📔Non-Fungible Tokens
Non-fungible tokens (NFTs) are unique, non-interchangeable assets minted on-chain. These assets are verifiably unique and indivisible. These tokens can be linked to a variety of assets including both physical & digitized items. The core attributes of NFTs give them unique value and categorically separate them from other types of assets. The transparent nature of the underlying code means that the scarcity and ownership of any given token are evident without the need for a trusted intermediary. This is the primary reason we see NFTs as a continuation of the paradigm shift from centralized to decentralized systems. Our goal here at Forge Finance is to be at the forefront of that education and pave the way for mass adoption of NFTs in real world systems. Let's get to work. Watch our educational YouTube video to learn more about Non-Fungible Tokens:
Various NFT Standards
There are a plethora of different NFT standards that boast different strengths and applications. Below you find a list of the various standards that have been created thus far and a few examples of how each one is currently being applied/used in the Web3 space.
ERC-721
Built on top of the Ethereum blockchain, the first real iteration of a non-fungible standard came about with ERC721. It was popularised in late 2017 with the rapid adoption of CryptoKitties, a game which allowed for the purchase, and subsequent ‘breeding’ of digital cats. These cats were bought and sold as a virtual token, and some have fetched prices over $200, 000! At its peak, CryptoKitties was responsible for more than 10% of total transactions on the Ethereum network.
ERC-1155
Created by the team at Enjin, this standard allows for both fungible and non-fungible items in the same smart contract. In doing so, ERC-1155 reduces the amount of data required, creating smoother deployments and requiring a lot less network power.
The best example of ERC-1155 is seen in blockchain gaming. Rather than requiring a new contract for every in-game item, you can now create multiple items using the same contract. Moreover, say you collect weapons and coins (crypto) in a game, you can now achieve both with ERC-1155, drastically reducing the resources required to efficiently run blockchain based games, and allowing them to be stored in a simple wallet interface.
ERC-994
Created a system where DNFT’s can identify an area or zone (let’s say the suburb you live in), and can then delegate NFT’s to represent individual houses or parcels of land. In this way, ownership of property can be tokenised whilst also providing a way to update land registries, and legally verify their sale. It was designed with the following essentials:
A non-conflicting geospace
Legal validity and physical sovereignty
Compatibility with financial contracts
ERC-420
Also known as the ‘dank’ standard, ERC-420 is more than just an afternoon on the couch. This standard was proposed by the PepeDapp guys and is designed with digital trading cards in mind. It takes into account that in a deck of trading cards, you usually end up with a number of the same card (often referred to as resource cards). If you can cast your mind back to Pokémon cards, we’re talking about the energy cards, or those required to actually use your Pokémons attacks. The same goes for Magic the Gathering with Mana.
ERC-809
This is the standard for renting out your NFT’s, by creating an API to allow any “rival” NFT to be rented. In this case, the NFT is considered rival if being in possession of the NFT simultaneously prevents consumption/access to other individuals. The example given in the Github proposal is driving a car is rival but watching the sunset is non-rival. That is, driving a car prevents others from driving the car, and in the same way, being the renter of an NFT would inhibit other peoples access or use of it.
ERC-1201
Inspired by ERC-809, the ERC-1201 standard proposes to tokenise rental rights, as opposed to just allowing for them. This creates a means for the rented NFT to be easily exchanged between parties. It is probably easiest to think of it as follows:
ERC-721 creates an NFT for your house.
ERC-809 creates a standard set of commands allowing you to rent said house.
ERC-1201 tokenises this right, and in a practical sense, means the leaseholder could sub-lease your house, simply by exchanging the token.
ERC-998
A standard extension for any non-fungible token to own another non-fungible ERC-721 or fungible ERC-20 tokens. Transferring the token composition means transferring the entire hierarchy of items. For example, a cryptokitty may own a scratching post and a feeding dish; the dish may contain some amount of fungible “chow” tokens. If I sell the cryptokitty, I sell all of the belongings of the cryptokitty. ERC-998
The Ways NFTs Are Being Used
The benefits and various utilities of NFTs go far beyond gaming & artwork. However, most of the population refers to NFTs as "silly JPEGS" which no inherent value or real world application. Nothing could be further from the truth. (Although... Still plenty of silly JPEGS going around 😓)
NFTs can be utilized in a number of different ways including, but not limited to:
Access To A Product Or A Platform
Creating Unique & Branded Artwork
Digitizing & Coining Intellectual Property
Ensuring Provenance Of Luxury Goods (historical record of ownership)
Managing Licensing For Photography
Managing Licensing & Royalties For Musicians
Staking/Farming For Passive Income
Use Inside Of Play To Earn Games And/Or Virtual Reality/Metaverse
Unlocking Equity & Transferring Ownership In Real Estate Assets
Unlocking & Automating Fractionalized Ownership Of Real Estate Assets
And more!
Diffusion of innovation will provide plenty more utility for NFTs that we cannot yet conceive of. Technology is growing at a rapid pace, and the landscape of the cryptosphere is changing with it. Nevertheless, the possibilities for application are endless, and we here at Forge Finance are excited to be at the forefront of that future! If you are an NFT enthusiast/creator, be sure to join our Discord server using the link below!
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