Deep Dive into ERC-6551: What New Possibilities Does It Bring to the NFT Space?
Original Author: bayemon.eth, Pomelo
On June 25th, the EthGlobal Waterloo hackathon officially ended, with a total of 11 projects entering the finals, covering various fields such as NFT, infrastructure, AI, and payments. It is worth noting that among these 11 selected projects, 4 of them are based on the newly proposed token standard ERC-6551. For example, the decentralized media network platform AquaNet supports users to use their NFT holdings as their own accounts, and the auction platform Fukuro supports the buying and selling of NFT bundled with ERC 20 or other NFTs.
This is also the first time that users have seen real-world projects based on the ERC-6551 concept, which has quickly attracted intense attention from the crypto community.
ERC-6551 is a new token standard released by the Future Primitive team on May 23. It will support NFTs to create token-bound accounts (TBA), which means that NFTs can be used as wallet addresses or on-chain accounts, truly realizing NFT as a wallet.
This will open up new possibilities for ERC-721 NFTs. Currently, NFTs are only static assets stored in wallets, which cannot interact with other DApps or serve as representations of on-chain identities. The on-chain identity of users is still the wallet address. ERC-6551 will support the creation of smart contract wallet accounts for ERC-721 NFTs, making NFTs serve as on-chain identity wallet accounts. These NFT accounts can contain multiple wallet addresses, held NFTs, ERC-20 tokens, and other contents, making NFTs true representations of on-chain identity accounts.
This article will explore the characteristics, implementation principles, and differences with ERC-721, etc., to discuss the new possibilities that ERC-6551 will bring to the NFT field.
What is ERC-6551?
ERC-6551 Concept
In the past, NFTs could only lie in users' wallets as small pictures, seemingly serving no other purpose besides being viewed. The emergence of ERC-6551 may open up new possibilities for NFTs. Besides being assets in the form of images, they also have other functions, such as serving as on-chain accounts, the ability to bundle and sell NFTs together, etc., making them more combinable, dynamic, and interactive, bringing NFT assets to life.
How to understand ERC-6551? Simply put, through a fresh piece of code (ERC-6551), NFTs get their own wallet, and the NFT itself becomes the wallet account.
If the setting of "Legend of Sword and Fairy" is applied to NFT, let's assume Li Xiaoyao is the NFT created under the ERC-721 standard. Then the money obtained from his battles in the game, achievements obtained through the storyline, the wooden sword in his backpack, and even the "social relationships" formed with Zhao Ling'er, Lin Yueru, and others do not belong to the character "Li Xiaoyao" itself, but are separate NFTs scattered in the wallets of players who purchased the game. On the other hand, ERC-6551 binds Li Xiaoyao to a wallet account that belongs exclusively to him. All the assets, reputation, social relationships attached to him, as well as future inheritance and continuation, will be recorded on the blockchain in the form of "past memories" under this NFT account, rather than being controlled by the player who purchased the game using the ERC-721 standard alone.
Origin of ERC-6551
So why did the Future Primitive team introduce a new development standard ERC-6551 when ERC-721, which has already been widely adopted, was already available? Is it really necessary to go through so much trouble just to give NFTs the so-called "autonomy"? This is mainly because the current ERC-721 still has flaws.
As we all know, ERC-721 has long been widely adopted in the field of NFTs and NFTs created based on this standard occupy a significant share in the cryptocurrency ecosystem. However, this standard still has obvious shortcomings. Currently, NFTs created based on ERC-721 are still static assets that can only circulate as tokens between accounts. There doesn't seem to be a way for them to create their own stories as an NFT itself, as a representation of on-chain or Web3 identity.
With no transaction history that can be traced and the inability to perform on-chain signatures, it means that tokens minted under the ERC-721 standard cannot interact with other smart contracts and DApps like wallets. They can't own other assets and can only exist as "mascot" images.
In fact, in order to make ERC-721 a true representation of on-chain identity, developers in the Ethereum community have proposed various extension methods for the ERC-721 standard over the years.
Proposals related to the asset ownership of ERC-721
Although there have been proposals that allow ERC-721 to have the ability to own assets and not just be a "small image" lying in a wallet, the biggest problem with these proposals is that they are not compatible with ERC-721. This means that most of the NFTs currently circulating in the market would require developers to make significant code modifications in order to become "wallets".
So, in order to give ERC-721 assets more functionality while ensuring compatibility with previously deployed ERC-721, Future Primitive released the ERC-6551 standard, with team member @BennyGiang, who was also an early project member of Dapper Labs/CryptoKitties.
