Digital ownership has been revolutionized by the remarkable development and innovation of Non-fungible tokens (NFTs). These tokens offer a secure way of representing and exchanging digital assets on the Ethereum network. However, traditional NFT standards have faced challenges in managing linked assets. To overcome this issue, a new standard known as ERC-6551 has been introduced as an Ethereum Improvement Proposal (EIP) by the Ethereum blockchain ecosystem. ERC-6551 token development proposal introduces on-chain wallets designed explicitly for NFTs to maintain assets in the NFT realm.
Coinsclone, a leading Ethereum Token development Company, carefully observes the market before releasing ERC-6551 token standard. In this article, we explain the concept of ERC6551 token, its benefits, features, and the possibilities of developing it.
What is the ERC-6551 Token Development?
ERC-6551 token development is the process of developing an Ethereum NFT for token-bound accounts . Each NFT is given a smart contract wallet, enhancing its adaptability and interactivity.
ERC 6551 is an extension of the current ERC721 and ERC1155 standards that aims to enhance NFT functionality by introducing on-chain wallets. Every NFT associated with ERC6551 has a unique on-chain wallet, which makes it easy to maintain and interact with the assets handled by the NFT. This standard gives NFT owners complete control over their assets, allowing the Ethereum ecosystem to trade, utilize, and monetize these assets more effectively.
The ERC-721 standard is fully backward compatible with token-bound accounts, which is another advantage. This eliminates the need to create new contracts or wrap existing ERC-721 NFTs, reducing unnecessary friction and allowing existing NFTs to upgrade to ERC-6551 without significant alterations.
How Does the ERC-6551 Token Standard Work?
A new proposal has been introduced in Ethereum to create a new standard for Non-Fungible Tokens (NFTs) called ERC-6551. Future Primitive, an on-chain product studio managed by Benny Giang and Steve Jang, developed the standard. The proposal introduces Token-bound accounts (TBAs), which are smart contract wallets linked to specific NFTs. This allows NFTs to have more interaction and ownership over assets and applications.
The current NFT standard, ERC-721, has limited scope and can only be used for ownership and transfer. They cannot own other assets, interact with smart contracts, or change over time based on user input. However, ERC-6551 token development addresses these issues by implementing a permissionless registry that is compatible with current ERC-721 NFTs. The registry acts as a factory and directory for TBAs, allowing anyone to build a TBA for any ERC-721 token by paying a small fee to use a function in the registry and deploying a proxy contract that serves as the TBA.
The proxy contract adheres to the EIP-1271 standard and includes all of the original ERC-721 token’s attributes and metadata, enabling it to sign messages and validate signatures on the token’s behalf. This makes it easier for the TBA to communicate with other Ethereum network accounts and contracts, including DEXs, loan services, gambling venues, etc. The TBA can also use the proxy contract to hold and transfer additional assets like tokens or other NFTs.
Enhancing NFTs with ERC-6551 Token
The use of ERC721 has allowed for widespread acceptance of NFTs and opened up many opportunities for blockchain-based digital assets. However, the limitations imposed by ERC721 are set to be loosened by ERC6551. One constraint of ERC721 is its built-in provenance.
Although NFTs serve as on-chain proof of ownership for digital goods, they do not always provide a complete history of the assets. NFTs mainly act as a link between the asset and the owner’s account, without offering a complete picture of previous transactions or any additional value beyond proof of ownership.
NFTs have limited potential because they lack the necessary versatility to interact with other smart contracts. Essentially, an NFT is a digital certificate of ownership that cannot be modified or renewed.
The current design of the token standard, specifically ERC-721, prevents it from interacting independently with other on-chain assets or contracts. Due to their static JSON metadata, ERC-721 tokens are less adaptable and productive. This metadata only records URIs and cannot store any additional information.
As a result, NFTs are unable to add more functionality or sophisticated security measures to the token itself. However, the introduction of token-bound accounts (TBAs) through ERC 6551 has made NFTs more flexible and interactive without sacrificing the benefits of ERC-721.
