Introduction
Crypto Insider is delighted to share an exclusive interview with Benny Giang, the visionary force behind the innovative Ethereum Improvement Proposal, ERC-6551. This game-changing standard not only promises to amplify the functionality of NFTs but also envisages their transformation from mere static digital assets into dynamic, autonomous, and interactive entities, catalyzing a seismic shift in the NFT landscape. This piece encapsulates the enlightening discourse we had with Benny. For the full extent of our insightful conversation, we invite you to view our video ‘What is ERC-6551: The Future of NFTs’, where Benny is engaged in a rich discussion with our interviewer, Brown Yeung.
Self-Introduction
CryptoInsider (CI): Let’s get this started, shall we? Can you tell us a little bit about yourself and how you got into the world of crypto?
Benny Giang (BG): Yeah, so my name is Benny, I’m from Vancouver, Canada. I got into the crypto or the blockchain space around early 2017. I was part of the team that launched CryptoKitties and we formed Dapper Lab soon after that. I had a chance to work on Cheese Wizards and NBA Top Shot. I was actually in Hong Kong in 2018, in the Animoca office, talking to Yat Siu and everybody. At that time, Animoca was still focusing on mobile games. They were our first international partner based in Hong Kong to bring CryptoKitties to Hong Kong, Taiwan, Singapore. That’s kind of how I came to Hong Kong and I met a bunch of other folks in that city.
CI: That’s fascinating. Could you tell us more about your journey with Dapper Labs and what you’re currently working on?
BG: I left Dapper Labs in October 2021, and it’s been about a year and a half ish now. I started my own software development design company that’s focusing on building primitives for decentralized communities. It’s called Future Primitive. It’s based in San Francisco, and I’m based here in Vancouver. For the last year and a half, we’ve been doing a lot of experimental NFTs, and it’s been a fun ride.
Introduction to ERC6551
CI: Amazing! I understand you’re one of the author of ERC6551. Can you explain what ERC6551 is and what its main purpose is?
BG: Yes, so you may have already heard of ERC721. That was a standard that I had a chance to participate in, along with the broader team from the CryptoKitties side. ERC721 is the standard now known as NFTs. Six years later, I’ve had a chance to work on a new standard called ERC6551 with the team here at Future Primitive. The key difference is that ERC6551 is not a token standard. It often gets confused or compared to like ERC721, but you don’t have to make a decision between ERC721 and ERC6551. You just launch a normal NFT project and it already has ERC6551.
CI: Can you explain a bit more about ERC6551 so that we can understand it better?
BG: I usually refer to it as Token Bound Accounts. Token Bound Accounts are the opposite of Soul Bound Tokens, tokens that you cannot transfer, they’re tied to your wallet. Token Bound Accounts are the idea that every single NFT on every single EVM chain has an account or wallet that’s attached to the token. It’s basically an account that’s bound to a token, which is an NFT. That’s the simple idea of ERC6551. The other thing that’s super important is, for the last 6 years since the beginning of NFTs and CryptoKitties, there has been a lot of imagination all around the world on how to take NFTs further. In 2018, there was a project called Kitty Hats, exploring the idea of equipping things onto your NFT assets. That was created by Dan, who was the first employee of Open Sea. Since then, there’s been many different standards and companies trying to build protocols on different blockchains.
Key Features of ERC6551
CI: Fascinating. How does ERC6551 differentiate itself from these standards?
BG: ERC6551, or token-bound accounts, has five key differences:
- It works with every single NFT, from CryptoKitties to Azuki to Board Ape and any new NFT launched on any other blockchain that is EVM compatible.
- Your NFT can hold any type of assets, so it could hold ETH, USDC, Pepe coins, ERC721s, ERC1155s, and even new token standards like ERC8888.
- There’s no wrapping contract, so you don’t need to wrap your NFT or send your NFT to a contract for our standard.
- It works with every single platform because there’s simply a wallet or an account.
- It’s decentralized. Every single NFT basically has a smart contract account or wallet and so the NFT is the owner of this account.
CI: So, would you say ERC6551 is a better version of ERC721?
