NFTs as wallets: What innovations will the new standard ERC-6551 bring to NFTs?

Author | Heimi, Baize Research Institute

ERC-6551 is a new standard released on the Ethereum mainnet on May 7, 2023. ERC-6551 allows each ERC-721 NFT to have one or more wallets behind it by granting them the full functionality of an Ethereum account. In other words, NFT itself is a wallet with its own wallet address. These wallets are called "Token Bound Accounts", or TBA for short (TBA control is delegated to NFT holders, that is, NFT holders can use TBA to initiate on-chain operations).

ERC-6551 will significantly enhance the capabilities of ERC-721 NFTs, making them more practical than ever.

Using TBA, you can store any crypto asset in an NFT that you own. For example: you can store ETH or even other NFTs in Azuki’s TBA. At the same time, as a "wallet", TBA can also be used to interact in dApps.

This makes your NFT no longer just a static JPEG whose value comes from speculation, it will become more valuable based on the assets stored and past interactions.

Below we mainly discuss the 4 main use cases of TBA, each of which pave the way for innovation in the NFT field:

1. Composability

You can bundle your related assets (NFTs, tokens, identities...) into an NFT, making it easier to manage and transfer your assets across different platforms. If you sell/transfer an NFT, all assets within it will also be transferred.

Example a: Before the emergence of TBA, all NFT-form assets in Web3 games will be stored in your wallet as separate tokens. With TBA, you can let your NFT game character have an "inventory", dig gold and kill monsters in the game, and the accumulated assets will be directly transferred to the game character's TBA. If you want to give up the game, you can sell your character NFT and the equipment stored in TBA with one click - this will bring a better user experience to Web3 games, which is what we need now.

Example b: If a PFP NFT project wants to airdrop tokens to holders, with TBA, the project can directly airdrop to NFT TBA to incentivize holders and expand the utility of the NFT.

2. On-chain identity

Benny Giang, co-author of ERC-6551, once said: "The idea is simple... What if NFTs had their own wallets? Inspired by Soul-Bound Tokens (SBT), our idea is the opposite, which we call Binding accounts (TBA) for tokens means not binding the NFT to the wallet, but binding the wallet to the NFT.”

Currently, we typically use our own wallets to represent on-chain identities. With TBA, each of your NFTs has its own identity. In other words, your NFT can interact with the dApp independently without having to rely on the wallet holding it.

This means that one of your NFTs may become your on-chain identity, and it can demonstrate your trustworthiness through a TBA record of successful transactions. This opens up new possibilities - loyalty programs based on past behavior of NFTs, including Web3 games retroactively rewarding those who completed certain tasks in the past or early bird users.

Example a: The NFT market can determine your credibility based on one of your NFT TBA transaction records, thereby reducing counterparty risk.

Example b: The lending agreement can determine your creditworthiness based on one of your NFT TBA transaction records, thereby simplifying the lending process.

3. Source/Provenance/Historical Transaction Records

NFT currently cannot provide detailed information such as source/provenance/historical transaction records. Except for some NFT markets that display simple information, buyers usually cannot obtain it directly. TBA solves this problem.

4. Dependence

NFTs currently cannot interact with other on-chain assets/platforms on their own, which limits their functionality. Your NFT is nothing more than a certificate of ownership. With TBA, this is no longer the case, which naturally makes NFTs more valuable and practical.

Currently, we can use the toolkit Tokenbound to deploy TBA to your NFT. Interested friends can go and give it a try:

- Official website: https://tokenbound.org

- Link wallet

- Choose your NFT

- Deployment account

- Once the transaction is complete, you can "Use Wallet" in the dashboard of the selected NFT (feature coming soon).

In addition, if you are interested in ERC-6551, you can try Stapleverse, an innovative project that has implemented this standard - users can hold character NFTs and then bind the collected wearable item NFTs to the character NFTs. Therefore, the characters NFT has wearable item NFT in the form of TBA. That is, one main NFT can be nested within countless sub-NFTs.

All in all, adding TBA to NFTs will give NFTs more use cases and greater flexibility, which is an important criterion since people have formed many personal brands around top PFP projects (y00ts, Beanz).

Using the ERC-6551 standard in Web3 games is also a wise choice and will bring players a better gaming experience.

At the same time, ERC-6551 is built on the ERC-4337 standard designed to simplify the user wallet experience, so integrating TBA functionality for NFTs in a new form of wallet standard "smart account" is expected to accelerate the mass adoption of Web3.

risk warning:

According to the "Notice on Further Preventing and Dealing with Speculation Risks in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing and does not promote or endorse any business or investment behavior. Readers are requested to strictly abide by the laws and regulations of their region and do not Engage in any illegal financial practices.