IoTeX community members received Soulbound Tokens (SBT) for their recent participation in IoTeX's 13th Improvement Proposal (IIP-13) vote to support ether (ETH) liquid staking derivatives.
In total, IoTeX distributed 123 to those who staked 141 million IOTX tokens representing 97% of the votes in favor of the IIP-13 to increase the IOTX staking ratio to enhance network security by expanding the number of validators that process transactions and maintain the blockchain.
The proposal included natively adding support to represent staking buckets as non-fungible tokens so that liquid staking protocols can manage stakes through smart contracts.
Raullen Chai, IoTeX CEO and Co-Founder, said, "we are very excited about adopting SBTs as a reward mechanism for all our community members who participate and vote when presenting for DAO Governance our IoTeX Improvement Proposals."
Chai told the Blockchain Reporter, "we decided to adopt SBTs to reward DAO Governance proposal voters and because of their uniqueness and utility." He also said, "SBTs are a type of digital asset that shares some similarities with non-fungible tokens (NFTs). While NFTs represent property or assets with some monetary value, SBTs represent a person's credentials and reputation."
He also said, "we firmly believe that giving our IoTeX community members SBTs for voting generates greater participation and engagement."
SBTs have the potential to be highly valuable in Web3 networks. They are helpful as a reputation indicator instead of relying on money-centric frameworks.
Vitalik Buterin, one of Ethereum's founders, revealed his SBT concept in January 2022 when he told journalists that they are the future of Ethereum and Web3.
He explains that a lender would verify a borrower's bank account balances, credit scores, and repayment history to offer an undercollateralized loan in the current system. However, with SBTs representing a person's credentials, reputation can act as collateral to get an undercollateralized loan.
The lender can verify a borrower's reputation based on their interactions with the community, such as trophies earned from any blockchain network's Governance Rewards program. These trophies represent a member's on-chain activity, which can now be sufficient security for an undercollateralized loan.
Most DAOs assign voting power based on the number of tokens a member holds. However, DAOs issuing SBTs could prioritize reputation over tokens owned by a member. Additionally, third-party protocols can utilize SBTs to facilitate DAO governance voting and airdrops, among other use cases.
Security and more decentralization
Chai reiterated that the "primary motivation behind IIP-13 is improved security and further decentralization of the IoTeX blockchain." With the deployment of this feature, builders can quickly launch their liquid staking dApps, such as Lido and Rocket Pool, on the IoTex network.
Liquid staking refers to the exchange of staked ether for tokenized versions of the second-largest cryptocurrency people can use in Decentralized Finance (DeFi) apps. Uses range from tokens as collateral for loans or margin to trading or earning yield. Staking on the IoTeX blockchain is currently done directly on the network without connecting to smart contracts for support.
Explaining IIPs again
We believe IIPs are crucial, so let's explain them again. IoTeX Improvement Proposals (IIPs) orchestrate the development of features that make IoTeX the go-to platform for smart devices and all things data-driven.
IIPs are instrumental in ensuring IoTeX remains stable and secure while improving transparency and giving a voice to community members during the governance process. As they drive continuous advancement, IIPs play a vital role in IoTeX's evolution.
You can submit an IIP too
Anyone can submit an IIP: A proposal should provide a concise technical specification and a rationale for the new feature. The IIP author is responsible for building consensus within the community and documenting dissenting opinions.
And well, we are already talking about IIPs, so please keep your eyes peeled for IIP-14, as that will be your next opportunity to get your SBT. Read more about the Account Abstraction via EntryPoint Contract governance proposal here.