BG: The way I would think about it is if we were to rewind back time six years, and we were back in the room where we were working on ERC721 and CryptoKitties, if we had the same idea that we have now, it should have been included in the ERC721 standard. ERC6551 takes the concept of NFTs to a new level, where NFTs are beyond just overpriced JPEGs. They are beyond just buy-sell-trade. With ERC6551, it gives all NFTs three new properties: asset ownership, social identity, and action potential. The first property, asset ownership, your NFT can own other assets, and you can have an NFT that owns an NFT that owns another NFT, and so on. The second property is a social identity. People are already using their NFTs as their profile picture on Twitter. Some people are even creating personalities on Twitter. With ERC6551, you can log in, create a transaction history for your NFT, and start to become your NFT.
CI: That’s interesting. Could you explain more about the third property, action potential?
BG: The third property, action potential, is something we call the future. When you pair an NFT with an AI model, you can have an NFT perform on-chain actions by themselves. Because an NFT now has its own wallet, it almost acts equal to a human on a blockchain. You can imagine telling your doodles to collect the coolest music NFTs, and it goes and buys the coolest music NFTs.
CI: So, you’re saying that ERC6551 does not compete with ERC721, but instead adds more value to it?
BG: Yes, exactly. It does not compete with ERC721. It actually adds more value to every single ERC721 that exists currently.
Compatibility of ERC6551
CI: And how does ERC6551 allow ERC721 tokens to interact within the blockchain and own on-chain assets?
BG: There’s a decentralized registry that specifies in the ERC6551 standard. The registry links uses crate to deterministic addresses. It looks at every single NFT Token ID or every NFT collection contract and assigns a smart contract account that’s linked to it. As of right now, if you wanted to send 1 ETH to a random CryptoKitties, you could do that. You would do this by going to tokenbound.org, connecting your wallet, and if you have a CryptoKitties, it’ll show you the Token Bound Account address, or the TBA address. With this address, you can just go to Metamask and send whatever you want to it. There’s no action required. That’s the magical thing about ERC6551 or Token Bound Accounts. The entire world woke up and NFTs were completely changed with no action required by the owner or creator of the project. It just became reality that every NFT has an account.
CI: That’s truly amazing. Can you explain how ERC6551 ensures compatibility with existing infrastructure that supports Ethereum accounts?
BG: A Token Bound account is a smart contract wallet. This concept has been around for a while now. One of the first smart contract accounts or wallets was a Dapper Wallet, which I had a chance to work on. Everyone knows about Gnosis Safe or Safe Nowadays; that’s also a smart contract account. There’s also Argent and a few others out there.
CI: How does this relate to the move away from Ethereum owned accounts?
BG: More recently, there’s a different proposal, ERC4337, which was written by Vitalik and a few others. ERC4337 specifies account abstraction, which is the idea of moving away from EOA wallets. Vitalik has been writing about the need to move away from this type of wallet for various reasons. ERC4337 has fully passed and is live on Mainnet. ERC6551 is essentially account abstraction for NFTs. So if you imagine this huge wave that Vitalik and everybody is pushing for, moving away from EOA wallets, we’re on that same wave. The only difference is that our focus is around NFTs.
CI: How does this affect the compatibility with Ethereum?
BG: Since there’s already this wave, there have been different proposals like 1271 for signing with a smart contract account. A lot of different wallets, Wallet Connect, or different wallet services or even Dapps all now support signing or logging in or using Wallet Connect for a smart contract wallet. And since we’re using the same structure, the paradigm, we’re fully compatible with ERC4337. We’re leveraging that same existing infrastructure.
Effect of Bear Market
CI: I’ve noticed a lot of energy projects failing because of the bear market. Do you think this has hindered the promotion of ERC 6551, or maybe even deterred people’s interest in using it?
BG: On the contrary, I believe things have been growing quite a lot. Despite the bear markets of 2019 and 2020, there was a second wave of interest in NFTs, fueled by projects like Board Apes, Azuki, Doodles, and Moon Birds. These projects focused a lot on social utility and real-life perks, which was pretty interesting.
CI: So, the bear market didn’t negatively impact ERC 6551?
BG: Correct. In fact, we’ve seen a lot of blue chip projects looking to figure out what to do next, and ERC 6551 opens up new opportunities for them. We are currently in talks with many of these projects as well as different companies. There’s also a developer working group, with over a thousand developers from major protocols, focusing on this ERC.
