ERC-721, the token standard that made NFTs popular on the Ethereum network as distinctive and verifiable digital assets, has paved the way for an intriguing development. Imagine transforming our ordinary NFTs into comprehensive Ethereum accounts.
This imagination has become a reality! A recently introduced token standard called ERC-6551 takes Ethereum NFTs to a whole new level of usefulness and functionality.
Now, your beloved collectible can directly possess assets, engage with web3 applications, and serve as your on-chain identity more effectively. We are entering an exhilarating era, so let me bring you up to date on the fundamentals of ERC-6551.
The basics of ERC-6551
ERC-6551, a new token standard, launched on the Ethereum mainnet on May 7th, 2023. It significantly enhances the capabilities of ERC-721 NFTs by allowing them to operate as their own smart contract accounts, making them more versatile and functional than ever before.
The inspiration behind ERC-6551 arises from the increasing utilization of NFTs as a means of on-chain identification. So far, ERC-721 tokens were unable to function as agents or possess other on-chain assets, which didn’t align with real-world scenarios involving unique assets.
To tackle this, ERC-6551 addresses the issue by providing every ERC-721 token with the complete capabilities of an Ethereum account, while ensuring compatibility with existing ERC-721 contracts. This is accomplished by creating distinct smart contract accounts, known as “token bound accounts,” for each ERC-721 token through an open registry.
It’s important to note that ERC-6551 enables a single NFT to own multiple token bound accounts. Consequently, an NFT can now encompass multiple wallets and other such functionalities.
The system introduced in ERC-6551 is primarily made of
1) a permissionless registry for deploying token bound accounts, and
2) a standard interface for interacting with these accounts.
Thanks to the ERC-6551 standard, an ERC-721 NFT can now perform all the functions that a regular Ethereum wallet can do. The possibilities go far beyond the basics, such as storing other NFTs or trading ERC20 tokens. This is just the tip of the iceberg!
To illustrate, let’s say you’ve been acquiring NFT wearables in a web3 game. Instead of keeping them in your typical Ethereum wallet, you have the option to store them within the NFT of your choice, like your player avatar from the same game. This not only adds an element of fun and familiarity on a psychological level but also presents future opportunities. When you decide to move on from the game, you can consider selling the player avatar along with the accumulated wearables as a unified package on an NFT marketplace using ERC-6551.
Thanks to the ERC-6551 standard, an ERC-721 NFT now possesses the same capabilities as a regular Ethereum wallet. The possibilities go well beyond the fundamentals, like storing other NFTs or trading ERC20 tokens. However, this is just the beginning!
For instance, let’s consider a scenario where you have been amassing NFT wearables in a new web3 game. Instead of keeping them in your ordinary Ethereum wallet, you can now store them within the NFT of your choosing, such as your player avatar from the same game. This not only adds a more enjoyable and familiar experience on a psychological level but also opens up future prospects. When you decide to move on from the game, you can contemplate selling the player avatar along with the accumulated wearables as a unified entity on an NFT marketplace using ERC-6551.
This is merely one hypothetical example, but the range of possibilities is extensive. Another illustration involves PFP projects being able to incentivize and emphasize the expanded utility of their collectibles by distributing rewards to any holders in their collection who possess token bound accounts.
Moreover, the fact that ERC-6551 permits NFTs to have multiple token bound accounts and supports multi-chain token bound accounts introduces additional layers of usefulness. This is bound to catalyze fresh waves of experimentation and innovation throughout the NFT space.
The ERC-6551 standard does not support all NFT projects. Specifically, projects that do not utilize an “ownerOf” method in their smart contracts are not compatible with ERC-6551, such as CryptoPunks.
In addition to the absence of comprehensive ERC-721 support, ERC-6551 introduces two significant safety considerations that necessitate careful attention within the NFT ecosystem, like Avoiding Fraudulent Behavior and Preventing Ownership Cycles.
To explore further and delve into the exciting world of ERC-6551 and NFT innovation, consider reaching out to Bitsapiens Token Development Studio. With their expertise and experience in token development, they can provide valuable insights and guidance. Contact Bitsapiens Token Development Studio today to unlock the full potential of ERC-6551 and discover new possibilities in the NFT space.