The new and improved NFT Token Standard
Before ERC-6551 was recognized as the new NFT token standard, it was ERC-721 that had its limitations. Specifically, ERC-721 was not compatible with smart contracts and decentralized applications across the Ethereum blockchain. This created many roadblocks for the NFT concept to develop among people. However, after the co-authorization of ERC-6551 by Benny Giang, a recognized member of Dapper Labs, it soon caught on with NFT enthusiasts as it had the power to take the NFT token standard to a whole new level. ERC-6551 easily collaborated with smart contracts while introducing a new set of use cases to the Ethereum blockchain.
How does ERC-6551 work?
If you had been a previous user of ERC-721 NFTs, you may be aware of their limited reach. You can only transfer ERC-721 NFTs from one place to another without including other NFTs or tokens in them. Also, ERC-721 NFTs were not familiar with smart contracts, which limited their operational inputs.
However, such problems were soon eliminated when ERC-6551 used a permissionless registry compatible with ERC-721. This registry is a smart contract that acts as a factory and directory for token-bound accounts (TBA). From now on, anyone can generate a TBA on the ERC-721 token by using a function in the registry and contributing a small fee.
After this, the registry distributes an authorization contract, which acts as the TBA for these tokens. Alongside the authorization contract, the EIP-1271 standard is implemented for signing messages and verifying token signatures. Thus, TBA finally begins to interact with smart contracts in the Ethereum blockchain, decentralized exchanges, lending platforms, etc.
It even gets the functionality to hold other NFT assets within itself to transfer them to other sources as and when required.
Use cases of ERC-6551
Interlocking capability is one of the best use cases that ERC-6551 has brought into the NFT space. This functionality allows other NFTs and tokens to be held next to each other in one profile, which was previously not possible. Therefore, while you sell or transfer your ERC-6551, all the other assets in it can also be moved.
All the NFTs in your ERC-6551 NFT token standard will have a unique identity that allows you to easily recognize them. Thus, they can interact with dApps independently without relying on their wallet to hold them. This feature will increase the value of your NFTs as different platforms want to use it for their needs.
Previously, the ERC-721 NFT token standard did not allow users to get a detailed look at transaction history. However, this soon changed when ERC-6551 enabled users to drill down into an asset’s transaction history and POW. NFTs are known to hide the previous owner’s transaction records. But by using the ERC-6551 NFT token standard, you can see these transactions in detail.
ERC-6551 is a breakthrough innovation that will take ERC-721 applications to new heights. Moreover, this innovative development will pave the way for a number of new ventures in the NFT space, thanks to its improved operations.