NFT as a wallet: What innovations will the new standard ERC-6551 bring to NFTs?

ERC-6551: Innovations for NFT wallets.

Author | Heimi, Bai Ze 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 be granted full Ethereum account functionality, allowing the NFT to correspond to one or more wallets. In other words, the NFT itself is a wallet with its own wallet address. These wallets are called “Token Bound Accounts” (TBA), with control delegated to the NFT holder, meaning that the NFT holder can use the TBA to initiate on-chain operations.

ERC-6551 significantly enhances the functionality of ERC-721 NFTs, making them more practical than ever before.

Using TBA, you can store any cryptographic asset in the NFT 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 with dApps.

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This means that your NFT is no longer just a static JPEG with speculative value, but will become more valuable based on the assets stored and past interactions.

Below we explore the 4 main use cases of TBA, each of which lays the foundation for innovation in the NFT space:

1. Composability

You can bundle your related assets (NFTs, tokens, identity features, etc.) into one NFT, making it easier to manage and transfer your assets across different platforms. If you sell/transfer the NFT, all the assets inside it will also be transferred.

Example a: Before TBA, all forms of NFT assets in Web3 games were stored as separate tokens in your wallet. With TBA, you can have your NFT game character have an “inventory” and accumulate assets directly into the character’s TBA through gameplay. If you want to give up the game, you can sell the character NFT and the equipment stored in the TBA with one click – this will bring a better user experience to Web3 games, which is exactly what we need now.

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

2. On-Chain Identity

Benny Giang, co-author of ERC-6551, has said “What if NFTs had their own wallet? Inspired by Soul-Bound Tokens (SBT), our idea is the opposite, we call it Token-Bound Account (TBA) – instead of binding your NFT to your wallet, you bind your wallet to your NFT.”

Currently, we typically use our own wallet to represent our on-chain identity. With TBA, each of your NFTs has its own identity. In other words, your NFTs can interact with dApps independently without relying on the wallet that holds them.

This means that one of your NFTs could become your on-chain identity, and it could demonstrate your credibility through successful TBA transaction records. This opens up new possibilities for loyalty programs based on an NFT’s past behavior, including Web3 game retroactive rewards for those who have completed certain tasks in the past or were early adopters.

Example a: An NFT marketplace can determine your reputation based on TBA transaction records for one of your NFTs, thus reducing counterparty risk in transactions.

Example b: A lending protocol can determine your reputation based on TBA transaction records for one of your NFTs, thus simplifying the lending process.

3. Source/Provenance/Transaction History

NFTs currently cannot provide detailed information such as source/provenance/transaction history, and buyers usually cannot obtain such information directly except for some basic information displayed on some NFT marketplaces. TBA solves this problem.

4. Dependency

NFTs currently cannot interact with other on-chain assets/platforms on their own, which limits their functionality. Your NFT is only a proof of ownership. But with TBA, this is no longer the case, which naturally makes NFTs more valuable and practical.

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

– Official website: https://tokenbound.org

– Connect wallet

– Select your NFT

– Deploy account

– After the transaction is completed, you can “use wallet” in the dashboard of the selected NFT (functionality coming soon).

In addition, if you are interested in ERC-6551, you can try the innovative project Stapleverse that has already implemented the standard. Users can hold role NFTs, and then bind the collected wearable item NFTs to the role NFTs. Therefore, the role NFTs have wearable item NFTs in the form of TBA, which means that a main NFT can nest an infinite number of sub NFTs.

In summary, adding TBA to NFTs will give them more use cases and greater flexibility. This standard is important, especially since many personal brands (y00ts, Beanz) have already been formed around top PFP projects.

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, which is designed to simplify the user wallet experience. Therefore, integrating TBA functionality for NFTs in the new wallet standard “smart account” is expected to accelerate the mass adoption of Web3.

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