# Proof of concept of an updatable SBT for DAO membership

By [Envelop It](https://paragraph.com/@envelop-it) · 2024-01-24

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Envelop offer the ability to upgrade the reputation inside SBT via dropping reputation level/grade tokens (ERC-20 format) inside. When the SBT holder has achieved or executed some useful activity for his community. Thus we can easily build dynamic reputational models with on-chain proof. Aside fan communities could be used as proof, certificate, diploma, confirmation of skill/job skills etc. with opportunity to have grades and be dynamic.

**Transactional Reputation in DAOs**
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Transactional reputation (TR) takes into account qualitative characteristics according to three factors: quantitative, temporal and subjective.

TR is not a rating; rating is a purely quantitative indicator, it has no quality.

TR in DAO Envelop is represented by SBT.

> _SBT (Soulbound tokens) are non-fungable and non-transferable tokens. This concept was_ [_systematized by V. Buterin and his colleagues_](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4105763)_, but_ **_DAO Envelop developed a technical implementation of such a solution few months before._**

**Why are SBTs needed?**
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First of all, to create transactional reputation, which is an alternative to the existing (subjective) one and is based on the fact that any act, action or inaction, can be evaluated by any system.

The valid SBT for a DAO could look as follows:

1.  One party (for example, a DAO member) agrees to accept it (the SBT token) to its wallet, e.g., by purchasing a DAO token;
    
2.  The second party (for example, the DAO Architect, core contributor, or genesis member) creates an SBT, attaching it to the participant’s wallet with the consent obtained in step 1;
    
3.  The SBT cannot then be transferred or unwrapped, but can be filled to account for transactional reputation.
    

**How SBTs designed in DAO Envelop**
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Technically, it’s a wrapped NFT created in the Envelop protocol.

To simplify, wNFT is an NFT with advanced features with which you can:

*   Set timelock for unwrapping;
    
*   Create сollateral by putting ERC-20 tokens, coins or NFTs into the wNFT;
    
*   Customize royalty;
    
*   etc.
    

In this case we are interested in the Collateral function. This is a kind of vault that can contain crypto-assets.

In our case, these will be ERC-20 NIFTSY tokens, which will be distributed depending on the conditions between the participants.

**How is the SBT collateral filled?**
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1.  A new DAO member must agree to participate by acquiring a NIFTSY token on the free market: by direct buy-in, exchange, through airdrops and other authorized methods;
    
2.  Active members of DAO create SBT in one of the EVM networks (Arbitrum is in the queue for now, but it can be any chain where the Protocol, Oracle and NIFTSY token are deployed);
    
3.  A filled SBT (using Envelop protocol), where NIFTSY tokens can be added from special accounts (to avoid spoofing and SPAM) depending on the activity of a particular member.
    

How to do create SBT with Envelop protocol
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Go to [https://app.envelop.is/wrap](https://app.envelop.is/wrap) and select advanced mode

![Advanced mode in Envelop wrapper ](https://storage.googleapis.com/papyrus_images/2f929c1f980da7c431aa0bfe0a8ba7bd18d3572d346547eb22151463ad5b0305.png)

Advanced mode in Envelop wrapper

Check two boxes in Advanced options: Unwrapping, Transferring (Soulbound Token).

![Advanced options in Envelop wrapper dApp ](https://storage.googleapis.com/papyrus_images/063d978aec771137acb20d8147baa061c17e02e7a6581ebc3d11feb82cf1a237.png)

Advanced options in Envelop wrapper dApp

In Collateral section set ERC-20 (BEP-20 for BNB Smartchain) and select your reputation crypto asset. Add tokens, which will be permanently locked in this SBT. For example, I use the NIFTSY tokens (Envelop’s native tokens).

![](https://storage.googleapis.com/papyrus_images/7e784ef8458fbcdc11f009c7dd4aa26434ca60e2d635833007e0538d54944f2f.png)

Push the Wrap button

![SBT token wrapped successfully in Envelop dApp](https://storage.googleapis.com/papyrus_images/a56d89f6fbe8eb3853cbb065f221d4a369e29f7c83b65a063ca1c1f41e774d04.png)

SBT token wrapped successfully in Envelop dApp

You can see your SBT via «breadcrumbs» menu. Just copy NFT URL and paste it in new page.

![DAO Envelop NFT view](https://storage.googleapis.com/papyrus_images/ca8039e75647a763a7d6017e1c7b4ee0860e478645688b8e42ec76ebb6bb5766.png)

DAO Envelop NFT view

After a DAO member has written code, presented the project at a conference, etc. DAO gives him/her additional tokens inside the SBT, increasing his/her reputation. It is possible to create multiple reputation traits, e.g. developer reputation, designer reputation, etc.

Thus Envelop provides an incredibly flexible, permissionless tool for tokenizing the reputation of any web3 project, be it DeFi, GameFi, DAO or airdrop design project.

Envelop is a collateral-backed and price discovery cross-chain protocol to provide NFT with inner value and liquidity.

🌎 [Website](https://envelop.is/) | 🐦 [Twitter](https://twitter.com/Envelop_project) | **🗯** [Telegram](https://t.me/envelop_en)\-chat | 🐱 [Github](https://github.com/niftsy/niftsysmarts) | 📢 [**TG channel**](https://t.me/nonfungible_web)

📩 [Wrapper dApp](https://appv1.envelop.is/#/) | 🌾 [Farming dApp](https://app.envelop.is/farming/#/) | 🗂 [SAFT wNFT](https://app.envelop.is/landings/saft/) | 🔨 [Mint](https://appv1.envelop.is/mint/)

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*Originally published on [Envelop It](https://paragraph.com/@envelop-it/proof-of-concept-of-an-updatable-sbt-for-dao-membership)*
