Beyond 721 and 1155: Re-examining the Design Space of NFTs

Rethinking NFT Design: Exploring Beyond 721 and 1155

Original title: Beyond 721 & 1155: Revisiting The NFT Design Space

Original author: Natalie Mullins

Original source: volt.capital

Translated by: MarsBit, MK

Explore the latest innovations in non-fungible token (NFT) standards, as well as the practicality and metadata infrastructure.

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In a bull market, people often use Google’s search trends for the term “NFT” as a proxy indicator of its popularity and acceptance. But ironically, it may be when the term fades entirely from our lexicon that true mass adoption signals are achieved. When the applications of NFTs are so widespread and ubiquitous that the term itself is no longer useful because it can refer to anything, we know that substantial progress has been made.

In bear markets, the “practicality” of NFTs becomes a popular subject of reflection, with many complaining that non-speculative use cases and applications remain scarce despite six years having passed since the ERC-721 standard was first proposed on Ethereum’s Github.

While these debates are important, they often get stuck in endless loops, ignoring the big picture. This article aims to revisit the fundamentals of NFT practicality and highlight innovations that expand NFT capabilities to create richer user experiences.

Global Perspective

Just as governments can freeze your bank account, confiscate your funds, and even block your ability to use (legal) banking systems, centralized content platforms and data monopolists also have the power to take action against you in the digital realm. This not only has serious implications for the future of online censorship resistance, but also brings about secondary and tertiary effects such as highly anti-competitive market dynamics that stifle overall innovation, and raises new questions about data privacy (and its monetization), particularly against the backdrop of increasing demand for valuable AI training data. This is the big picture we need to pay attention to.

So…why has the primary use case for NFTs been around (expensive) art and collectibles?

More simulation of real use cases of new technologies usually appear first, as people need time to experiment and understand them to imagine truly novel possibilities. Another major reason for the slow practicality and application development of NFTs is that scalability challenges with blockchain over the past few years have actually limited the practicality of NFTs. For example, consider the new ERC-6551 standard, which allows any ERC-721 token to have a smart contract account – adding functionality often comes with additional costs. As long as creating, distributing, and interacting with NFTs remains too expensive for most people, low-cost and/or “non-speculative” applications of NFTs will not be economically viable.

However, this situation is beginning to change, as massive industry-wide investments in scalability are finally paying off. In the Ethereum ecosystem, L2 is leading the charge, while Solana is doubling down on its overall architecture and token standard innovation.

Expanding NFT Practicality: New Token Standards

(Note: these standards are not necessarily exclusive)

NFTs as Applications – xNFTs

xNFTs (or “executable” NFTs) are a Solana-native non-fungible token standard built in conjunction with the BackBlockingck wallet, which acts as the operating system and key management layer for interacting with xNFT-based applications. xNFTs can be used to build collectibles (like the Mad Lads series of personal image PFPs) or applications – however, because they represent the right to execute certain code, developers can use xNFTs to build more expressive experiences.

Staking your Mad Lads xNFT can accrue reward points tied to the NFT itself.

xNFT App Store

Perhaps most uniquely, xNFT applications are similar to on-chain software licenses – this makes it easy for developers to retain ownership of their code, enforce how many times their xNFT app is installed and by whom, set installation costs, and create and track upgrades and user interactions.

The BackBlockingck team recently also released a new feature they call Soul Abstraction, which not only enables NFT-Escrow-like functionality for xNFTs, but also allows developers to build additional functionality and/or airdrop rewards for xNFTs and their holders without requiring permission or technical support from the BackBlockingck team. It’s like an open iOS.

Learn more: click here to watch a developer tutorial on developing xNFT.

Scalable NFT – Compressed NFT

Compressed NFT (cNFT) is achieved by state compression technology, which is an innovation developed by a group of engineers from Solana Labs, Solana Foundation, and Metaplex. The idea came from a conversation about what it takes to bring applications like Instagram to the chain, and its design goal is to make “the marginal storage cost per unit as close to zero as possible.”

Simply put, state compression stores the Merkle root of NFT data on the chain, while keeping the actual data itself off-chain. Security is maintained by the fact that even if off-chain data is tampered with, its Merkle root will be different from the Merkle root stored on-chain. (Metaplex’s Bubblegum contract can be used to verify the correctness of NFT data.)

You may wonder if a 1000x cost reduction is really necessary – but it is worth considering because NFTs need to reach a scale to truly become popular. “Everything can be tokenized” has become a meme to some extent, but cNFTs are making it economically feasible to put internet data on-chain and transform it into “persistent, sovereign digital objects.”

This is also why continuing to work on scalability to reduce minting and issuance costs is so important. L2 solutions such as Arbitrum and Optimism have already made impressive progress in reducing transaction costs, lowering costs by about 10x compared to L1. These improvements are by no means trivial, but often the devil is in the details. We know that even fees of $0.10 – $0.50 can be too much for many use cases based on large-scale applications like Instagram, and extreme improvements in cost are actually necessary to unlock the next level of “practicality” and accessibility. It is also worth noting that L2 is still relatively new and may take longer to arrive, but we will highlight some early signs of L2 NFT innovation below.

