Dialogue with ERC-6551 Author Benny Giang, Discussing the Path of NFT Expansion

Original Video: What is ERC-6551: The Future of NFTs

Interview: Brown Yeung, Cyber Insider

Organizer: Spectrum Labs

Introduction

Crypto Insider is thrilled to share an exclusive interview with the visionary behind the innovative Ethereum Improvement Proposal EIP-6551, Benny Giang. This groundbreaking standard promises not only to enhance the functionality of NFTs but also envisions transforming them from simple static digital assets into dynamic, autonomous, and interactive entities, thus triggering a significant revolution in the NFT space. This article summarizes our enlightening conversation with Benny. For the complete dialogue filled with insights, please watch our video "What is ERC-6551: The Future of NFTs," where Benny engages in an in-depth discussion with our interviewer Brown Yeung.

Self-Introduction

Crypto Insider (CI): Let's get started. Can you tell us a bit about yourself and how you got into the cryptocurrency world?

Benny Giang (BG): Sure, my name is Benny, and I'm from Vancouver, Canada. I entered the cryptocurrency or blockchain space in early 2017. I was part of the team behind the CryptoKitties project, and afterward, we founded Dapper Labs. I had the opportunity to be involved in the development of projects like Cheese Wizards and NBA Top Shot. In 2018, I was actually in Hong Kong, talking with Yat Siu and others at Animoca's office. At that time, Animoca was still focused on mobile gaming. They were our first international partner for launching CryptoKitties in Hong Kong, Taiwan, and Singapore. That's how I ended up in Hong Kong and met some other people in that city.

CI: That's interesting. Can you tell us more about your experience at Dapper Labs and what you're currently working on?

BG: I left Dapper Labs in October 2021, and it's been about a year and a half since then. I founded a software development design company called Future Primitive, focusing on building the fundamentals of decentralized communities. It's based in San Francisco, while I'm in Vancouver. Over the past year and a half, we've been working on many experimental NFT projects, which has been an exciting journey.

Introduction to ERC6551

CI: Awesome! I understand you are one of the authors of ERC6551. Can you explain what ERC6551 is and its main purpose?

BG: Yes, you may have heard of ERC721. That was a standard I had the opportunity to be involved with, alongside the broader CryptoKitties team. ERC721 is now recognized as the standard for NFTs. Six years later, I had the chance to work with the Future Primitive team to develop a new standard called ERC6551. The main distinction is that ERC6551 is not a token standard. It is often confused or compared with ERC721, but you don't have to choose between ERC721 and ERC6551. You just need to launch a regular NFT project, and it already has the capabilities of ERC6551.

CI: Can you explain ERC6551 in more detail so we can better understand it?

BG: I usually refer to it as "Token Bound Accounts." Token Bound Accounts are the opposite of Soul Bound Tokens, which are non-transferable tokens tied to your wallet. The main concept of Token Bound Accounts is that every NFT on every EVM chain has an account or wallet associated with that token. It's essentially an account bound to the token (NFT). That's the simple idea behind ERC6551. Another very important thing is that over the past six years, since the inception of NFTs and CryptoKitties, there has been an immense amount of imagination worldwide about how to further develop NFTs. In 2018, there was a project called Kitty Hats that explored the idea of equipping items to your NFT assets. This project was created by Dan, who was the first employee at OpenSea. Since then, many different standards and companies have attempted to build protocols on various blockchains.

Key Features of ERC6551

CI: Interesting. How does ERC6551 differ from these standards?

BG: ERC6551 or Token Bound Accounts have five key differences:

1. It applies to any new NFT launched on any EVM-compatible blockchain, from CryptoKitties to Azuki to Board Ape.
2. Your NFT can hold any type of asset, such as ETH, USDC, Pepe coins, ERC721, ERC1155, or even new token standards like ERC8888.
3. No wrapping contracts are needed, so you don't have to wrap your NFT or send it to a contract for our standard.
4. It works on every platform since you only need one wallet or one account.
5. It is decentralized. Each NFT essentially has a smart contract account or wallet, so the NFT is the owner of that account.

