What is a Soulbound Token?
A soulbound token (SBT) is a non-transferable, non-tradable digital token permanently bound to a wallet address — used to represent verifiable credentials, reputation, identity, or membership that shouldn't be bought, sold, or transferred.
WHY IT MATTERS
Most tokens can be transferred — that's a core feature. But some things shouldn't be transferable: university degrees, professional certifications, reputation scores, and identity credentials. Soulbound tokens solve this by being permanently bound to a wallet.
The concept was proposed by Vitalik Buterin in 2022 as a building block for 'decentralized society.' SBTs enable on-chain reputation and identity without the tradability that would undermine their meaning (you shouldn't be able to buy someone else's reputation).
For AI agents, SBTs could represent verifiable credentials: 'this agent has been audited,' 'this agent has operated for 6 months without policy violations,' or 'this agent is operated by a licensed entity.' Non-transferable means the credential stays with the agent it was issued to.
HOW POLICYLAYER USES THIS
PolicyLayer can use SBTs as non-transferable agent credentials — verifiable proof that an agent has passed security audits, maintains compliance, or has achieved certain operational milestones. These credentials inform spending policy decisions.