What is ERC-6551?
ERC-6551 adds smart contract functionalities to NFTs, making them capable of owning assets, interacting with applications directly, holding tokens and working as an on-chain identity.
ERC-6551, a token standard introduced on the Ethereum mainnet on May 7, 2023, aims to enhance the functionality of NFTs by adding smart contract capabilities. Implementation of this token standard assigns an Ethereum account to the NFT, setting up a token-bound account (TBA). Thanks to ERC-6551, nonfungible token (NFT) are able to own assets and interact with applications directly.
With TBAs, developers can build a smart contract wallet for each ERC-721 token, which can facilitate transactions, interact with other decentralized applications (DApps), function as an on-chain identity, or hold tokens. As TBAs are backward-compatible with the ERC-721 standard, ERC-721 tokens can enact the ERC-6551 standard without any major modifications.
How is ERC-6551 an improvement on ERC-721?
NFTs integrated with ERC-6551 enhance the capabilities of ERC-721 NFTs across several parameters, such as metadata flexibility, trackable history, composability and on-chain interactivity.
The purpose of the ERC-721 token standard was to implement a minimum standard interface for NFTs. However, NFTs created under ERC-721 cannot be associated with other on-chain assets, making it difficult to create digital assets representing several real-world assets.
The standard wasn’t compatible with DApps and smart contracts across the Ethereum ecosystem. The
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Author: Dilip Kumar Patairya
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