The advent of NFTs has revolutionized the digital asset landscape, enabling unique ownership and provenance of digital items. However, until now, the value and interactions associated with NFTs often relied heavily on external off-chain activities and speculation.
To address this limitation and unlock new possibilities for project creators, collectors, and builders, the team at Future Primitive has introduced ERC 6551, known as token-bound accounts. This new protocol binds every NFT to its own account/wallet address, providing a significant technological leap for the NFT ecosystem.
Token Bound Accounts Explained
Token-bound accounts (ERC 6551) establish an open protocol that associates a smart contract wallet with each NFT. This binding mechanism ensures that every NFT has a dedicated account that can hold and interact with ETH and other ERC20, ERC721, and ERC1155 tokens. Notably, this protocol does not require any modifications to the original ERC721 contract or transactions from NFT owners.
Importance from a Tech Perspective
The introduction of token-bound accounts holds immense importance from a technological standpoint. It allows for the seamless addition of a new ownership layer on top of existing and new NFTs, unlocking numerous use cases that were previously challenging to implement on-chain. Some of the notable use cases include:
- Equipping Digital Outfits and Items: Token-bound accounts enable NFTs to possess and interact with digital outfits and items. This functionality has implications for projects like RTFKT's CloneX and Doodles, where NFTs can own and wear unique digital wearables.
- ERC20 Token Earning/Airdrop Models: With token-bound accounts, NFTs can participate in earning ERC20 tokens through airdrops or other models. This capability enhances engagement and incentivizes collectors, as demonstrated by projects like Bored Ape Yacht Club (BAYC), Cool Cats, and SupDucks.
- Participation Badges (POAPs): NFTs can accumulate participation badges or POAPs earned from real-world events or community activities. Token-bound accounts facilitate the transfer of these badges to the NFT's account, creating a comprehensive on-chain history of its engagements, as seen in projects such as Azuki, FWB, and Moonbirds.
- Bulk Transfers and Collection Trading: The introduction of token-bound accounts enables the trading of entire NFT collections as a single unit. Platforms like OpenSea can leverage this functionality to facilitate bulk transfers of NFTs, streamlining collection management for both creators and collectors.
Provenance and Value Accrual
One major benefit of token-bound accounts is their ability to record on-chain history, also known as provenance, within the NFT itself. In traditional setups, the value accrued within an NFT relies on external wallets like MetaMask or Rainbow.
However, with token-bound accounts, all transaction history and provenance are embedded within the NFT, ensuring that the NFT carries its entire value and historical data with it. This feature enhances transparency, trust, and the potential for serious buyers to review an NFT's complete history before making a purchase.
Conclusion
ERC 6551, token-bound accounts, represents a significant technological advancement for the NFT ecosystem. By binding every NFT to its own account/wallet address, this open protocol unleashes a range of new use cases and possibilities.
At PERCS, we see the benefits of the technology and we are excited to help brands to implement the tokens in their web3 campaigns! We're also eager to connect with those that are building in this builders market like us, if there's one thing that we can be sure is that we are only touching the surface of the many incredible solutions that blockchain has to offer.
Interested in connecting with us? Send us a message on any of our Social Media Channels: Twitter, Lenster, or via e-mail builders@getpercs.com
