How to use SBTs in your community

In the last part of our story, the Otternauts discovered The Badge.

The Otter Badges are used to represent affiliation with a planet, give governance over the planet and recognize the achievement of extraordinary Otternauts. As Otternauts collect the badges and tuck them in their fur, they can show other Otters who they are and access the interplanetary rafts. Moloch doesn’t stand a chance against this level of coordination.

As the coordination among the Otternauts improves, their societies flourish and become healthy ecosystems composed of rafts floating through the Otterverse. The motto of the Otternauts is ‘flow over control’. To encourage other communities, they decided to share the secret of how they use badges.

The hyperfinancialization of Web3 has seen plutocratic governance, a culture of meme-driven speculation and roaring bull runs. Non-transferable (and therefore non-financial) tokens offer a promising path for communities built less around money and speculation. But how can this new type of token, sometimes called an SBT or ‘Soulbound’ token be applied within DAOs and other Web3 communities?

At Otterspace, we’re working on a token standard, protocol and app that enables any community to harness the power of SBTs, or what we call ‘badges’. It has been a while since we posted a product update, so we thought we would use this opportunity to introduce some of the ways communities can use badges with Otterspace.

Issuing badges

Communities are at the heart of Otterspace - every badge generated by the protocol is associated with and issued by a community. Within communities, badge design is customizable - a badge is simply an EIP4973 NFT (backwards compatible to ERC721) with a name, artwork and optional expiration date. To issue badges, the community adds members to an allow list. This ensures that badges are never non-consensually airdropped to wallets. Minting costs are exceptionally low, as the protocol is deployed to Optimism.

Badges for membership

One way badges can add a lot of value to communities is to represent membership. When the Otternauts first set up a new community, they created the Otter Badge and give it out to all members. This is a great way to start a decentralized community without having any financial component at all.

Instead of defining community membership by ownership of an ERC20 token, communities are based on holding a specific badge. Individuals can be invited to join the community without being able to transfer their membership to someone else.

Another benefit of using badges for membership is that communities can create a more nuanced membership model. The Otternauts created a Level 1 Otter Pup, Level 2 Sea Otter and Level 3 Alpha Otter badge, for example. The community also has a ‘Visitotter Badge’ which expires after 7 days and allows guests to temporarily become members. Newly onboarding members receive the Otter Pup badge for completing their onboarding requirements, and then have to prove their further commitment to reach Sea Otter status. With the Otterspace missions app (coming soon), you can issue badges for completion of onboarding tasks and on-chain requirements.

Community membership is not just defined by how deeply integrated someone is into a community, but also by what role they hold. Badges can be used to represent roles like “Sea Urchin Hunter” or “Rock Juggler”. These badges could have an expiry date to represent the agreed-upon length of the role.

Badges are powerful membership tools compared with ERC20s - a fungible token allows you to distinguish individuals only by the number of tokens they hold. By using badges, the complex nature of membership can be captured on-chain and displayed in members’ wallets.

Badges for community engagement

Badges are not just membership NFTs, but can also be used for fun and engagement in the community. The Otternauts have the Batman Badge, which is given to a community hero who goes above and beyond 🦸.

Badges can be used to represent one-off awards, but also event participation, project participation, work completion or anything else you can imagine. Anytime you want to recognize an individual, you can use a badge. Because the Otterspace badges are on Optimism, the cost of claiming a badge is in the order of cents.

Earning non-transferable badges by engaging in a community is similar to collecting Soulbound items in a video game to level-up your avatar. Badges can not only be used as incidental ‘rewards’ for engagement, but also to chart participation paths.

With Otterspace Missions, badges can be awarded to members permissionlessly based on a predefined set of criteria. One criterion for earning a badge can be the ownership of another badge - this creates paths or journeys in the community. For example, you might need to earn the ‘EngineerOtter Level 1’ badge before you can work towards getting the ‘EngineerOtter Level 2’ badge. Badges can be earned along a journey as a member goes from being a rookie to a core contributor.

Another way to engage the community is to recognise early adoption or event participation. We’ve seen POAPs being used to gain clout for attendance of events or “being early”. Badges allow this social capital to be non-tradable and therefore a more reliable signal. If someone can buy your POAP collection, it is no longer a trustworthy sign of clout.

With the financialized tools of Web3, it’s easy to forget that social capital is often more of a reward to community members than money. Badges can be a powerful tool to incentivize participation. Instead of paying ‘tips’ to members for joining their first community call for example, they could be given a badge to show off in their wallet.

One benefit of the wild NFT craze of last year has been that digital collectibles have reached cultural adoption. Non-transferable digital collectibles are even more desirable because they can’t simply be bought by the wealthy. Introducing them into your community is a powerful way to reward and incentivize members for their engagement.

Badge utility

The beauty of putting badges on-chain is that they can have boundless utility. Unlike scout patches which are just worn on clothing to signal affiliation and reputation, Otterspace badges can do this and more. Now that your community has a bunch of badges for membership, roles, events and achievements, what’s next?

Otterspace badges can be used for governance, access permissions, salary payment, staking reputation, token-gated commerce, undercollateralized lending, retroactive airdrops and pretty much anything else you can think of that requires an on-chain record.

Using badges for governance is a powerful way to address the limitations of coin voting while maintaining sybil resistance. Reviewing the entire badge collection of an individual can be a reliable signal that they are in fact a unique human without having to carry out KYC or proof of personhood checks.

While sybil resistance is certainly an important benefit, the power of badges for governance doesn’t end there. Because badges represent the nuanced nature of membership, they can be used to give individuals varying degrees of influence or decision scope. For example, the Otternauts have granted holders of Rock Juggler badges decision scope over Rock Guild decisions. Perhaps Expert Rock Jugglers have 20% more governance weight than Rookie Rock Jugglers. Using badges as your membership primitive allows you to generate far more complex governance structures than you could do with a fungible token.

Another common utility given to badges is access permissions. Any badge can be programmed as a key to unlock any door in Web3 (or Web2 with the right tools). DAOs that use Web3 native tools like Clarity, Wonder or Radicle can set permissions via badges. For example, Wonder could be set-up so that only Expert Sea Urchin Hunters can pick up sea urchin-related bounties. Discord roles can also be configured to correspond to badges, so any time someone earns a level-up badge, they are automatically given a new role on Discord.

We know there are many more kinds of badge utility that we haven’t thought of yet. By building the Otterspace Protocol as a composable primitive and toolset, we invite developers to integrate new tools and build custom use cases. We’re excited to see all the ways the Otterspace building blocks are used.

To start using SBTs in your community with Otterspace, join our waitlist and we’ll reach out about getting you onboarded to our Beta program. If you have any questions or feedback, our Twitter DMs are always open.

Stay tuned for more updates by subscribing to us on Mirror or following us on Twitter.

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