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Unique Features of ERC-6551 Token Development
Token Bound Accounts(TBAs)
The ERC 6551 NFT token standard introduces a significant advancement with the introduction of TBAs. These smart contracts are linked to a particular NFT and offer enhanced capabilities such as the ability to acquire additional assets, interact with dApps, and evolve.
For example, an NFT can represent a house and the TBA can contain relevant information such as the title, mortgage details, and other pertinent data. The TBA can also connect with dApps that provide home maintenance services or allow the property to be sold to another user.
Compatibility with existing NFTs
The existing NFTs and the ERC 6551 NFT standard are fully compatible, and no modifications are required to migrate current NFTs to the new standard. To convert the NFT to the ERC-6551 standard, the owner only needs to create a new TBA that stores the metadata for the NFT, including its name, picture, and description.
The ERC-6551 team is actively developing new features for the standard, such as expanded scalability, support for various asset types, and improved security. With support for multiple asset kinds, TBAs can hold physical goods and ERC-20 and ERC-721 tokens, making them less susceptible to fraud and hacking.
Improved security and increased scalability will allow TBAs to process more transactions per second. Overall, the ERC-6551 standard offers numerous benefits that increase its value and usefulness for both enterprises and users, transforming the NFT token creation market.
Many crypto enthusiasts and token investors are excited about the unique features of ERC6551 tokens and are eager to invest. For startups looking to Launch a Crypto Token based business, this is a great opportunity and the perfect time to create ERC 6551 nft tokens. Other than this there are many…
Benefits of Developing ERC6551 NFT Standard
The previous token standard’s constraints become more apparent as NFTs develop, preventing advancement. ERC-6551 comes into play here. It aims to quicken the interactive and dynamic evolution of all NFTs. ERC-721 NFTs can access all of an Ethereum account’s features by using token-bound accounts. It performs the same role as a wallet in respect of the NFT address. The other significant benefits of ERC-6551 standards are listed below.
Improved Asset Management
Assets are viewed by traditional NFT standards as distinct from the NFT itself. This issue is resolved with ERC6551, which gives each NFT access to a separate on-chain wallet, enabling streamlined asset ownership and management.
Simplified Asset Transactions
By using ERC6551, NFT assets can be traded as a group, avoiding the difficulties of sending each asset one at a time. This makes it easier to sell or transfer entire collections while preserving asset integrity.
ERC6551 lets NFTs engage equally inside the Ethereum ecosystem by tying each NFT to an on-chain wallet. Because wallets are widely supported, digital arts such as NFTs can take advantage of the tools and services already available for wallets.
Expanded Use cases
New opportunities for on-chain gaming and inventory management are made possible by the advent of on-chain wallets for NFTs. In-game objects can now be seamlessly traded, upgraded, or customized thanks to NFTs’ new ability to represent characters and their associated assets.
Immutable Activity Record
Making Ownership and Transaction History Transparent ERC-6551 token-bound accounts keep an immutable record of all on-chain operations carried out by the accounts in a permissionless registry. This unchangeable record of activity gives NFTs a complete provenance of ownership, transactions, and utility. ERC-6551 strengthens the NFT ecosystem’s sense of trust and confidence by assuring accountability and transparency.
So with all these benefits, the ERC6551 token attracts many crypto enthusiasts to invest in them. These tokens have the potential to revolutionize the crypto market for both investors and users, surpassing even NFTs and opening up new possibilities.
ERC-6551 Token Development with Coinsclone
Coinsclone can be your ideal digital partner to give a boost to your NFT journey. With a broad range of crypto token development tools and services, we have a nimble staff of certified and professional NFT experts. They have first-hand knowledge of all prominent NFT token standards. Moreover, collaborating with us for Ethereum Token Development offers significant advantages, including customization. Additionally, we ensure prompt project delivery and have a dedicated support group to assist you throughout the process.
Our team of blockchain explorers maintains current trends with Web 3.0 and the most recent developments in the sector. We provide a range of development services, such as blockchain & token development services, DeFi platform development services, crypto exchange platforms, crypto payment gateway solutions, crypto wallet development services, and more.
Get in touch with us if you’re interested in the idea of developing an ERC6551 token for further conversation.