CI: So, would you say ERC6551 is a better version of ERC721?

BG: I think it should be thought of this way: if we go back to that room six years ago, where we were working on ERC721 and CryptoKitties, if we had the same ideas we have now, we should have included them in the ERC721 standard. ERC6551 elevates the concept of NFTs to a new level, making NFTs more than just overpriced JPEG images, beyond mere buy-and-sell transactions. With ERC6551, each NFT possesses three new attributes: asset ownership, social identity, and action potential. The first attribute is asset ownership; your NFT can own other assets, and you can have an NFT that owns another NFT, and so on. The second attribute is social identity. People have been using their NFTs as profile pictures on Twitter. Some even create personalities on Twitter using their NFTs. With ERC6551, you can log in, create a transaction history for your NFT, and start becoming your NFT.

CI: That's fascinating. Can you elaborate on the third attribute, "action potential"?

BG: The third attribute, action potential, is something we refer to as the future. When you pair an NFT with an AI model, you can allow the NFT to execute on-chain operations by itself. Because the NFT now has its own wallet, it is almost equal to a human on the blockchain. You can imagine telling your graffiti collection to buy the coolest music NFT, and it will go and purchase the coolest music NFT.

CI: So, you mean ERC6551 doesn't compete with ERC721 but adds more value to it?

BG: Yes, that's absolutely correct. It doesn't compete with ERC721. It actually adds more value to every existing ERC721.

Compatibility of ERC6551

CI: So, how does ERC6551 enable ERC721 tokens to interact on the blockchain and own on-chain assets?

BG: In the ERC6551 standard, there is a decentralized registry that specifies ERC6551. The registry will use links created to deterministic addresses. It looks at the token ID of each NFT or each NFT collection contract and assigns a smart contract account associated with it. Currently, if you want to send 1 ETH to a random CryptoKitty, you can do that. You just go to tokenbound.org, connect your wallet, and if you own CryptoKitties, it will show you the Token Bound Account address, or TBA address. With this address, you can go directly to Metamask and send anything you want. No operations are needed. That's the magic of ERC6551 or Token Bound Accounts. The whole world has awakened, NFTs have undergone a complete transformation, and the NFT owner or creator doesn't need to take any action. Every NFT has an account, and that has become a reality.

CI: That's amazing. Can you explain how ERC6551 ensures compatibility with existing infrastructure that supports Ethereum accounts?

BG: Token Bound accounts are smart contract wallets. This concept has been around for a while. One of the earliest smart contract accounts or wallets was Dapper Wallet, which I had the opportunity to be involved with. Everyone knows Gnosis Safe or Safe Nowadays; that's also a smart contract account. There are also Argent and a few others.

CI: How does this relate to the trend of moving away from EOA wallets?

BG: Recently, there has been a different proposal, ERC4337, written by Vitalik and some others. ERC4337 specifies account abstraction, which is the concept of moving away from EOA wallets. Vitalik has been writing about the need to move away from this type of wallet. ERC4337 has been fully passed and is now live on the mainnet. ERC6551 is essentially the account abstraction for NFTs. So, if you imagine the wave that Vitalik and everyone else is pushing, moving away from EOA wallets, we are also on that same wave. The only difference is that our focus is around NFTs.

CI: What impact does this have on compatibility with Ethereum?

BG: Because this wave is already happening, different proposals have emerged, such as 1271 for signing with smart contract accounts. Many different wallets, Wallet Connect, or different wallet services, and even Dapps now support signing, logging in, or using Wallet Connect with smart contract wallets. Since we used the same structure and paradigm, we are fully compatible with ERC4337. We leverage existing infrastructure.

Impact of the Bear Market on ERC6551

CI: I've noticed that many energy projects have failed due to the bear market. Do you think this has affected the promotion of ERC6551 or possibly reduced people's interest in using it?

