The unified on-chain protocol standard can effectively reduce the threshold and difficulty of NFT asset issuance, and solve the problems of asset security, authenticity, liquidity and decentralization in the NFT market.
People usually divide NFT projects into trading platforms, games, art, collectibles, virtual worlds, etc. These are actually NFT applications seen by top-level users or Dapps built on top of the protocol layer. If analyzed from a more global perspective, in addition to Dapps, there are also the underlying infrastructure and intermediate network protocols that serve NFTs. For example, the NFT trading platform is an application based on NFT standards such as ERC721 or ERC1155 built on the underlying foundation (Ethereum, WAX, Polygon). The underlying infrastructure provides performance and interoperability for trading platforms, and the ERC standard limits the usage scenarios of top-level applications.
In terms of functional attributes, the NFT industry chain can be divided into three layers from top to bottom:
One is: the application layer, what users see and use on a daily basis;
The second is: the protocol layer, the technology stack between the NFT application layer and the computing layer;
The third is: the settlement layer, which is responsible for the storage and recording of the value of NFTs.
The protocol layer is the key module between the settlement layer and the application layer. The unified on-chain protocol standard can effectively reduce the threshold and difficulty of NFT asset issuance, and solve the problems of asset security, authenticity, liquidity and decentralization in the NFT market. The most widely used ones are the ERC721 protocol and the ERC1155 protocol.
This article will take stock of the existing NFT protocols in turn, including ERC721, ERC1155, ERC998, NFT leasing protocol, EIP2981, as well as liquidity protocols and cross-chain protocols.
NFT standard protocol
ERC721 – Metadata structure for NFT tokens on Ethereum. The first standard to represent NFT assets, created by Dapper Labs Dieter Shirley and brought to market by CryptoKitties
ERC1155 – Manage multiple types of NFTs in a single smart contract
ERC998 – Nestable NFT, that is, the binding relationship of multiple NFTs
EIP2981 – NFT Royalties
ERC1523 – NFT as an insurance policy
EIP1948 – NFTs with Changeable Information
ERC875 – Batch Transfer NFT
In addition to the mainstream ERC-721 and ERC-1155, some NFT underlying public chains have begun to develop NFT on-chain protocols, such as DNFT, a decentralized NFT protocol that supports cross-chain, and supports the development of NFT asset-related creation, transaction, and analysis , derivatives, data and other products; Vera, a Polkadot ecosystem NFT lending and liquidity protocol. These belong to the general protocol layer of NFT, which can enable various application scenarios of NFT, such as finance, data, cross-chain, privacy and other tracks. Other NFT general protocol layers can be roughly divided into liquidity protocols and cross-chain protocols.
Different NFT Protocols
ERC721 is the first formal and widely adopted NFT standard, which defines a set of code rules for recording NFT-related information on the Ethereum blockchain. Although ERC-721 is not mandatory, it is widely accepted as a standard for NFT projects.
The full name of ERC-721 is Ethereum Request for Comment-721. ERC-721 is derived from Ethereum Improvement Proposal (EIP) No. 721. After an EIP is reviewed and finalized, it becomes an ERC.
History of ERC721
EIP-721 was first proposed in September 2017 by Dieter Shirley. Later Shirley co-developed CryptoKitties based on the original version of EIP-721 in late 2017, which caused a stir in the Ethereum community at the time. On January 24, 2018, EIP-721 was officially submitted by William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs. EIP-721 was accepted as the final version and officially became ERC-721 on June 21, 2018.
Contents of ERC721
ERC-721 assigns two identifiers to any NFT, the contract address and the token ID, the combination of which gives the NFT a unique identity. For example, the contract address of Bored Ape Yacht Club and the token ID of #3749.
ERC-721 is a single token standard, which means there are separate smart contracts for each asset, even the same gamefi ingame asset. This standard defines “Name”, “Symbol”, “Total Supply”, “Balance”, “Owner”, “Approval”, “Take Ownership”, “Transfer”, “Token Owner Index” and “Token” Metadata” and other functions, but also two events used in the market: “transfer” and “approval”.
Disadvantages of ERC721
Not compatible with ERC20
Only works on Ethereum
ERC1155 is a multi-token standard extended from ERC721, which supports the issuance of many tokens from the same smart contract, which makes creation and transfer more efficient.
History of ERC1155
ERC1155 was created by Enjin CTO Witek Radomski and allows the issuance of one or more ERC1155 items in a single transaction.
