You need to login in order to Like
ERC: 6551 Game Changer For NFTs
By Ruchi Sharma
The development of Non-Fungible Tokens (NFTs) has transformed the world of blockchain-based digital assets, with the ERC-721 standard paving the way for a plethora of new use cases, but it also has drawbacks such as restricted traceability and lack of composability.
This allows for further innovation when new applications for NFTs develop. The ERC-6551 standard is the most recent advancement in the area of NFTs. By offering token-bound accounts (TBAs), it enables digital assets on Ethereum to transcend numerous present constraints.
What is ERC-6551?
ERC-6551 is a new Ethereum standard for NFTs that allows them to be more than just static assets while preserving the benefits and functionality of ERC-721. The asset is then converted into a token-bound account (TBA). Token-bound accounts provide NFTs with an interface and registration for ERC-721 smart contract accounts.
Smart accounts, which are based on ERC-4337, can be customized and used to store assets and conduct transactions. Furthermore, token-bound accounts maintain an unalterable record of all blockchain operations.
Even though token-bound accounts officially belong to an ERC-721 NFT, power over them is delegated to the NFT’s owner. Using a token-bound account, an owner can initiate on-chain operations on behalf of an NFT.
Why was ERC-6551 created?
Why do we need ERC-6551 since the ERC-721 standard has opened the road for general use of NFTs and unlocked different use cases for blockchain-based digital assets? This is due to the following limitations of ERC-721 NFTs:
Limited provenance:
The principal utility of NFT now is the identification of the digital asset’s relationship to the owner account. NFTs only serve as an on-chain proof-of-ownership for assets stored on or off-chain.
Lack of composability:
Existing NFTs are generally static in the sense that users cannot add any more utility to them, leaving potential for greater innovation.
Inability to operate as on-chain agents:
Due to their limited identity, ERC-721 tokens cannot interact with other on-chain assets or contracts on their own.
Static JSON meta data:
The static JSON meta data that ERC-721 tokens retain prevents them from keeping more URI codes, increasing security, or increasing efficiency. This implies that the token cannot include any more information or value.
NFTs can now be more than just static assets thanks to the addition of TBAs in ERC-6551, while still enjoying the benefits and use of ERC-721.
How does ERC-6551 work?
Token bound accounts are smart contract wallets that are in fact held by an ERC-721 NFT, though that NFT’s owner retains authority over them. Using the token bound account, the owner can start on-chain actions on behalf of the NFT.
Token bound accounts are initiated at the Registry which has two main functions:
- Create Account: Deploys a TBA for an ERC-721 token given an implementation address.
- Account: Computes a TBA address for the ERC-721 token. Further, each TBA is deployed as an ERC-1167 minimal proxy with immutable constant data appended to the bytecode.
The reason behind this added step is that a ERC-1167 minimal proxy contract allows for two things:
- Cheap deployment of clone contracts as opposed to several gas-intensive deployments of NFT contracts.
- Reduced operational effort because it only needs to install a proxy contract once, pointing to the same logic each time with fresh data instances.
The account interface defines the functions of TBA that are currently possible. This includes:
- Receiving Ether (ETH) using the ‘receive’ function
- Executing calls using the ‘executeCall’
- Limiting the owner of the NFT from executing calls
- Adding grant execution permissions to other non-owner accounts.
- The Ethereum specifications ERC-165 and ERC-1271 are also used by TBAs. While the latter makes it easier for users to sign messages on behalf of smart contracts, the former aids in standardising the TBA interface.
- Moreover, a single ERC-721 token can own multiple TBAs, with each TBA assigned for a specific purpose.
ERC-6551 Use Cases
On Ethereum, ERC-6551 is a developing standard, but innovation for token-bound accounts is speeding up significantly. The following three TBA use scenarios will maximise the potential of NFTs:
On-chain NFT Identities:
NFTs with token-bound accounts have the ability to establish complete on-chain identities and reputations. This is so that NFTs can possess wallets and the assets that go along with them thanks to TBAs. Furthermore, these NFTs communicate directly with dApps as opposed to using wallets to store them. TBAs can be used in a variety of ways in this context, such as behavioral economics-based airdrops, loyalty schemes, and in-game prizes.
Intuitive Asset Management:
A TBA can be used to store a wide range of assets, from NFTs to POAP awards. Tokens, assets, and NFTs being combined into one TBA makes it simpler for users to transfer assets and switch platforms, improving the user interface for doing so.
Gaming Use Cases With TBAs
The development of gaming use cases is made possible by the composability of token-bound accounts. Token-bound funds make it possible for developers to give players “inventories” that instantly transfer all of their assets into their character’s wallet, improving the user experience and enabling in-game UIs that were previously very challenging to construct.
The ability to create token-bound accounts is made possible by the new NFT standard ERC-6551. These accounts are becoming more and more well-liked since they can make NFTs more functional and interactive. It is excellent for developers who wish to add this feature quickly and simply into their applications. Token-bound accounts enable NFTs to develop into more dynamic, interactive assets that can be tailored to suit certain use cases.
You need to login in order to Like