BG: On the contrary, I think things have been continuously growing. Despite the bear market in 2019 and 2020, there was a second wave of interest in NFTs driven by projects like Board Apes, Azuki, Doodles, and Moon Birds. These projects focus heavily on social utility and real-life benefits, which is very interesting.

CI: So, the bear market hasn't had a negative impact on ERC6551?

BG: Correct. In fact, we see many blue-chip projects looking for what to do next, and ERC6551 opens up new opportunities for them. We are currently in contact with many such projects and different companies. There is also a developer working group with over a thousand developers from major protocols focusing on this ERC.

Notable Projects Adopting ERC6551

CI: That's impressive. Do you have any notable projects or events to mention?

BG: Yes, the recently concluded Ethereum Global Paris hackathon had about 10 to 15 projects building on ERC6551.

CI: That sounds very promising. Can you tell us about some particularly noteworthy projects?

BG: Sure. There are many, such as the work "Fuel World" by renowned NFT artist Ferocious. We also have Parallel, which is a top 20 NFT project that started as a trading game and is now developing a AAA game. We are closely collaborating with marketplaces like OpenSea and Zora. Infrastructure providers like AirStacks are also involved. There are many projects related to gaming and DAOs, such as Station and DAO House. YGG Yield Games is also exploring ERC6551, and Lens Protocol just announced that Lens V2 will use ERC6551. So, the momentum is definitely building.

Security Concerns

CI: ERC6551 seems to be a hot topic right now. However, any technological innovation may come with potential security considerations. Are there any associated risks with ERC6551 that we should be aware of?

BG: Like any smart contract, there are always risks. Our contracts have been audited, but as features increase, you must continue auditing. One of the main security concerns is what we call "baiting attacks." In a baiting attack, a buyer may bid to purchase an NFT, expecting it to contain specific assets, but the seller may remove those assets, leaving the buyer with an empty NFT. To prevent this, we currently have a temporary measure that allows sellers to lock their token vault accounts for a year, during which no assets can be withdrawn from the account, ensuring buyer trust.

CI: That's interesting, but it sounds like it places a lot of responsibility on buyers to do their homework.

BG: Indeed, we understand this is not an ideal long-term solution. That's why we are working closely with the Seaport team, which is OpenSea's marketplace protocol, to develop a protocol-level safeguard. Once implemented, this safeguard will check for any changes in the token vault account when a buyer places an order. If there are changes, the bid will be canceled. This way, buyers can trust that they will receive the item they bid on.

Counterfactual Accounts

CI: Let's continue discussing the concept of counterfactual account addresses in ERC6551. Can you explain that?

BG: Sure, we use create to deterministically generate account addresses, meaning each NFT has a token vault account address without requiring any action to reveal it. This is great because it allows anyone to send assets to the NFT without waiting for the owner to reveal the address. However, the smart contract account is deployed only after the owner activates it on tokenbound.org, at which point they can start using that account.

CI: This concept of counterfactual addresses seems to add a layer of complexity to NFTs. Do you think this could become a barrier to adoption?

BG: Indeed, it adds a new dimension to NFTs, but we believe it's a step forward. By providing each NFT with an address that can receive assets, we enhance the functionality of NFTs. The activation process is just a one-time action that the owner needs to perform to start using their account.

Outlook for the NFT Ecosystem

CI: What do you think the potential impact of ERC6551 on the NFT ecosystem will be?

BG: Thank you for the question. The impact of ERC6551 on the NFT ecosystem is incredibly exciting. I believe it will change every aspect of NFTs and inject new vitality into the field. The area I am most interested in is imagining the future of NFTs.

CI: Can you elaborate on that?

BG: As I have thought about NFTs over the past six years, I have been considering many things. People have different views on NFTs; they either love them or hate them. Generally, those who dislike NFTs think of them as just JPEG images with metadata. But I believe we can push it further, moving away from viewing NFTs merely as JPEG images with metadata and starting to think about the concept of digital objects.

