charities, there is also a large and underexplored design space of what non-transferable NFTs could become,” said Vitalik.”

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Vitalik Buterin. Source: Forbes

NFTs – aka non-fungible-tokens – are often conceptualized as digital art or digital collectibles used for fan engagement. Less commonly, they’re promoted as a technology that can tokenize other non-material goods like stocks, receipts, or property.

However, most people still think of them as gambling tools, whereby some tokens arbitrarily trade for ridiculous prices, forever searching for a higher bidder. If anything, these tokens merely end up signifying the owner’s wealth.

What Works Best When Soulbound?

Vitalik recognizes the trading phenomenon and believes it interferes with the functionality of more purpose-built NFTs.

For instance, POAP (proof-of-attendance protocol) is most helpful when NFTs guarantee that the holder attended a particular event. If its NFTs are tradeable, then the holder may be some non-attendee who paid substantial money. On-chain driver’s licenses and university degrees could face a similar issue.

The most pertinent dangers with trading culture apply to governance tokens. As Vitalik states, if governance rights are tradeable, wealthy buyers can buy up the governance rights of a given protocol. This could defeat the purpose of decentralization that these protocols’ designs serve. Furthermore, more competent and less wealthy ecosystem participants may lose access to those tokens.

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There are still many cases in which Vitalik thinks NFTs should stay tradeable. These include charity NFTs, which need to trade on secondary markets to generate funds, among other things.

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