ERC-6551: What new narratives will emerge from making NFTs wallet accounts?

Author: bayemon.eth, Grapefruit, ChainCatcher

On June 25, the EthGlobal Waterloo hackathon officially concluded, with 11 projects entering the finals, covering various fields such as NFTs, infrastructure, AI, and payments. Notably, among these 11 selected projects, 4 are centered around the newly proposed token standard ERC-6551, such as the decentralized media network platform AquaNet, which allows users to use their held NFTs as their accounts, and the auction platform Fukuro, which supports the buying and selling of NFT bundles with ERC20 or other NFTs.

This marks the first real-world projects seen by users since the concept of ERC-6551 was proposed, quickly attracting intense attention from the crypto community.

ERC-6551 is a new token standard released by the Future Primitive team on May 23, which will support the creation of token-bound accounts (Token Bound Account, TBA) for NFTs, meaning NFTs can serve as wallet addresses or on-chain accounts, truly making NFTs wallets.

This will open new doors for ERC721 NFTs, as current NFTs are merely static assets stored in wallets, unable to interact with other DApps or represent true on-chain identities; currently, users' on-chain identities remain wallet addresses. ERC-6551 will support the creation of smart contract wallet accounts for current ERC721 NFTs, allowing NFTs to serve as their on-chain identity wallet accounts, which can contain multiple wallet addresses, held NFTs, and ERC20 tokens, making NFTs true representatives of on-chain identity accounts.

This article will explore the characteristics, implementation principles, and differences between ERC-6551 and ERC-721, discussing the new possibilities that ERC-6551 will bring to the NFT space.

What is ERC-6551?

ERC-6551 Concept

In the past, NFTs could only lie in users' wallets as small images, seemingly having no other purpose apart from being visually appealing. The emergence of ERC-6551 may open up new possibilities; in addition to being image assets, NFTs can also serve as on-chain accounts, allowing NFTs to be bundled and sold together, enhancing their composability, dynamism, and interactivity, truly bringing NFT assets to life.

How to understand ERC-6551? Simply put, it is a fresh piece of code (ERC-6551) that gives NFTs their own wallets, making the NFT itself the wallet account.

If we apply the setting of the game "The Legend of Sword and Fairy" to NFTs, let's say Li Xiaoyao is an NFT created under the ERC-721 standard. The money he earns from battles in the vast world, achievements gained from the storyline, the peach wood sword in his backpack, and even the "social relationships" formed with Zhao Ling'er and Lin Yue Ru do not actually belong to this "Li Xiaoyao" himself, but are instead scattered as separate NFTs lying in the wallets of players who purchased the single-player game. ERC-6551 binds Li Xiaoyao to a wallet account that belongs solely to him, where all the assets, reputation, and even social relationships attached to him, as well as future inheritances and continuations, will appear in this NFT account as "past memories" when recorded on-chain, rather than just the actions of players who purchased the game under the ERC-721 standard.

ERC-6551 Origin

So, why introduce a new development standard ERC-6551 when ERC-721 already exists and has been widely adopted? Is it really necessary to go through such trouble just to give NFTs so-called "autonomy"? This is mainly because the current ERC-721 still has vulnerabilities.

As is well known, ERC-721 has been widely adopted in the NFT space, and the NFTs created based on it occupy a significant share of the cryptocurrency ecosystem. However, this standard still has obvious flaws; NFTs created based on ERC-721 remain static assets, merely circulating as "tokens" between accounts, seemingly lacking the ability to create their own stories as NFTs or represent on-chain or Web3 identities.

Without traceable transaction history or the ability to perform on-chain signatures, this means that tokens minted under the ERC-721 standard cannot interact with other smart contracts and DApps like wallets, nor can they possess other assets, merely existing as "mascots" like images.

In fact, to enable ERC-721 to become a true on-chain identity representative, developers in the Ethereum community have proposed numerous proposals over the years, defining various ways to extend the ERC-721 standard.

Proposals related to the token ownership issue of ERC-721 assets

Although there have been proposals that could allow ERC-721 to possess assets rather than just lying in a wallet as "small images," the biggest problem with these proposals is that they are not compatible with ERC-721. This means that most NFTs circulating in the market would require developers to make extensive code modifications if they want to become "wallets."

Thus, to grant ERC-721 more asset functionalities while ensuring compatibility with all previously deployed ERC-721s, Future Primitive released the ERC-6551 standard. A member of this team, @BennyGiang, was also an early project member of Dapper Labs/CryptoKitties.

