9 future directions for NFTs: Innovations and standards in the NFT space
Non-Fungible Tokens (NFTs) have taken the digital world by storm, and they are only just getting started. With the rise of PFPs and game NFTs, the NFT market is expanding rapidly, and the potential use cases for NFTs are increasing. NFTs can represent anything from digital artwork, music and even physical assets. In this guide, we will explore the latest EIPs and propose nine future directions for NFTs.
One of the most exciting things about NFTs is their potential for flexible ownership and usage. The latest EIPs introduce concepts such as permission-enabled NFTs, which allow non-owners to access the benefits of a given NFT instance, and rentable NFTs with a valid duration field and user field in the ERC-721 contract. Additionally, shareable NFTs enable ownership to be fine-grained to each feature or function of the NFT, allowing for more flexible ownership and usage.
Another promising direction for NFTs is their potential to represent physical assets through the use of Digi-physical technology. EIPs such as EIP-7216 propose a new type of NFT called “Physical NFT,” which includes additional fields to capture physical attributes such as size, weight, and material of the physical asset. EIP-7217 also proposes a standard for QR codes to be included in NFT metadata, which can be scanned to verify the authenticity of the physical asset.
NFTs can also be used as social tokens, allowing communities to create and manage their economies. EIPs such as EIP-7215 propose a standard interface for social tokens to be represented as NFTs, allowing for easy integration with existing NFT infrastructure. Additionally, NFTs can be used as collateral in DeFi lending and yield farming protocols, with EIPs such as EIP-1633 introducing a standard interface for NFTs to be used as collateral in lending and borrowing protocols.
NFTs have come a long way since the creation of ERC-721 in 2018. With the recent explosion of PFPs and game NFTs, the NFT market has been expanding rapidly, leading to innovations and standardizations in the space. This guide summarizes the latest EIPs and proposes 9 future directions of NFTs.
Permission enabled NFTs
Permission-enabled NFTs allow for flexible ownership and usage of NFTs. EIP-4400 introduces a consumer role for NFTs, allowing non-owners to access the benefits of a given NFT instance. EIP-4907 proposes the concept of rentable NFTs with a valid duration field and user field in the ERC-721 contract. EIP-5023 introduces shareable NFTs, allowing ownership to be fine-grained to each feature or function of the NFT.
Relation enabled NFTs
Relation-enabled NFTs allow for bundling multiple NFTs to be owned by one, increasing the value and output of a collection of assets. EIP-5606 proposes multiverse NFTs, enabling a universal representation of related NFTs as a single asset across various platforms. EIP-6059 furthers the concept of bundled NFTs to be parent-governed nestable NFTs, with a relationship layer within the bundled NFT. EIP-6150 proposes hierarchical NFTs to resemble the file system in the operating system. EIP-6220 creates composable NFTs with equippable parts with fixed and customizable slots.
NFT as vesting utilities
Vesting NFTs offer a fair way to distribute stakes, allowing for gradual ownership claims in ERC-721. EIP-5725 creates an interface for transferable vesting NFTs, releasing the underlying tokens over time. EIP-5753 proposes a lockable extension for NFTs to disable token transfers during the lock-up period, enabling safer NFT collateralization in Defi lending or yield farming.
NFT as utility tokens
NFTs have been used as utilities to support gaming applications and club memberships, with unlimited potential for utility values to inherit users’ behaviors and traits from web2. EIP-5050 suggests that NFTs should have defined ways to interact with each other through action messaging and discovery protocols. EIP-5643 proposes subscription NFTs to embed expiration and recurring payment schemes for an active subscription.
NFT as identity tokens
Soul-bound tokens and naming services represent identity on-chain, relying on NFTs to carry identity and represent unique characteristics and possessions. EIP-5192 proposes the minimal interface for soulbinding NFTs, creating a standardization of SBT in wallet implementation and transfer functionality.
NFT for richer content
Richer content can completely upgrade the experience of NFTs, with the ability to hold richer content by itself. EIP-4955 adds a new field to NFT metadata to let vendors store application-specific JSON. EIP-5489 proposes a hyperlink extension to add clickable features to all NFTs, routing users to designated web pages. EIP-5773 specifies an interface for multi-asset tokens with context-dependent asset type, embedding various assets into NFTs for a more seamless user experience.
NFT for physical assets
Digi-physical combines digital and physical experiences and assets. NFT is a promising carrier of the digital-physical relationship of products and services. EIP-4519 proposes an interface to represent physical assets through NFTs, allowing for ownership verification, transfer of ownership, and traceability of physical assets. EIP-7216 introduces a new type of NFT called “Physical NFT” that includes additional fields to capture physical attributes such as size, weight, and material of the physical asset. EIP-7217 proposes a standard for QR codes to be included in NFT metadata, which can be scanned to verify the authenticity of the physical asset.
NFT for social tokens
Social tokens allow communities to create and manage their own economies, with NFTs being used as social tokens to represent membership or access rights. EIP-7215 proposes a standard interface for social tokens to be represented as NFTs, allowing for easy integration with existing NFT infrastructure. EIP-732 proposes a registry of social token contracts to improve interoperability between different social token platforms.
NFT for Decentralized Finance (DeFi)
NFTs are starting to be used as collateral in DeFi lending and yield farming protocols. EIP-998 proposes a new type of NFT called “Wrapped NFT” that can be used as collateral in DeFi protocols. EIP-1633 introduces a standard interface for NFTs to be used as collateral in lending and borrowing protocols, allowing for the creation of NFT-backed stablecoins. EIP-2665 proposes a new NFT standard called “Collateral NFT” that includes built-in collateralization functions, making it easier to use NFTs as collateral in DeFi protocols.
Bringing it together
The NFT space is constantly evolving, with new EIPs and proposals being created to expand the potential use cases of NFTs. The nine future directions of NFTs discussed in this guide offer a glimpse into the exciting possibilities of NFTs in the coming years. As the NFT market continues to mature, we can expect to see more innovation and standardization in the space, leading to greater adoption and integration of NFTs in various industries and applications.