Exciting examples of using cNFTs to enhance user experience:

DRiP

DRiP, brought to you by the team that previously created Solana SBlockingces, is building a crypto-native, creator-centric content distribution platform. By subscribing to their flagship channel, Showcase, you’ll receive DRiP team-curated freebies airdropped straight to your wallet every Wednesday. To get even more direct and proactive access to your favorite content, you can also subscribe to the growing number of creator channels, including Degen Poet, Degenerate Ape Academy, Vault Music, Floor, and more. Users can expect to receive a variety of collectibles in their cNFT airdrop packs, ranging from video games to music videos.

Large-scale NFTs

Dripping display

DRiP creator channel

With hundreds of thousands of subscribers, providing content to users at this scale would significantly increase costs without cNFTs. DRiP’s second season has already distributed over two million NFTs to subscribers, with over 500,000 in the last few days alone.

Dialect

Web3 messaging platform Dialect has also minted hundreds of thousands of cNFTs, which are used as tradable sticker emojis. Users can utilize Dialect’s smart messaging feature to buy and sell assets directly within the messaging interface, powered by Tensor.

Helium

As part of their migration from their own L1 to Solana, Helium is now using cNFTs to represent their nearly one million unique physical hotspots on-chain. Hotspot operators can claim NFTs when they log in to their hotspot-related wallets.

Metaplex

After their Mailchimp account was expectedly suspended, NFT infrastructure provider Metaplex turned to using cNFTs to send invitations to their new creator studio tool. Metaplex is now working with Underdog Protocol to develop a cheaper, more localized crypto alternative tool.

NFTs with superpowers – dynamic NFTs, private NFTs, NFT custody, NFT fusion

Dynamic NFTs

Dynamic NFTs have the superpower of updating metadata, especially metadata based on specific on-chain or off-chain events, which is a subtle but game-changing ability that makes dynamic NFTs more useful than their static counterparts in almost all cases. Additionally, as we’ll explore below, dynamic NFTs also highlight the urgent need for encrypted local databases and storage infrastructure, which makes the deployment and management process more seamless and standardized.

Private NFTs

One of the earliest examples includes the SNIP-721 standard on the Secret Network, which Quentin Tarantino used in 2021 to release an unpublished scene from “Pulp Fiction” as an NFT. Other solutions include utilizing access control with the Lit protocol and Arweave to enable permissioned access to encrypted metadata. The Vault Music music platform on Solana uses this solution to provide private NFTs to its users.

Quentin Tarantino’s private NFT for “Pulp Fiction”

Vault Music private NFT

NFT Custody and NFT Fusion

Another Solana-native standard, NFT Minter, is an extension of the Metaplex token metadata contract that allows any NFT to serve as a wallet and hold its own tokens. It makes two different types of custody accounts possible — tokens owned custody (TOE) managed by the NFT holder and creators owned custody (COE) managed by specific creators. This feature is also coming soon to the EVM ecosystem with ERC-6551 and the Future Primitive team.

On the other hand, NFT Fusion is a feature that extends NFT Escrow by allowing NFTs to be bundled together to create new NFTs and to change based on the assets they hold, etc.

Both of these standards are extremely powerful building blocks for creating immersive gaming experiences, such as token inventories and upgrades.

NFTs for Trust and AI-Generated Content Attribution — AIGC NFTs

EIP-7007 proposes an ERC-721 wrapper that includes functions for checking the validity of a combination of hints and proofs using zkML technology. The metadata schema will also provide structure for storing information about AIGC-NFTs, such as hints, content, ownership proofs, etc. In practice, creators of machine learning models can publish their models and accompanying ZKP verifiers to Ethereum, users can declare input hints, publish inference tasks, and ultimately receive outputs in the form of NFTs. The proposers of this EIP see it as a way to monetize smaller models.

The key is that as NFTs become containers for more and more content, assets, and experiences, a decentralized, web3-native database is needed that allows the metadata layer to be composable and rich in functionality. Ideally, this would mean that only a small amount of data is locked up in centralized walled gardens, and more importantly, data can be exchanged more granularly and permissionlessly between entities, without the need to rent-seeking intermediaries. Brands and creators could stop spending billions of dollars every year on Google Analytics and Facebook ads just to understand and reach their own fans and customers, while returning ownership and control to users.

One promising example is Tableland, a SQLite database solution built specifically for web3 development. You can think of Tableland as a layer between Filecoin storage and EVM smart contract logic that allows the database to be programmable directly from smart contracts. For example, developers could allow only the owners of specific NFTs or the results of certain on-chain events to change specific cells or rows. This is the direction we need to move in, though there is still a lot of work to be done in adapting to new token standards and ecosystems.

Read more: Click here to see Tableland’s curated list of databases and metadata solutions.

The demand for data will not slow down anytime soon, and finding a balance between extracting/controlling data and protecting digital property rights will only become more difficult as AI and the digital economy become the forefront of human life. NFTs may be our best chance.