Notable Projects Adopting ERC6551
CI: That’s impressive. Any notable projects or events you’d like to mention?
BG: Yes, there was an Ethereum Global Paris hackathon that just finished, where 10 to 15 projects were building on ERC 6551.
CI: Sounds very promising. Can you tell us about any particularly notable projects?
BG: Absolutely. There are quite a few, such as Fuel World from the well-known NFT artist, Ferocious. We also have Parallel, a top 20 NFT project that started off as a trading game and is now building a AAA game. We’re also working closely with marketplaces like OpenSea and Zora. Companies like AirStacks, who provide infrastructure like indexing, are also involved. There are many projects related to gaming and DAOs, like Station and DAO house. YGG Yield Games is also exploring ERC 6551, and Lens Protocol just announced that Lens V2 will use ERC 6551. So, the momentum is definitely building.
Security Concern
CI: ERC 6551 certainly seems to be a hot topic right now. But with any technological innovation, there are bound to be potential security considerations. Are there any associated risks with ERC 6551 that we should be aware of?
BG: As with any smart contracts, there are always risks. Our contracts are audited, but you have to keep auditing as you add things to it. One of the main security issues that have come up is what we call a “bait and switch” attack. In a bait and switch attack, a buyer might put in a bid for an NFT, expecting certain assets inside, only for the seller to remove those assets, leaving the buyer with an empty NFT. To prevent this, we currently have a temporary measure in place where sellers can lock their token vault account for up to a year, during which they cannot withdraw anything from the account, ensuring buyer trust.
CI: That’s interesting, but it sounds like it puts a lot of responsibility on the buyer to do their homework.
BG: Indeed, and we understand that’s not an ideal long-term solution. That’s why we’re working closely with the Seaport team, the marketplace protocol for OpenSea, to develop a protocol-level protection. Once implemented, this will check for any changes to the token vault account when a bid is placed. If something has changed, the bid will be cancelled. This way, buyers can trust that they will get what they bid for.
Counterfactual Account
CI: Let’s move on. Could you explain a bit about the concept of counterfactual account addresses in ERC 6551?
BG: Sure, we use create to deterministic addresses, which means every NFT has a token vault account address without having to take any action to uncover it. This is great as it allows anyone to send assets to an NFT without waiting for the owner to uncover the address. However, the smart contract account is not deployed until the owner activates it on tokenbound.org, at which point they can start using the account.
CI: This concept of counterfactual addresses seems to add a new layer of complexity to NFTs. Do you think this might be a hurdle for adoption?
BG: It does add a new dimension to NFTs, but we believe this is a step forward. By giving every NFT an address that can receive assets, we’re enhancing the functionality of NFTs. The activation process is just a one-time action that owners need to take to start using their account.
CI: It certainly sounds innovative and it will be interesting to see how this plays out in the wider NFT market. Thank you, BG, for taking the time to explain ERC 6551 and its implications for us.
BG: My pleasure. I’m glad to have the opportunity to discuss these developments. I believe ERC 6551 is going to play a significant role in the evolution of NFTs and the wider crypto ecosystem.
Forecast of NFT Ecosystem
CI: It’s great to have you here, BG. I’d like to start by asking about the potential impact of 6551 on the NFT ecosystem. How do you predict or foresee this?
BG: Thanks for having me. The impact of 6551 on the NFT ecosystem is really exciting. I think it’s going to change everything about NFTs and inject some new energy into the space. The area that I’m most interested in is imagining what NFTs can be.
CI: Could you elaborate more on that?
BG: Of course. Over the past six years, I’ve been thinking a lot about NFTs. There’s been a lot of friction because people either love NFTs or they hate them. Often, people who are not fond of NFTs see them as just JPEGs with metadata attached. But I think we can take that much further, moving away from the notion of NFTs as just a JPEG with metadata, and start thinking about the idea of digital objects.
CI: Digital objects, could you explain more?
BG: Sure. In real life, we own objects, like a car, a house, or even collectible items like sneakers or toys. As we migrate more and more to a digital lifestyle, I believe we’re going to own more digital objects in the future. We might run out of physical space to hold all these objects, but in the digital realm, there’s no such limitation. So, I foresee every human owning hundreds, thousands, or maybe millions of digital objects in the next 20 to 30 years, and a lot of these digital objects will be NFTs.
