The ERC-6551 standard is introduced by the Future Primitive team, which proposes a method to bind smart contract accounts to each ERC-721 NFT. These accounts are called Token Bound Accounts (TBA).
We believe that ERC-6551 will become one of the most influential innovations in Web3 for the following reasons:
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It allows each ERC-721 NFT to own/hold any number of other tokens (ERC-20, ERC-721, ERC-1155, etc.).
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It can be deployed without making any changes to existing NFT or any new NFT contracts.
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It “automatically” binds these accounts to all existing NFTs without requiring any transactions from the NFT owners.
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It is practically infinitely scalable.
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It already supports account abstraction (ERC-4337).
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It provides new use cases for NFTs.
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This is an important step in the evolution of NFTs, as they transition from simple PFPs to Tokenized Avatars.
TBA is cool technically, but what can we actually do with it?
TBA has many use cases, but the most prominent ones are:
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NFT composability
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On-chain reputation
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Game avatar inventories
NFT Composability
Composability is not a new concept in the NFT world, and there have been many impressive composable NFTs and standards in recent years. However, TBA changes the composability landscape of NFTs because of one key difference – it does not require any changes to the existing ERC-721 standard.
One practical use case of composability is in logistics and manufacturing. For example, imagine an NFT representing a car that has its own account, which stores information such as insurance, registration data, tax data, manufacturing data, part recalls, etc. When transferring the car NFT, we can also directly transfer the relevant data of the car.
Unlike previous composable NFTs, TBAs can hold virtually unlimited assets, similar to standard externally owned accounts (EOAs), and they are almost infinitely scalable, making TBAs highly influential for NFT composability.
On-Chain Reputation
Another notable use case of TBA is in the field of on-chain reputation.
Let’s consider a scenario of measuring loyalty using NFTs. With TBA, it is possible to track and record all contributions that an individual makes to a DAO, organization, or similar entity. By sending the soul/token-bound NFT to the wallet associated with the loyalty NFT, it can seamlessly track activities related to loyalty.
For example, suppose you are a loyal fan of a musician. You have obtained an NFT album from that artist. For every music concert you attend, you can exchange an attendance proof token, which will be stored in the TBA of the album NFT. This mechanism not only enables on-chain tracking and verification of loyalty but also increases the value of the original album NFT over time. The artist can also reward loyal fans who attend each music concert by simply tracking the content of the NFT account.
Thanks to TBA, it is now feasible to airdrop NFTs to existing NFT holders without knowing their wallet addresses. This feature opens up new possibilities for cultivating brand loyalty and creating engaging experiences for users in a transparent and secure manner.
Game Character Inventory
Our personal favorite use case for TBA is game character inventory.
There is a significant distinction between players and their game characters. Most players create multiple characters with unique attributes, skills, achievements, in-game reputation, etc. TBA allows each NFT to have its own character inventory.
While the official team Token Bound of ERC6551 is working with the market to facilitate the support for NFTs with TBA, the market may need time to adapt and address the related complexities.
Original article link: https://research.cr3labs.com/p/what-are-token-bound-account
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