CI: Digital objects? Can you explain that further?

BG: In real life, we own objects like cars, houses, and even collectibles like sneakers or toys. As we increasingly migrate to a digital lifestyle, I believe we will own more digital objects in the future. We might feel constrained by a lack of physical space to store these objects, but there are no such limitations in the digital realm. Therefore, I foresee that in the next 20 to 30 years, everyone will own hundreds, thousands, or even millions of digital objects, many of which will be NFTs.

CI: What about the quality of these NFTs?

BG: Well, like any collectibles, some NFTs will be of lower quality, but some will be really cool. That's the point of ERC6551. Many NFTs currently stored in cold storage can actually be assigned tasks or perform actions, thus increasing their productivity. This goes beyond the concept of JPEGs and enters a new realm where we start to view them as NPCs or non-player characters.

CI: NPCs? Interesting. Can you elaborate on this concept?

BG: If you've played games, you know what NPCs or non-player characters are. They are crucial to the gaming experience. Imagine playing The Legend of Zelda without characters. The same applies to the digital world or the metaverse. Currently, the metaverse has an "emptiness" problem. We need to fill these metaverses, and I believe NFTs programmed with personalities and the ability to perform actions can be key to achieving this. We call them Networked Playable Characters, or NPCs.

CI: So, you believe ERC6551 is the gateway to a new era of reimagining NFTs?

BG: Yes, that's absolutely correct. ERC6551 will open that door, and I believe it will trigger massive innovation among creators, artists, and developers.

Advice for New Players

CI: What would you say to someone completely unfamiliar with NFTs or who knows nothing about them?

BG: Sure. I believe Token Bound Accounts will be the best way to onboard and offboard. This way, a person can access an e-commerce site, register using their email, and be assigned an NFT as an account. They can shop around, purchasing physical and digital products that will go into their account. If they want to leave, they can send the NFT to their wallet, achieving full ownership without any security risks. Thus, a newcomer’s collection of NFTs can quickly begin without even needing to know, just by registering on a site with their email or phone number.

Expansion of Token Bound Accounts

CI: That sounds like a significant shift. I also want to ask about the Token Bound Account generated through 6551 being a contract account, with the NFT being the key to that account. Different rules and functionalities can be written into the contract to generate different use cases. What are your thoughts on this?

BG: That's a great point, and I think it touches on the core of this concept. The power of Token Bound Accounts lies in the concept of extensibility. Soon, as an owner, you will be able to access a sort of "app store" to unlock different functionalities or utilities for your NFT. This is very important because right now, when you own an NFT, you don't have much control. Control is in the hands of the creators.

CI: How does this relate to the concept of Token Bound Accounts?

BG: Well, the power of Token Bound Accounts lies in the concept of extensibility. Soon, as an owner, you will be able to access a sort of "app store" to unlock different functionalities or utilities for your NFT. This is very important because right now, when you own an NFT, you don't have much control. Control is in the hands of the creators.

CI: Are you saying that control will shift from creators to owners?

BG: Exactly. Currently, we are under the control of creators, but the future I see is one where NFT ownership is controlled by the owners. Owners will have the freedom to add functionalities to their NFTs without needing the creator's permission because they own the asset. I believe this is the biggest opportunity we face.

CI: So, you mean we are moving towards a future where NFT owners have more control over their assets?

BG: Precisely. This is a shift from creator-controlled NFTs to owner-controlled NFTs. Currently, most NFT projects are controlled by creators. We, as owners, have to wait for them to roll out new features, and if they don't, the price may drop. We are somewhat at the mercy of the creators. But for owner-controlled NFTs, owners can add functionalities without needing the creator's permission. That's the future we envision.

CI: This is a fascinating vision. It has been a pleasure discussing the future of NFTs and the role of 6551 in it with you today. Thank you for sharing your insights on ERC-6551 and its transformative impact on the NFT ecosystem.

BG: I'm glad to be part of the discussion. Thank you for having me.