NFT
Ethereum’s ERC-721 and ERC-1155 are probably the most recognizable examples of token standards in blockchain today.
They are like blueprints, laying down rules for how tokens behave in a protocol and greatly simplifying the creation process. Their predetermined rulesets offer a kind of “package deal” with a variety of functionalities. Plus, you can rest assured that they’ve been carefully checked and confirmed to be compatible with a range of applications.
Without standards, a creator can enjoy more customizability, but can run into serious problems when trying to interact with platforms and interfaces.
So it may be surprising to discover that many common NFT functions, such as hit and burn, do not exist as standard. In fact, even the way the InterPlanetary File System, or IPFS, is used to store an NFT’s metadata is not standardized.
Folklore founder Rafa spoke with host Chase Chapman about the complexities of standardizing a wider range of NFT interactions on a recent episode of the On the Other Side podcast.
He acknowledges that while it is a cliché to say, we are still very early. “We’re just surfacing what it means to deal with an NFT, so it’s probably too early to commit to specific standards, but if we have an eye on actually developing those standards, that’s awesome.”
Token standards like ERC-721 are “intentionally very limited,” says Rafa. “The standard is as small as possible to allow interoperability between any interface that wants to connect to it”.
Using relatively limited standards gives service providers flexibility to create additional types of contracts, such as minting, Rafa added.
“What that means is that the protocol you choose gives you the specific coin feature they designed,” notes Rafa. For example, the feature may be gas-optimized, allow air droplets, or have combustion mechanisms.
“You may have a range of different features that enhance interaction with the particular NFT or token you’re actually creating.”
“This is great for creators,” Rafa continues, “because you can experiment with it.”
But one thing that shouldn’t be assumed, he says, is that interfaces will start building interoperability with all the possible custom functions of different mints.
Just as an ERC-721 cannot become an ERC-1155, contracts deployed on a single platform, such as Zora, says Rafa, “cannot become a contract hosted on Manifold or Thirdweb.” Compatibility issues are inevitable without standardization.
Creators as providers of content liquidity
Ultimately, says Rafa, a creator’s ability to distribute their content “is predetermined by the interfaces that support your choice of protocol.”
If a creator chooses to create a custom mint function, he notes, the ability for people to mint a particular NFT is limited to the interfaces that support that particular method. This reduces what Rafa describes as the creator’s “content liquidity”.
Rafa suggests a path to more content liquidity for creators by expanding the default sets. Rafa envisions creators as providers of content liquidity and envisions an established standard for NFT minting and burning as a first step in improving the system.
“The small downside,” says Rafa, is that whichever protocol “lobbies the hardest and has the biggest voice” will be the most influential in setting the standard.
Rafa adds that any protocols that do not yet meet that specific standard will then need to be updated to comply.
“And yes, your contracts, which you may have created this year, may not be interoperable with many interfaces in the future.”
In a more distant future, Rafa envisions a solution that removes these kinds of problems for makers. An interface could be some sort of “middleware,” he says, “that just swaps contracts in and out.”
In this scenario, says Rafa, “my audience doesn’t even know what protocol they are using. We just always use the lowest fee protocol that can be put together with the interface.”
“Protocols become commodities.”