Guide to ERC 6551: Token bound accounts

Any token created on Ethereum must follow a certain set of rules and guidelines. What set of rules and guidelines a project decides to follow can vary depending on what ERC (Ethereum Request for Comment) standard they choose to go with. The NFT trend became mainstream when the ERC 721 standard came about back in 2017. ERC 721 is what adds the “non-fungible” aspect to NFTs. However, there haven’t been a lot of developments since then and the way we perceive or use NFTs stays the same.

Introducing The ERC 6551, the standard that is now set to change that.

It allows your NFT to be more than just an eye candy. In simple terms, ERC 6551 turns your NFT into a smart contract wallet, known as a token-bound account, that can own assets and perform on-chain actions like making transactions and participating in games. The standard went live on the Ethereum Mainnet on May 7, 2023, and has been the building block of a few projects like Stapleverse and Sapienz.

The sole purpose behind it is to make NFTs more convenient to handle and enable them to interact with other on-chain assets or contracts independently while retaining all its ERC 721 components.

Token bound accounts:

• work with all existing NFTs.
• can hold ERC 20, 721, or any other token.
• are compatible with existing platforms like Metamask and Opensea.
• are fully decentralized.

Use cases

1. Bundle, configure, and disassemble your NFTs.

Take in-game items for example. With a token-bound account, you can bundle up and trade all your items together. A sniper and a scope that are always used together won’t have to be yielded individually. Your playable avatar would be able to pick and store new items with itself, take off its hat and shoes as separate items, and much more — just like we do IRL.

2. Interact with on-chain assets and dApps independently.

Again, imagine having to collect some sort of reward of swap money as your NFT avatar. With ERC 6551, you won’t have to use a separate wallet for it since the NFT itself can perform such trades.

3. Know what your NFT has been doing all along.

Since they’re just smart contracts, they can also hold a record of past transactions like any standard smart contract. You could see when your favorite sword was created, who owned it before you if there are some additional items it holds, and how many times it’s been traded. This information can prove helpful in determining the rarity of the NFTs as well.

Collectively, all these use cases help your NFTs to truly become your digital persona rather than just being a digital collectible.

Though it’s not all fun and games (yet).

Firstly, note that only ERC 721 and its wrapped versions are compatible with ERC 6551. Then, it surely upgrades your NFTs to a whole new level but there’s no additional layer of security. Being more valuable and lucrative, they’re more prone to get hacked and stolen. There are also some issues regarding the ownership cycle that are yet to be addressed.

And, of course, not all projects are willing to accept and implement it yet.

To sum up, the ERC 6551 standard levels up your NFTs to make them more interactive, dynamic, and seamless. It can be a game changer (literally!) and force us to think beyond the “digital collectible” tag of NFTs. The possibilities it opens up for NFT and the web3 space as a whole are immense.