After studying 19 EIPs, we summarized 9 future directions of NFT

23-03-21 15:30
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Original title: 《 ABCDE: After studying all EIPs, we summarized 9 future directions of NFTs 》

Original author: ABCDE
Original translation: Shiwen, Odaily Planet Daily

ERC-721 was created in January 2018, when some NFT experiments had already appeared on the chain. But no one could have predicted that it would lead to the birth of the NFT ecosystem and release the potential of NFT applications. PFP and GameFi NFTs have been on the Web3 main stage for a while in 2021 and 2022, and we are even more excited to look forward to the next stage of NFT growth.

More and more innovations and standardization measures are further driving NFTs. In this article, we will analyze the latest EIPs (Ethereum Improvement Proposals) and extract 9 future directions for NFTs.

1. Permission-enabled NFTs

Previously, we have been following a model for NFTs: each NFT has an owner field in the metadata, representing one of its owners. However, the single-owner configuration leads to a lack of flexibility in the use of NFTs. What if the owner wants to rent out the utility of the NFT? What if an issuer wants to limit the number of total NFTs but still make their service widely accessible to their audience? This leads us to permissions-enabled NFTs.

By permissions-enabled, we mean an approach that generalizes permissions on NFTs. An NFT can have a single owner, but can also have fields specific to potential rights holders, loyalty givers, etc. We can break down the utility of an NFT into specific pieces, allowing different players to get the most out of it.

EIP-4400 introduces the consumer role of NFTs, by creating permissions for non-owners to enable them to enjoy the benefits of a given NFT instance. The main use case comes from the metaverse: land owners can authorize consumers to use their land. It hints at the potential of leveraging additional roles to enable beneficiary-user relationships in NFT-based rental markets and NFT yield farms.

EIP-4907 proposes the concept of rentable NFTs. It includes user fields and validity fields in the ERC-721 contract to enable fine-grained owner-beneficiary relationships within an NFT. With this improvement, one can easily rent out an NFT or authorize others to use the IP. Prior to this EIP, an NFT holder had to transfer the NFT to enable leasing and carefully calculate the required collateral to protect his or her ultimate ownership. This model is not the safest and causes the NFT leasing market to behave like an options market: if the value of the NFT rises dramatically, the lender can choose to give up the collateral and receive the benefit of the NFT's appreciation.

EIP-5023 creates an interface for creating NFTs that are shared by multiple owners, called shareable NFTs. The current reference implementation emits a share event so that new tokens can be minted based on a given token ID and transferred to the recipient. While the implementation is not perfect, it points to a future where the ownership of NFTs can be refined to each specific function or functional module. Owners can share the rights to the same or different parts granted by the NFT. In addition, it can respond to the current contradiction between supply and demand: NFTs need scarcity and limited supply to stabilize market prices, however, NFTs should be shared and therefore should be accessible to everyone. Through shareable NFTs, applications such as music NFTs may achieve the goal of retaining price appreciation while providing access to all fans through sharing capabilities.

In short, we look forward to the application of permission-enabled NFTs in the rental market, variants of NFTFi, and the distribution of fan products through NFTs.

2. Relationship-Enabled NFTs

In addition to innovating on multiple owners and users of NFTs, we also urgently need to implement the function of multiple NFTs being bundled together and belonging to the same owner. In games, the value or output of a group of assets may be much higher than a single item. In the metaverse, people may want to transfer between multiverses and still be able to access their assets in a compatible format. If NFTs can be combined between ERC-721 contracts, applications, and chains, there will be a huge market to unlock the balance of value through NFTFi.

EIP-5606 proposes the concept of multiverse NFTs to achieve a universal representation of multiple related NFTs on different platforms. As a single asset, it enables users to bundle and unbundle any NFT to support collection needs and utility. It can define relationships between assets and their associated properties to achieve better cross-chain and cross-metaverse interoperability.

EIP-6059 further extends bundled NFTs to nestable NFTs controlled by a parent, which adds a relationship layer to bundled NFTs. It provides better clarity for bundling by specifying a tree structure that controls the EOA of the parent NFT and all child NFTs. It can support bundling, standardized collections, on-chain membership relationships, and delegation to enhance the NFT collection experience and NFT utility potential.

EIP-6150 proposes the concept of layered NFTs, similar to the file system in an operating system. It can more accurately layer and grade NFT hierarchies. In addition, it also proposes to standardize the setting of permissions for each layer of each hierarchy to achieve better NFT permission operations.

EIP-6220 creates composable NFTs with fixed and customizable slots, which can make NFTs directly combined into a practical or tradable asset. It can support game applications with a standardized way to equip characters, or any DApps use combined NFTs to create new user experiences or assets.

3. NFTs as a phased vesting tool

Tokens have always been a medium for investors and early supporters to gain shares and rewards in projects. However, there has been more short-term hype than supporting healthy growth of the ecosystem. It is difficult for projects to formulate fair share distribution methods using crypto-native methods, or for ordinary people to easily create gradual ownership claims in ERC-721. Vested NFTs can be a solution, and it has great potential to expand to a variety of applications and move traditional financing to the blockchain.

EIP-5725 creates a transferable unlocked NFT interface that can release the underlying Token at a certain time. This means that NFTs are the carriers of unlocked Tokens , or can be unlocked according to a predetermined curve to reach their ultimate use value.

EIP-5753 proposes a lockable NFT extension to disable Token transfers during the lock period. This enables more secure NFT collateralization in Defi lending or yield farming. Instead of depositing NFTs into external contracts, holders can choose to lock NFTs under their own accounts to achieve the same results, but with less protocol risk and less risk of losing NFTs.

We look forward to more financial structures being included by NFTs and enriching the entire blockchain market.

