ERC 6551, known as Token Bound Accounts (TBAs), has recently been introduced as a groundbreaking addition to Ethereum’s open-source stack, specifically in Non-Fungible Tokens (NFTs). Since the emergence of ERC-721 as a mainstream digital collectible standard, ERC 6551 has the potential to revolutionize the way NFTs are used, their economic implications, and their functionality within the Ethereum (ETH) and EVM ecosystem blockchains.
Key Highlights of ERC 6551 or Token Bound Accounts:
- Launch and Standard: ERC 6551, named “Non-fungible Token Bound Accounts: An interface and registry for smart contract accounts owned by ERC 721 tokens,” was officially launched on May 7, 2023.
- Wallet Functionality: ERC 6551 establishes a standard for non-fungible tokens on Ethereum (ETH) to act as noncustodial wallets. This means that every ERC 721 token can now perform the functions of a cryptocurrency wallet, including sending and receiving transactions, storing NFTs, participating in airdrops, and more.
- Backward Compatibility: The ERC 6551 standard is designed to be backward-compatible, enabling existing non-fungible tokens to be equipped with advanced functionality without any issues.
- Authors: The new standard was authored by Jayden Windle, co-creator of CryptoKitties, and Benny Giang from Future Primitive.
- Diverse Applications: ERC 6551-enabled NFTs can be utilized in various decentralized applications, such as gaming, reputation management, on-chain messaging, analytics, trading, and beyond.
From the outset, ERC 6551 has been developed open-source, and certain Web3 companies are trying to simplify the process of upgrading existing NFTs.
Understanding NFTs:
Non Fungible Tokens (NFTs) are a unique type of cryptocurrency token with distinctive properties. Unlike fungible tokens (such as traditional fiat currencies or cryptocurrencies like USDT or BTC, which can be interchangeably replaced), each NFT is one-of-a-kind.
Under the surface, NFTs represent ownership contracts for specific content. Analyzing the code of most NFTs reveals that they are tokenized agreements, certifying ownership of digital assets associated with Ethereum accounts. These assets can include images, texts, songs, videos, characters, and in-game items.
Exploring ERC 721:
Ethereum Request for Comments 721, or ERC 721, is a standardized design for non-fungible tokens on the Ethereum blockchain. Introduced in December 2017, ERC 721 paved the way for the creation of standard NFTs, simplifying their development and deployment. Notably, popular NFT collections like Bored Ape Yacht Club, Azuki, and RTFKT are built on the ERC 721 standard, and it forms the backbone of major NFT marketplaces like OpenSea, LooksRare, Rarible, and Blur.
Creating NFTs:
There are two primary methods for creating NFTs. The first approach involves using no-code platforms like Mintable, where users can upload their content, pay gas fees, and mint their NFTs. Gasless minting is also possible on Layer 2 chains.
The second method involves utilizing OpenZeppelin code templates. Users must set up a MetaMask wallet, pay fees or claim testnet tokens, acquire the ERC 721 code template, compile it, and deploy it on the Ethereum or Polygon network.
Ordinals Bitcoin NFTs:
In 2023, the concept of “Bitcoin NFTs,” also referred to as “Inscriptions” or “Ordinals,” gained attention. Ordinals allow
Data to be attached to Bitcoin (BTC) transactions. As Bitcoin (BTC) satoshis can be modified, users can associate them with various content formats, from JPEG files to JSON data. However, this standard is technically complex, requiring running a whole Bitcoin (BTC) node and causing network congestion.
Account Abstraction:
Account Abstraction, ERC 4337, enables Ethereum (ETH) wallets to function as decentralized banks, blurring the line between wallets and smart contracts. It introduces the concept of “smart wallets” and is considered a significant advancement in Ethereum (ETH) functionality. Vitalik Buterin has described Account Abstraction as one of the three pillars driving Ethereum’s progress toward a mature tech stack.
A Comprehensive Guide to ERC 6551 or Token Bound Accounts:
ERC 6551 represents a novel mechanism within the Ethereum (ETH) ecosystem. It empowers NFTs with enhanced wallet functionality, enabling them to perform all actions typically associated with noncustodial crypto wallets. Token-bound accounts (TBAs) are the name given to ERC 6551-enabled tokens, allowing them to send and receive transactions, store their NFTs, swap ERC 20 tokens, and more.
In conclusion, ERC 6551, or Token Bound Accounts, can potentially revolutionize the use, economics, and functionality of NFTs within the Ethereum (ETH) and EVM ecosystems. With its backward compatibility and diverse applications, ERC 6551 paves the way for exciting innovations in decentralized gaming, reputation management, on-chain messaging, analytics, trading, and beyond.
