They made their debut in the Ethereum market for the very first time.
This particular non-fungible token is based on the ERC-6551 token standard, which enhances certain features of the widely recognized ERC-721 standard. It has enjoyed substantial popularity on Polygon over the past few months.
Let’s explore how these unique NFTs function in conjunction and examine some statistics showcasing their expansion.
Here are all the specifics:
What is ERC-6551: The Token Standard Transforming the NFT and Crypto Wallet Landscape?
The Surge of Token-Bound Accounts on Polygon in Recent Months
What exactly is ERC-6551: the token standard that is bringing innovation to the NFT and cryptocurrency wallet arena?
ERC-6551 represents a token standard that empowers developers to elevate the design of NFTs to a level where they closely resemble crypto wallets.
This standard was introduced to the Ethereum community in February 2023 through an ‘improvement proposal’ known as EIP 6551, and practical experimentation began in May.
The primary objective was to overcome the limitations of the ERC-721 standard, injecting greater dynamism and interactivity into the non-fungible token market.
As previously mentioned, the standout feature of these tokens is their capacity to function as genuine cryptocurrency wallets, capable of storing assets. This marks a significant milestone in the history of cryptocurrency, as it’s the first instance of one token containing other tokens within it.
Benny Giang, one of the co-authors behind the ERC-6551 proposal, described this unique characteristic as “token bound accounts” (TBAs).
An equally intriguing attribute of this innovative category of NFTs is their ability to sign cryptographic messages and validate signatures, enabling direct interaction with decentralized application smart contracts. This introduces the concept of social governance to NFTs, allowing for the implementation of dynamic traits and personalities in these tokens, transcending their role as mere collectible images.
The potential applications and use cases stemming from this innovation are boundless, particularly within the realm of gaming, where AI could revolutionize the entire sector. With ERC-6551 and its bound account tokens, web3 game developers can explore new use cases such as inventories, equipment, and other interactions that demand increased resources.
This milestone represents a crucial step in the evolution of the Ethereum ecosystem, enabling experimentation with novel forms of social interaction within the blockchain realm.
In describing the potential of his creation, Benny Giang remarked:
At a deeper technical level, ERC-6551 employs an unlicensed registry compatible with ERC-721 NFTs, which functions as a catalog for Token Bound Accounts (TBAs). This registry facilitates the distribution of proxy contracts for TBAs while inheriting the metadata from the original ERC-721 token.
Assets housed within these TBAs, whether in the form of NFTs or fungible tokens, can be seamlessly transferred to other TBAs through a designated function within the proxy contract.
The expansion of token-bound accounts on the Polygon network in recent months
Over the past few months, specifically since July, a notable trend has emerged on Polygon’s blockchain – the rise of NFTs serving as crypto wallets, commonly referred to as ‘token-bound accounts.’
Based on data sourced from Dune Analytics, there have been a total of 18,116 activated ERC-6551 accounts so far, housing 7,581 NFTs within these designated TBAs.
The real surge in this innovation on the Polygon network occurred between the end of August and September, during which the statistics experienced a remarkable spike.
In the final week of September alone, an impressive 8,900 ERC-6551 accounts were brought into existence.
Among the NFT collections on Polygon that have most actively embraced this standard and implemented the crypto wallet feature, prominent names include Dippi TBA, Lens Protocol Profiles, and OrbSoulbound. Collectively, these three collections manage a substantial 77% share of all created accounts, leaving limited space for potential competition.
If we use the broader cryptocurrency market, which also includes the Ethereum network, as a benchmark, we can observe from the data that there has been intermittent yet overall increasing activity from May up to the present date.
In total, there have been 26,334 activations of token-bound accounts across all Ethereum Virtual Machine (EVM) chains, facilitated by 1,520 transactions, and these accounts collectively hold 11,270 NFTs.
In light of Polygon’s achievements, it’s evident that the highest number of TBA activations occurred at the close of September, with over a third of these accounts being created between September 25th and October 1st.
Regarding the actual transaction volumes, there was a decline in activity from mid-July to mid-August, followed by a resurgence starting from August 21st, with the first week recording 119 transactions.
Considering the significant potential introduced by the ERC-6551 standard, we anticipate a steady increase in the creation of TBA accounts in the forthcoming months. These accounts aim to offer users and developers a dynamic crypto wallet solution for NFTs and various other cryptocurrency assets.
It is highly probable that this trend will gain momentum and become a widely adopted practice as web3 game developers incorporate TBAs into their virtual environments. This development is poised to usher in fresh avenues for social interactions within the blockchain context.