Data Structures and Algorithms

A Merkleized Batch Attestation Scheme with Selective Disclosure and Compliance-by-Design

Authors: Harry Willson Potter
Comments: 8 Pages.

Soulbound tokens (SBTs) have been theorized as non-transferable attestations for decentralized identity and reputation. The existing SBT literature assumes permissive regulatory environments that tolerate token-based incentives, pseudonymous participation, and secondary markets. This paper inverts that assumption. We study SBT design under prohibitive regulatory constraints—jurisdictions that ban cryptocurrency, mandate real-name identity verification, and impose data minimization. We formalize the Usefulness Paradox as a theorem: for any SBT system under three or more prohibitive constraints, the DeFi feature set and the compliance feature set intersect in exactly one element—non-transferability. We define an 8-dimension compliance evaluation framework with formal criteria and prove existing SBT standards satisfy at most one of eight criteria. We present three general design patterns—hook-level soulbound enforcement, dual-layer compliance middleware, and beacon-based pseudonymity—that collectively satisfy all eight criteria.
Category: Data Structures and Algorithms