ERC-6551, a new token standard for NFTs, is set to broaden their utility beyond simply being digital art or profile pictures. The introduction of ERC-6551 will enrich the functionality and worth of NFTs by embedding smart contract abilities. This standard behaves akin to a smart contract wallet, capable of holding and transferring other NFTs, and manifests as token-bound accounts (TBAs). These accounts are crafted and administered via a permissionless registry compatible with ERC-721 NFTs. Benny Giang, a co-author of ERC-6551, is a founding member of Dapper Labs and has prior experience working on the ERC-721 token.
ERC-6551 addresses the limitations of its predecessor, ERC-721, which struggles to interact with other smart contracts and lacks the ability to evolve over time. In contrast, ERC-6551 is compatible with ERC-721 and utilizes a permissionless registry. This registry functions as a factory and directory for TBAs, enabling anyone to generate TBAs for any ERC-721 in return for a nominal fee.
The integration of ERC-6551 promotes the creation of multiple on-chain identities, augmenting the possibilities for interaction with smart contracts and decentralized applications (dApps). This development enhances opportunities for in-game and loyalty program rewards while ensuring accessibility to ownership, transaction, and history related data.
One of the key advantages of ERC-6551 is the increased transparency it brings. Unlike previous instances where the ownership history and past prices of an NFT remained unknown upon purchase, ERC-6551 makes this information accessible through smart contracts.
ERC-6551 augments the utility of NFTs in multiple ways. First, it allows NFTs to collect other assets, tokens, and NFTs, transferring all embedded information and assets when sold. This enhancement simplifies the user experience of Web3 gaming. Second, ERC-6551 empowers NFTs to establish their identities independent of wallets, opening up new prospects for in-game rewards. Lastly, this standard enables NFTs to interact autonomously with other on-chain assets or platforms, thus amplifying their functionality and value.
Despite these benefits, ERC-6551 faces challenges. Gaining favor from projects and platforms is a significant hurdle as not all NFT projects support the ERC-6551 standard due to compatibility issues or technical difficulties. Security concerns also pose a risk as the broadened capabilities of NFTs provide a larger attack surface for hackers. Additionally, the platform should ensure user-friendly and intuitive experiences to facilitate the creation, management, and access of ERC-6551 NFTs.
In summary, ERC-6551 holds the potential to redefine the world of NFTs by eliminating the need for wallets and enabling the creation of on-chain identities through NFTs. By endowing ERC-721 with the capability to store information and other assets, ERC-6551 makes NFTs more versatile and interactive.
