ERC-6551 Token Standard Proposes Redefining NFT Ownership

Throughout the past few months, the NFT community has been embracing the innovative new token standard ‘ERC-6551’, otherwise known as the ‘Backpack Wallet’. This cutting-edge protocol opens many new possibilities across NFT-focused domains on Ethereum, such as the metaverse, gaming and DAOs.

Quick Takes:

ERC-6551 token revolutionizes NFTs by empowering the tokens to autonomously manage its own digital assets.
Despite not yet being an official protocol, the token standard is gaining adoption throughout numerous NFT projects.
The Backpack Wallet presents transformative potential in the NFTs realm, poised to enrich digital asset ownership.

Enhancing NFT User Experiences

User experience complications and custody concerns have been significant hurdles to entry for Web3 novices. To address this, developers have been upgrading the infrastructure, especially within the Ethereum blockchain, where numerous NFTs are located.

The Ethereum Improvement Proposal (EIP), ERC-6551, introduced by developers from the NFT creator platform Manifold and Web3 venture studio Future Primitive, has created a mechanism for NFTs to manage their own digital assets. Consequently, NFTs can now function as self-contained wallets to directly receive airdrops and hold derivative collectibles.

Regardless of not yet being an official token standard, the Backpack Wallet is already garnering adoption and traction throughout various NFT projects and protocols for enhancement opportunities.

Unlocking New Possibilities On-Chain

To fully grasp the concept of a Backpack Wallet, imagine a PFP NFT that implements ERC-6551. The NFT can now hold a native cryptocurrency and have custody of derivative NFTs.

ERC-6551 sparks numerous exciting use cases across differing aspects of the Web3 ecosystem. The token standard empowers avatars to hold in-game cryptocurrencies and collectibles when delving into gaming. In contrast, DAOs can grant additional NFTs to members as rewards for their participation and contributions.

Moreover, decentralized social networks can empower users to signify their identities through wallet-bound NFTs. Co-creation of NFT projects, particularly in the NFT fashion realm, becomes more accessible — creators can use NFTs to design digital garments and beyond.

Furthermore, Backpack has implications for NFT loyalty programs, to effectively structure engagement models. In this context, NFT staking services can also be promoted, allowing holders to earn passive income via their tokens.

There are also early speculations that ERC-6551 can provide the means for non-transferrable Soulbound NFTs to be sold, removing its status for financial gain.

The new $40k Louis Vuitton NFT is a soulbound token, meaning it can’t be transferred or sold.

If for whatever reason you want to buy it, best to do it via a ERC-6551 wallet, which is a “wallet inside of an NFT”

That way, you can sell the whole wallet later if you want. https://t.co/DiZEyeXBth

— 6457.eth (@JKrantz) June 8, 2023

The Future of ERC-6551

Despite ERC-6551 gaining significant traction, the token standard remains a proposal and is yet to be official. Concerns are being raised, including the structure causing friction during digital asset transfers.

Nonetheless, the potential for this new token standard can enhance NFT ownership and interaction remains promising.

As NFT projects continue to test and explore the use cases for token-bound accounts, the true potential of ERC-6551 will likely come to light.

In a nutshell, ERC-6551’s fundamental purpose lies in empowering NFTs with actual digital ownership, whereby a digital asset can possess its own on-chain assets, bringing more immersive and natural experiences to the NFT world.

Prepare for new horizons of value creation to unlock, redefining the concept of digital ownership on-chain.

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