4. NFTs as Utilities

In addition to being a viable granting tool, NFTs are also used as utilities to support gaming applications and club memberships. What is the potential for NFT utility value? We expect unlimited utility value, inheriting user behaviors and characteristics from Web2. New EIPs are being proposed to support the utility value of NFTs.

EIP-5050 proposes that NFTs should define how they interact with each other through action messages and discovery protocols. This could allow creators to continually interact with holders, or for games to connect to their NFT characters. Additionally, it suggests that NFTs could become a connection point for users to interact with each other and use NFTs as phones or social media. Token Contracts will be discoverable and usable by applications so that games and other applications can have a layer to interact with NFTs.

EIP-5643 proposes subscription NFTs to be embedded in an expiration and recurring payment schedule for active subscriptions. It will provide a stable revenue stream for NFT issuers, rather than relying entirely on fluctuating loyalty fees on transactions. This means that NFT creators can focus on developing sustainable business models, rather than focusing on pushing NFTs and triggering FOMO to earn revenue. In addition, it will help users easily manage their subscriptions and be able to earn capital gains in NFTs by supporting promising projects early.

5. NFTs as identity tokens

Soul Binding Tokens and naming services have been popular ways of representing identities on the chain. They all rely on NFTs to carry identities and represent unique characteristics and properties of identities. EIPs have been adding support for SBT and its ecosystem, and we expect the zkID technology stack, the technology stack for on-chain privacy-preserving identities, to be ready soon and in the EIP standardization pipeline.

SBT was originally proposed in EIP-4671, which aimed to create a non-transactional Token as proof of holding and achievement. It was developed as a certificate issued by an institution that could not be revoked or transferred. However, EIP-4671 failed to become a standard on Ethereum and was shelved. Rather than quenching enthusiasm for SBT, it has initiated more direct development and EIPs in the SBT space.

EIP-5192 proposes a minimal interface for Soulbound NFTs to standardize SBT in terms of wallet implementation and transfer functionality. It proposes the simplest path to a canonical interface for SBT. This is currently the current standard for SBT on ERC. Through standardization, we will see more developers using SBT, and the creation of more SBT-oriented applications and utilities.

6. NFTs for richer content

Currently, NFTs need to rely on external storage to save PFPs or other media, which leads to interoperability issues when displaying and using NFTs in various metaverses and markets, because the linked files may exist in different formats or be unavailable. We believe that in the future, NFTs themselves will be able to hold richer content for use in any intermediary platform and multiverse.

EIP-4955 is the first step towards improving NFTs with richer content: vendor metadata extensions. It simply adds a new field for NFT metadata so that vendors can freely store application-specific JSON data, and NFT marketplaces and the metaverse can leverage NFTs by presenting custom metadata. For example, metadata can include a custom 3D representation or other properties of the NFT.

EIP-5489 proposes hyperlink extensions, adding clickable functionality to all NFTs to direct users to a specified web page. If NFTs become the primary media and information carrier in the Web3 world, NFTs need an alternative way to attach more content than can be found on-chain. Hyperlink standards are an important step toward enabling the dissemination of any type of information.

EIP-5773 specifies an interface for a multi-asset token with contextually relevant asset types. Each NFT can be displayed in a format that matches the access pattern, such as a PDF file in an e-reader format, a 3D model asset in a game format, etc. Embedding a variety of assets in different contexts directly into an NFT creates a smoother, richer user experience.

Richer content can completely elevate the NFT experience. It creates a larger surface area for the user experience of NFTs and can lead to more innovation and use cases.

7. NFTs for Physical Assets

An important step toward achieving widespread adoption of blockchain is to connect the real world and the blockchain world. Digi-physical is a common term used to describe the combination of digital and physical experiences and assets. NFTs are a promising vehicle for digital-physical product and service relationships.

EIP-4519 proposes an interface for representing physical assets through NFTs, with the ability to generate or restore accounts. It will link NFTs to unique physical assets to enable applications related to physical sensors and assets. The specification is a strong sign of progress towards fully integrating physical assets into blockchain cryptographic schemes, although more work is needed to achieve full physical-blockchain integration.

EIP-5700  can be bound and tracked to unique assets through tokens, which can create useful NFT  bundled physical assets. For example, it can be a microchip-implanted garment or a digitally registered real estate asset. The standard also supports the composability of NFT  by giving ERC-721 and ERC-1155 the ability to bind to contracts, thereby supporting unique or non-unique physical assets.

8. NFTFi with Advanced Metrics

With the increasing number of permissions, relationships, lock-up periods, and utility value in NFTs, the valuation and trading of NFTs requires more sophisticated mechanisms to reflect the market's different assessments of the value of each part of the NFT. The continued advancement and enrichment of EIPs shows the evolutionary path of NFTFi, with more layers of detail and a more sophisticated user experience in the future, as well as the more difficult task of ensuring a smooth and fluid user experience.

We see that the future of NFTs requires and promotes the emergence of better markets, trading options, and yield farming algorithms.

9. NFT as an EOA (Externally Owned Account)

Finally, an NFT can become its own entity. It can serve as a wallet, identity, or the usual EOA for the holder. This can limit a person's tracking on the chain, establish the history and reputation of the NFT, and enable more NFT ownership structures.

EIP-6066 standardizes the signature verification method of NFTs to easily verify the signatures of ERC-721 and ERC-1155 contracts. It essentially expands the utility of NFTs from an asset to be owned to an EOA with the ability to interact, pay, and approve transactions. NFTs can become managers or roles in the Web3 world, enriching the current ownership experience.

We can imagine that as NFTs become a sovereign on-chain entity, anyone can freely establish the intellectual property rights of NFTs. Additionally, using relationship- or permission-enabled EIP solutions, users can create hierarchical signatures or interact with NFT bundles in entirely new ways.

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