The proposed ERC 6551 token standard for non-fungible tokens (NFTs) has garnered attention among crypto enthusiasts, as it introduces the concept of NFTs owning other tokens, potentially revolutionizing the NFT and metaverse landscape. In a recent episode of the Unchained Podcast with Laura Shin, Benny Giang, and Jayden Windle, two of the authors behind the Ethereum Improvement Proposal (EIP) for ERC 6551, discussed how this new standard would enable NFTs to have their own ‘wallets.’
The ERC 6551 token standard proposal, which was introduced in February, aims to create a system that assigns a smart contract account to every ERC-721 token. This would enable these tokens to own assets and interact with applications without requiring any changes to existing ERC-721 smart contracts or infrastructure. The proposed system consists of two main components: a permissionless registry for deploying token-bound accounts and a standard implementation interface.
The registry will deploy a unique smart contract account for each ERC-721 token, allowing the token to interact with the blockchain, maintain transaction history, and possess on-chain assets. The owner of the ERC-721 token will have control over the token-bound account, enabling them to initiate on-chain actions on behalf of their token.
The proposal is designed to maintain maximum backward compatibility with existing non-fungible token contracts. It also utilizes EIP-155 chain IDs to uniquely identify ERC-721 tokens, providing optional support for multi-chain token-bound accounts. During the initial developer discussions surrounding the proposal, the focus was on potential security implications, such as the risk of duplicating registries and the need for trust verification. Suggestions were made to establish a registry for broad registration of account implementations and to designate the proposal’s registry as canonical due to its permissionless nature. The proposal’s potential implications in reducing airdrop costs were also highlighted, alongside discussions raising concerns about security risks associated with adding metadata to the NFT registry. More recently, with over 160 comments from Ethereum developers, concerns were expressed regarding the proposal’s “Draft” status, which could subject it to significant changes. There were also discussions about finalizing the naming of functions and the potential impact on those implementing the EIP.
As Benny Giang explained on the Unchained Podcast, the idea behind ERC 6551 originated from a simple question: “What if we had a project that was an NFT project with a character, like a Profile Picture (PFP) project, and we wanted to change the clothing or aesthetics of this PFP character?” This question led to the inception of the ERC 6551 standard, enabling NFTs to own other tokens and have their own ‘wallets.’ Giang further added, “Do you pursue the off-chain way where you build a database, have centralization, and render the NFT? Or do you go the on-chain way, where every item an NFT can be applicable on-chain as a transaction? Through this journey, we realized there was a potential solution.”
Giang and Windle also discussed the advantages and disadvantages of adopting an on-chain or off-chain method for applying every item an NFT could own as a transaction. They concluded that the ERC 6551 standard presented a potential solution to the limitations faced by previous attempts to standardize NFTs owning assets, such as the need for custom logic in smart contracts. The ERC 6551 standard overcomes these limitations, granting NFTs the same rights as Ethereum users, allowing them to own assets and take action.
The podcast guests also emphasized that while ERC 721, ERC 1155, and soul-bound tokens provide ways to own items on Ethereum,