Inspired by Soul Bound Tokens (SBT), the ERC-6551 standard transforms the "small images" in wallets into the wallets themselves, creating token-bound accounts (TBA) for NFTs, allowing NFTs to directly interact on-chain, record transaction histories, and hold on-chain assets. Token-bound accounts belong to NFT owners and authorize them to initiate on-chain interactions directly.

For example, after Xiao Ming purchased Azuki, he would typically store it in his wallet. Now, through ERC-6551, a smart contract account (TBA) can be created for him, where the NFT serves as the identity of that account. Within this account system, he can also hold other NFTs, crypto tokens, POAP credentials, etc., meaning the NFT is the wallet. As a "wallet," TBA can interact with other DApps.

Standing on the shoulders of giants, ERC-6551 transforms NFTs into wallets, expanding the originally flat assets into what seems to be a truly liquid "living entity," serving as a comprehensive proof of ownership and transactions.

ERC-6551 Features

As mentioned above, to realize more functionalities for NFTs, ERC-6551 needs to possess characteristics such as compatibility, composability, and traceability of transactions.

Compatibility

To enhance the universality, interoperability, and scalability of applications while reducing development and deployment costs. In the Ethereum ecosystem's daily emphasis on "compatibility," ERC-6551, as an extension of the OG standard ERC-721 in the NFT space, naturally engraves the word "compatibility" into the DNA of the new standard. For developers, compatibility means no need for code-level modifications to the current ERC-721 or the smart contracts after wrapping; for holders, there is also no need for any additional operations on the NFTs already existing in their wallets.

Composability and Traceability

In addition to "compatibility," standardization and composability of smart contracts have become mainstream trends. The composability of the ERC-6551 standard mainly allows all assets bound to tokens to be operated in the same place, providing DApps with easier and more flexible asset management and bundling. For instance, once OpenSea confirms the use of ERC-6551 in the future, artists can bundle and sell a series of NFTs on OpenSea.

Moreover, ERC-6551 supports allowing NFTs to directly interact on-chain, recording transaction histories. This transaction history may provide traceable transaction path proofs for previously hard-to-track NFT royalties, leading to more feasible solutions in royalty distribution.

What are the Application Scenarios of ERC-6551?

Even though ERC-6551 was proposed just over a month ago, it has already sparked a wave of discussions in the community. To some extent, what ERC-6551 creates is an NFT wallet with "development" capabilities, which can solve the rigid curse of "pre-programming" in the gaming industry, fitting the hierarchical relationships of the real world and even simulating interpersonal interactions. Therefore, in gaming and digital signatures, many excellent use cases based on ERC-6551 have already emerged.

Game Parallel Colony: NFTs as Player Accounts

Parallel Colony is a narrative game that integrates artificial intelligence, ERC-6551, and life simulation elements. The protagonist, Parallel Avatar AI, starts his life with a few coins (the in-game currency is ERC-20 PRIME), a chip, and a rifle.

In this game, the virtual character Avatar AI NFT utilizes ERC-6551 technology, meaning this NFT serves as its game account, and all purchased items in the game belong to the wallet bound to the NFT. Avatar AI will decide with the player how to manage the assets in the wallet.

Tokenbound Titans: NFT "Raising" Game

Tokenbound Titans is an NPC game developed by HomeDAO at ETH Waterloo 2023, using the ERC-6551 standard, combining NPC game modes with dynamically generated NFTs. Players are the owners of NFTs, with each NFT binding a character with different abilities and characteristics.

The core gameplay involves characters earning token rewards through battles and spending money to max out attributes like attack, speed, defense, and health. As levels increase, new moves and combos can also be unlocked.

The original model of NFT blockchain games seemed more like a combination of code blocks, which may not be friendly to players who love "raising" games. The emergence of ERC-6551 has completely changed the way blockchain games and NFTs integrate, allowing character NFTs to evolve and grow during gameplay and respond genuinely to players' choices.

Web3 Digital Fashion Company StapleVerse: Launching NFT Signature Caps Using ERC-6551

Stapleverse, on June 21, co-launched a limited edition baseball cap with @9dccxyz. Unlike other signature limited editions, the signature on the cap is digital. Thanks to the introduction of ERC-6551, which grants NFTs the right to hold other NFTs, in the collaboration between Stapleverse and @9dccxyz, the "cap" NFT becomes the holder of the "signature" NFT. If the "cap" NFT holder later trades it, the "signature" will also be traded as an additional asset of the "cap" to the buyer's wallet. Thus, ERC-6551 can be seen as a means of abstracting and realizing certain "hierarchical relationships" from the real world onto NFTs.