CI: What about the quality of these NFTs?
BG: Well, like any collection, some NFTs will be of less quality, but some of them will be really cool. And this is where 6551 comes in. A lot of these NFTs that are currently sitting in cold storage could actually be assigned tasks or actions to perform, increasing their productivity. This goes beyond the concept of a JPEG, entering a new territory where we start to think of them as NPCs or Non Player Characters.
CI: NPCs, interesting. Could you elaborate more on this concept?
BG: Absolutely. If you’ve ever played games, you’ll know about NPCs or Non-Player Characters. They’re important to the gaming experience. Just imagine playing Zelda without any characters. The same applies to digital worlds or metaverses. Currently, the metaverse has an “empty world” problem. We need to populate these metaverses, and I believe NFTs that are programmed to have a personality and perform actions can be key to this. We call these Networked Playable Characters, or NPCs.
CI: So, you see 6551 as a gateway to this new reimagining of NFTs?
BG: Yes, exactly. 6551 will open up this gateway, and I believe it will lead to a huge wave of innovation for the medium, the artists, and the builders.
Suggestion to New Players
CI: What about people who are new to or know nothing about NFTs? Do you have anything to say to them?
BG: Absolutely. I believe Token Bound Accounts are going to be the best way for onboarding and offboarding. With this, a person can go to an e-commerce site, sign up with their email, and they’ll be assigned an NFT as an account. They can shop around, buying physical and digital versions of products, which go into their account. If they want to leave, they can have the NFT sent to their wallet, achieving full ownership without any security risk. So, people new to NFTs will soon be collecting them without even knowing, simply by signing up on a website with their email or phone number.
Extension of Token Bound Accounts
CI: That sounds like a major shift. I’d also like to ask about the Token Bound Account generated by 6551. It’s a contract account, and the NFT serves as a key to this account. Different rules and features can be written into the contracts to generate different application scenarios. What’s your opinion on this matter?
BG: That’s a great point, and I think it touches on the very core of this concept. The idea that an NFT can have many different accounts and implementations is part of the design we pursued. There’s one school of thought that believes every NFT should have only one implementation or account, and that’s not a bad idea. However, we live in a decentralized and open world.
CI: And how does this tie into the concept of Token Bound Accounts?
BG: Well, the powerful part of Token Bound Accounts is the idea of extensions. Very soon, as an owner, you’ll be able to go to an “app store” of sorts and turn on different functionalities or utilities for your NFTs. This is extremely important because right now, when you own an NFT, you really don’t have much control. Control is with the creator.
CI: So, you’re saying that the control over NFTs will shift from creators to owners?
BG: Exactly. Currently, we’re at the mercy of the creators, but the future I see is one of owner-controlled NFTs. Owners will have the freedom to turn on these functionalities without the permission of the creator because they own the asset. I believe this is the biggest opportunity we have.
CI: So, in essence, what you’re saying is that we’re moving towards a future where NFT owners will have more control over their assets?
BG: That’s correct. It’s a shift from creator-controlled NFTs to owner-controlled NFTs. Currently, most NFT projects are controlled by the creators. We, the owners, have to sit and wait for them to ship new functionalities, and if they don’t, prices could go down. We’re somewhat at the mercy of the creators. But with owner-controlled NFTs, the owners can add functionalities without the permission of the creator. This is the future we envision.
CI: That’s a fascinating vision. It’s been great discussing these insights with you today, BG. Thanks for sharing your thoughts on the future of NFTs and the role of 6551 in that future.
BG: It’s been a pleasure. Thanks for having me.
Acknowledgments
We extend our heartfelt gratitude to Crypto Insiders for authorizing Spectrum Labs to transcribe this enlightening interview and share it with the broader community through their media platforms. Special appreciation is extended to Noah Ho and Ash Li, whose meticulous efforts in editing and organizing the content have made this valuable resource accessible to all. Their work has greatly contributed to furthering the understanding of ERC-6551 and its transformative impact on the NFT ecosystem.
Source: Spectrum Lab