ERC-6551: A new groundbreaking standard for NFTs
ERC-6551: A new groundbreaking standard for NFTs.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
Here's how it works and the impact on your experience as an NFT holder.
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ERC-6551 is a new standard that allows an NFT to have its own wallet. In other words, The NFT itself acts as a wallet with its own wallet address.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
These wallets are called "Token Bound Accounts", aka TBA.
Let's illustrate this and see what are the advantages.
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Currently, you have a wallet that stores your NFTs – Metamask. With TBAs, you can store any asset in any NFT you own.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
Ex: You can store ETH, traits, or even a Degod in your Azuki TBA.
"Seems like another fancy addition".
Hear me out degens, let's see why that matters.
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Put simply, TBAs allow you to have hyper-personalized/new "utilities" and interactions with dApps/platforms.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
Your NFT won't be a static JPEG whose value is derived from speculation.
It will become more valuable depending on its stored assets and past interactions.
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Still confused?
— Zak³⚱️ (@ZakaiMill) May 15, 2023
Let's see 4 major use cases below.
Each one of these use cases leaves room for innovation and represents a first step towards simplifying and improving NFTs.
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1. Composability
— Zak³⚱️ (@ZakaiMill) May 15, 2023
You can bundle your NFT with its related assets (NFTs, tokens, traits…) into one profile making it easier to manage and transfer your assets across different platforms.
If you sell/transfer the NFT, every asset in it will be transferred as well.
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Example:
— Zak³⚱️ (@ZakaiMill) May 15, 2023
Before TBAs, all assets (NFTs) collected within a game would sit as separate tokens in your wallet.
Now, you can have "inventories" allowing game-related assets to be transferred into your character's wallet — better UX/UI which is what we need.
(7/15)
2. Fully on-chain identities
— Zak³⚱️ (@ZakaiMill) May 15, 2023
Currently, your wallet represented your digital identity.
With TBAs, each of your NFTs has its own identity.
In other words, your NFT can interact with dApps independently, without having to rely on the wallet that holds it.
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This means your NFT could be associated with your on-chain identity which could indicate your trustworthiness or history of successful transactions.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
This opens up new possibilities – loyalty programs/in-game rewards based on an NFT's past behavior to incentivize users.
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This could have an impact on the value of YOUR NFT.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
Ex:
Blend could use your DeGod's (on-chain) identity and reputation to determine your creditworthiness, reducing counterparty risks.
This can also reduce the risk of predatory loans often mentioned by @waleswoosh.
(10/15)
3. Provenance
— Zak³⚱️ (@ZakaiMill) May 15, 2023
NFTs (right now) don't provide a complete picture of the asset’s transaction history or utility beyond the proof-of-ownership.
If you sold your DeGod OTC (not on a marketplace), you usually don't have much info.
TBA solves this problem.
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4. Dependancy
— Zak³⚱️ (@ZakaiMill) May 15, 2023
NFTs are unable to interact by themselves with other on-chain assets/platforms which limits their functionality.
Your NFT is simply a certificate of ownership. Nothing more.
Not anymore with TBAs which naturally makes NFTs more valuable and useful.
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Basically, you're getting more insightful and specific information about what the NFT has done in the past.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
One project that already implemented this standard is STAPLEVERSE.
I recommend you check it out to see the first applications of TBAs.
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→ My thoughts
— Zak³⚱️ (@ZakaiMill) May 15, 2023
TBAs enable more sophisticated use cases and greater flexibility + better UX/UI.
This standard is also important since people already associate themselves with PFPs and form their personal brands around them (y00ts, Beanz, etc…).
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Using this standard in gaming is a no-brainer in my opinion and will lead to a much better UX/UI for Web2 gamers.
— Zak³⚱️ (@ZakaiMill) May 15, 2023
This goes hand in hand with EIP 4337 (basically a new standard for wallets).
And as we all know, wallet integration is the first step to mass adoption.
(15/15)
Poor custody has resulted in ~$120B in crypto losses
Poor custody has resulted in ~$120B in crypto losses.
— Onramp (@OnrampBitcoin) May 15, 2023
A thread on what to watch out for & how to keep your assets safe… pic.twitter.com/HW43VntoV0
DeFi (decentralized finance) is the broad category of crypto projects and protocols aiming to replicate traditional finance functions through exotic blockchain applications.
— Onramp (@OnrampBitcoin) May 15, 2023
But safety is lacking, with $5B in assets hacked in just 3 years of history pic.twitter.com/gOInJ1GzSu
Exchange hacks have been a consistent part of the digital asset landscape since the beginning.
— Onramp (@OnrampBitcoin) May 15, 2023
Mt. Gox was hacked in early 2014, losing ~800k bitcoin (then worth $480M, now would be worth ~$24B)
Crushing for customers with BTC stored on the exchange pic.twitter.com/NT8vtqOtMm
On top of hacks, there are malicious Ponzi schemes & frauds. Most are designed to entice people to deposit their #bitcoin in promise of greater returns.
— Onramp (@OnrampBitcoin) May 15, 2023
Investors lost $3.5B in Bitconnect, $3B in Plustoken, and $5.8B in Onetoken.
Recently, FTX defrauded users of $8B. pic.twitter.com/Ag0nk1ViIp
Bitcoin-only & self-custody in an onchain address safeguards against all of the above threats.
— Onramp (@OnrampBitcoin) May 15, 2023
But many take on self-custody before they're ready.
3M #bitcoin, currently worth ~$90B, have been lost forever.
Make sure you (and your loved ones) don't end up a cautionary tale pic.twitter.com/iyBfuU0Sak
Understand what group you're in:
— Onramp (@OnrampBitcoin) May 15, 2023
1. Don't care if it gets hacked (leave on exchange)
2. Ready to secure cryptographic materials (self-custody)
3. Want best-in-class security, not ready for self-custody yet
We built Onramp for group #3. pic.twitter.com/9F2SS63Djf
Crypto market liquidity has dried up significantly
1/ Crypto market liquidity has dried up significantly.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 15, 2023
These are the consequences of a lack of a crypto bank settlement layer (SI & Signature).
Market makers need a way to settle instantly with counterparties (eg, exchanges, HFs, other MMs).
?
2/ Market makers want to trade with as many counterparties as possible – bit not take on counterparty or settlement risk.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 15, 2023
In TradFi, the answer to this is well capitalized clearinghouse firms that are the seller to every buyer and buyer to every seller – DTCC, CME, ICE, etc.
3/ In crypto, this problem was (seemingly) solved with SEN and SigNet.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 15, 2023
A market maker can enjoy instant settlement. One benefit is not having to tie up capital on many exchanges, or waiting several days for funds to clear.
Lack of instant settlement hurts capital efficiency.
4/ The banks ‘intermediate’ these transactions. They confirm transactions and validate sufficient funds – just like the blockchain.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 15, 2023
(And there are no pesky gas fees or mempool queues and tx are reversible but leave that aside for now.)
5/ Some of you are thinking:
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 15, 2023
‘Why not use a secure high TPS blockchain to settle transactions instead of the banking settlement layer?
Prop trading firms are not directly regulated also…’
Here’s the rub…
6/ The market makers were able to rely on the banks for compliance with sanctions screening laws issued by OFAC (division of US Treasury).
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 15, 2023
Entities on this list are N. Korea, drug cartels, Russian oligarchs, Iran, etc.
W/o banks, market makers assume more ofnthis risk.
7/ The penalties of an OFAC violation is severe.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia) May 15, 2023
There are Ethereum engineers in jail for allegedly violating OFAC…
(Side Note: The heart of decentralization vs centralization will turn on this issue – stateless vs state in one sense…)
