Ethereum News: the new ERC-6551 standard

The latest news for the Ethereum blockchain concerns the introduction of a new protocol standard for token issuance: the ERC-6551.

This new standard allows developers to improve the design of Non-Fungible Tokens and users to take advantage of hitherto unseen possibilities.

See all the details below.

Latest news for the Ethereum blockchain

The most relevant news regarding developments in the Ethereum network relates to the introduction of a new standard for the issuance of tokens, particularly non-fungible tokens (NFTs).

The Ethereum infrastructure, as is now known to the public, allows developers to create different types of cryptographic digital tokens, known as “tokens,” by relying on the distributed digital ledger that enjoys high security and an easy-to-use framework.

These tokens fall within certain standards, i.e., “rules” and characteristics that they must cover in order to transit efficiently within the network.

Existing standards include ERC-20, ERC-721, ERC-777, ERC-1155 and ERC-4626, of which the first two represent the most widely used cases and the ones we will take as examples here to introduce the newest standard namely ERC-6551.

ERC-20 trivially allows for the creation of fungible (interchangeable with each other) assets such as governance tokens and utility tokens, while ERC-721 is mainly used for the creation of NFTs, i.e., one-of-a-kind tokens with unique characteristics.

The problem with these two categories is that they are limiting and do not allow the performance of a number of actions, which are, on the other hand, possible and replicable on a large scale with the newly developed ERC-6551 standard.

The latter, generally speaking, improves the user experience by making it more dynamic and interactive and by adding more layers of ownership over all existing NFTs.

Then again, it was clear for months that the world of non-fungible tokens would evolve and experiment with new standards in the wake of their success in 2021, even though these are simply JPGs (or other formats) linked to the blockchain.

In the next section we explore the characteristics of ERC-6551 tokens in more detail.

Ethereum news: ERC-6551 standard will make the world of NFTs more dynamic

Following the latest news regarding the introduction of the ERC-6551 standard dedicated to non-functional tokens, Ethereum becomes even more fascinating and able to handle a large amount of requests from communities regarding more or less complex needs.

In this case, the main requirement was to make the NFT sector more dynamic by adding very interesting features.

First, ERC-6551 tokens function as real cryptocurrency wallets capable of holding assets, hence introducing for the first time in blockchain history the assumption that one asset can hold another asset within it.

Benny Giang, co-author of the governance proposal by which this standard was introduced, described this feature, known as the “token bound account” (TBA), quoting it this way in an interview:

“It could hold onto ETH, it could hold USDC, it could hold pepe coins, it could hold other NFTs.”

On a more technical front, ERC-6551s use an ERC-721 NFT-compatible permissionless registry, which serves as a directory for TBAs. The registry distributes a proxy contract for TBAs by inheriting the metadata of the original ERC-721 token.

The assets contained within them can be transferred to other TBAs through a function on the proxy contract.

In addition, this new standard makes it possible to sign messages and verify signatures on behalf of the token by interacting directly with other smart contracts on Ethereum’s various dApps.

This is a very important step for the Ethereum ecosystem, which from now on will be able to experiment with new ways to interact socially on the Web3.

In fact, another important “milestone” is introduced regarding the social governance property of NFTs, even giving the possibility to implement personalities and dynamic characteristics to these non-fungible tokens through the use of AI.

Again Giang’s words about this feature:

“So now that an NFT has its own account address, it could be a signer on a multisig, it could have its own ENS sub-domain. It could participate in voting on proposals.”

The NFT market on Ethereum

With the latest news regarding the introduction of the ERC-6551 standard, the NFT market on Ethereum could return to the hype levels seen during 2021 and 2022.

Over the past 30 days, Ethereum’s network has been the underlying infrastructure enabling NFT sales of $389 million, down 23% from the previous month.

In total, the blockchain generated $43.4 billion in sales, an incredible figure when compared to other competing networks such as Solana, Ronin, and Flow, which do not even come close to Ethereum’s volumes.

Nonetheless, since mid-2022 we have seen a significant downsizing of activities regarding the NFT sector on Ethereum.

This can be observed by looking at the trend graph of the number of NFT mints made on this network, which fell to multi-year lows in early 2023.

Notably, the average volume generated has also dropped dramatically from the golden periods we witnessed in 2021 and 2022.

This is probably due to the fact that at a time of market uncertainty, investors prefer to stay away from the more speculative markets such as NFTs and focus on sectors that are less profitable but have less inherent volatility.

We hope that with the advent of ERC-6551, the market for non-functional tokens on Ethereum can shine again, reaching, with or without wash-trading-generated volumes, at least the $1 billion mark in sales in a month.

If this does not happen, it would still not be a problem for Ethereum, which will continue undaunted to develop more fun and useful experiential solutions for its stakeholders. 

In fact, with or without volumes, technological progress cannot be stopped.