Advantages of ERC1155
Efficiency of transfers and exchanges
Compatible with cross-chain
Save Gas when minting new tokens
Disadvantages of ERC1155
Difficulty tracking ownership
ERC 998 — Composable Tokens
In terms of composable tokens, it can represent a group of ERC20 tokens or ERC721 tokens or a combination of both, which can be traded in a single transaction. To implement ERC998, the sub-token ERC721 or ERC20 needs to be added to ERC998 first. Child tokens can only be transferred from the contract if the sender also has the parent token ID. ERC998 realizes the one-time transfer of all levels and ownership.
Use cases: In-game assets, e.g. properties in the Metaverse, racing cars in REVV.
The value of an ERC998 token is equal to the accumulation of these items in an entity.
Lease Agreement (EIP4907/2615/5006)
EIP2615 and EIP4907, split NFT ownership and usage rights for fund providers and NFT borrowers through smart contracts.
EIP2615 – NFT Mortgage and Lease
EIP2615 is commonly used in NFT rental agreements. The protocol separates NFT ownership and usage rights, allowing users to rent their own NFTs, or to mortgage NFTs. In order to implement trustless leasing of NFTs with ERC721, it is necessary to deposit funds as collateral. This is to prevent malicious actions by borrowers, as once ownership is transferred, it is impossible to get it back. With this lease agreement, the security deposit is no longer required because the lease agreement itself supports the lease and tenant functions. Additionally, title escrow is not required when taking out a mortgage. This is to prevent the potential default risk of a mortgage loan. However, using ERC721 as collateral collateral damages the utility of NFTs. Since most NFT applications provide services for NFT holders, NFTs are basically not available under escrow. With ERC2615, it is possible to use NFTs while staking them, which makes NFTs more efficient.
Leasing of NFTs
1. Service separation by account
Off-chain account service – CEX model
Project: Axie Scholar Program
Disadvantages: Complexity due to different functions of NFTs, rights distribution issues, integration and scalability issues for developers, need for a separate front end, trust in account services, not open and interoperable
On-chain account service – multi-signature wallet
Project: Pine, 99 starz
Advantage: solves the problem of trust
Disadvantages: Requires front-end integration from Dapp, does not provide keys and cannot provide signatures, integration with other Dapps (such as opensea), Gas cost and security
2. Separate by project
Dual role –EIP4907
Projects: ENS (controller), Decentraland (Operatpr), Double protocol
Pros: Permissionless interoperability
Disadvantages: Heavy BD, requires GameFi or NFT project party to upgrade smart contracts
Metadata extension — developing custom smart contracts
Projects: reNFT, Rentable
Disadvantages: The project trusts user information, development is difficult, it is difficult to find the information you want
Wrapped dual role
Project: Cyan, Double, BendDAO
Cons: heavy BD and scalability
EIP2981 is the standard for handling ERC721 royalty payments, which allows for the standardization of royalty payments across gaming platforms, as each market has its own royalty, and none of them work on a secondary market. EIP2981 unifies royalties so they are set and provides a function that returns the amount to the creator address.
Types of royalties supported by EIP2981
- Atypical, i.e. fixed % royalties. For example, 10% is returned to the creator
- Decay royalties, which can be time-based ownership or any attribute
- Dynamic royalties, i.e. can change over time or the amount of sales
Release the application scenarios of NFT providing liquidity in finance. By staking NFTs to generate easy-to-circulate ERC20 tokens to improve the liquidity of NFTs. For example, Unicly, NFT holders create their own uTokens on the Unicly protocol. This protocol generally mints a corresponding number of ERC20 tokens after a set of NFTs is mortgaged and fragmented, and then participates in liquidity mining and trading.
Most of the current NFTs are based on the ERC721 standard, and the scene is limited to Ethereum. Other public chains of the settlement layer also need NFT transactions, such as WAX, Conflux, etc. The cross-chain protocol of NFT can provide interoperability of NFTs between the main chain and other main chains. For example, DNFT, DNFT is a cross-chain decentralized NFT protocol based on Polkadot Substrate, which provides the underlying cross-chain infrastructure services for various NFTs.
Share to WeChat
Image source: A&T Capital If there is any infringement, please contact the author to delete it.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-else-does-the-nft-protocol-have-besides-erc721-an-inventory-of-existing-nft-protocols-in-one-article/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.