The ERC-6551 standard, inspired by Soul Bound Tokens (SBT), transforms "small pictures" in wallets into the wallets themselves, creating Token Bound Accounts (TBA) for NFTs, allowing NFTs to interact directly on-chain, record transaction history, and hold on-chain assets. Token Bound Accounts belong to the owners of NFTs and authorize them to initiate on-chain interactions directly.
For example, previously, Xiaoming would store their Azuki NFTs in a wallet. Now, through ERC-6551, it is possible to create a smart contract account (TBA) for them. The NFT becomes the identity of this account, and in this account system, it can also hold other NFTs, encrypted tokens, POAP identity proofs, and more. In other words, NFT becomes the wallet. As a "wallet," TBA can interact with other DApps, etc.
ERC-6551, standing on the shoulders of giants, transforms NFTs into a wallet, expanding the inherently flat assets into a seemingly truly liquid "living organism," becoming a proof of collective ownership and transaction.
Features of ERC-6551
As mentioned earlier, to achieve more functionality for NFTs, ERC-6551 needs to have the characteristics of compatibility, composability, and traceability in transactions.
Compatibility
In order to improve the universality, interoperability, and scalability of applications, while reducing development and deployment costs, in the Ethereum ecosystem, the emphasis on "compatibility" is repeated day after day. As an extension of the ERC-721 standard, which has an OG status in the NFT field, ERC-6551 naturally engraves the word "compatibility" in the DNA of the new standard. For developers, compatibility means no need to code-level modifications to the current ERC-721 or the smart contracts post-wrapper. For owners, no additional operations are required for existing NFTs in the wallet.
Composability and Traceability
In addition to "compatibility," standardization and composability of smart contracts have become mainstream trends. The composability of the ERC-6551 standard primarily allows all assets tied to tokens to be operated in one place, providing DApps with easier and more flexible asset management and bundling. For example, in the future, when OpenSea confirms the use of ERC-6551, artists can bundle a series of NFTs for sale on OpenSea.
In addition, ERC-6551 supports allowing NFTs to directly interact on-chain and record transaction history. This transaction history can provide traceable transaction path proof for previously untraceable NFT royalty, thereby emerging more feasible solutions in royalty distribution.
What are the applications of ERC-6551?
Even though ERC-6551 was proposed just over a month ago, it has already sparked a discussion frenzy in the community. To some extent, ERC-6551 creates an NFT wallet with the capability of "development" and infinitely approaching reality. It can solve the rigidity curse of "pre-programming" in the gaming industry, fit the subordination relationship of the real world, and even simulate interpersonal interactions. Therefore, there have been many excellent use cases based on ERC-6551 in the gaming and digital signature fields.
Game: Parallel Colony: NFT as a player account
Parallel Colony is a narrative game that combines artificial intelligence, ERC-6551, and similar life simulation elements. The protagonist, Parallel Avatar AI, carries a few dollars (the in-game currency is ERC-20 PRIME), a chip, and a rifle in their pocket, starting their life.
In the game, the virtual character Avatar AI NFT utilizes ERC-6551 technology, meaning that the NFT serves as its own game account. All purchased items in the game belong to the wallet bound to the NFT, and Avatar AI will decide together with the player how to dispose of the assets in the wallet.
Game: Tokenbound Titans: NFT-based "cultivation" game
Tokenbound Titans is an NPC game developed by HomeDAO at ETH Waterloo 2023, which combines NPC gameplay with dynamically generated NFTs using the ERC-6551 standard. Players are the owners of the NFTs, and each NFT is bound to a character with different abilities and characteristics.
The core gameplay involves the characters earning token rewards through battles and spending money to maximize attributes such as attack, speed, defense, and health. As the level increases, new moves and combo skills can also be unlocked.
The original pattern of NFT blockchain games seemed more like a combination of code blocks, which was not very user-friendly for players who love "cultivation" games. The emergence of ERC-6551 completely changes the way NFTs and blockchain games are merged. The role NFTs can continuously evolve and grow during the game process, and they respond to the player's choices in a realistic manner.
Web3 digital fashion company: StapleVerse launches NFT signature edition hats using ERC-6551
Stapleverse collaborated with @9 dccxyz on June 21st to release a limited edition baseball cap. Unlike other limited edition designs, the signature on the baseball cap is in digital form. Thanks to the introduction of ERC-6551, NFTs now have the ability to hold other NFTs. In the collaboration between Stapleverse and @9 dccxyz, the "Hat" NFT becomes the holder of the "Signature" NFT. If the owner of the "Hat" NFT engages in subsequent transactions, the "Signature" will also be traded as an additional asset of the "Hat" to the buyer's wallet. In this way, ERC-6551 can be seen as a means of abstracting and implementing certain "subordinate relationships" in the real world on NFTs.
