NFTs today have limited functionality and interoperability. They have fantastic potential but are primarily used for speculation these days. To unlock the full potential of NFTs, we need smart contracts that allow more flexibility.
Current standards are too limited
Most NFTs are based on the ERC-721 standard, which makes it easy to exchange “non-fungible” tokens. Launched in 2017, the standard was used by CryptoKitties, a popular online game that was one of the first big projects that showed the potential of NFTs.
In essence, contracts using this simple standard include a base URI and incremental IDs representing individual tokens. Add the tokenID to the base URI, and you should have a URL that can be used to fetch the token’s metadata.
This allowed creators to build collections of multiple unique NFTs. The metadata is often stored on IPFS, a distributed storage network, but plenty of NFT projects just use a centralized service like Google Drive. Buyers of NFTs often don’t realize that if the creators delete or move the files, their NFT is nothing more than a pointer to an unknown location.
But this is in itself not the biggest problem with this standard. There is currently no way to validate if an NFT project is solid.
One of the most critical aspects of art is the creator, but nothing about the creators is being stored on-chain.
The only data attached to an ERC-721 contract is a
The collection pages on platforms like OpenSea seem rich with information, but most of this data is not coming from the smart contract of the NFT. It’s something that has been added through an input field on the platform itself, meaning it lives inside the database of that specific marketplace. NFT collections could potentially have very different information shown on other websites.
If your favorite marketplace no longer exists five years from now, all your NFT represents is a name, symbol, and ID.
Most importantly, your NFT says absolutely nothing about its creators. Although the smart contract has the owner’s public key, this key could belong to anybody and holds no information about the original creators.
The creators of an NFT, and their reputation, are an essential aspect of the value of an NFT or any kind of art. Especially when more professional designers and creators use NFTs, think of digital fashion and big brands working with well-known designers. Don’t you want your NFT to hold some information about them?
Would most paintings be as worthy if no one knew who painted them? Would you even trust if it’s real or just a scam?
Being able to buy directly from an artist with an on-chain reputation would drastically reduce the number of scams. But with current standards, all this data does not exist.
Most of the creators' profiles now live on centralized marketplaces and could vanish over time. Current platforms have evolved way faster than the underlying standards. The standards are lacking behind and are holding the industry back.
For NFTs to grow far beyond pointers to a file of a monkey picture, we might need to take a giant leap to use new standards built from the ground up and designed for the future of Web3.
Introducing NFTs 2.0
The creator of the ERC-20 standard, Fabian Vogelsteller, has developed new standards to take web3 to the next level. He started a new blockchain, LUKSO, and proposed LSP7 Digital Asset and LSP8 Identifiable Digital Asset, also referred to as NFT 2.0.
With these, NFT and token metadata inputs are very extensible. The on-chain metadata inputs could be changed, allowing NFTs to evolve over time. The contract can have multiple creators attached to it, and instead of just some public keys, these are addresses of Universal Profiles. These profiles show the face and the reputation of the original creators. The NFTs can also inform receivers of assets, making complex smart contract automation possible.
LSP7 and LSP8 are using the ERC725Y standard as their base. By using a generic data key-value store, a contract now comes with much-needed features:
- Attaching an unlimited amount of information makes the asset more customizable and unique.
- Knowing when the metadata has been altered
- Having metadata as a hash reference instead of a URL reference
This base will allow more customization and upgradability of the metadata over time. Summarized, these standards will be:
- Authentic & Verifiable Smart contracts can now verify whether a specific Universal Profile created an NFT.
- Flexible & Updatable Metadata can be updated, enabling dynamic NFTs to change certain things over time.
- Secure metadata You can now add unlimited secure metadata that can also be smart contract readable.
- Safer NFTS can only be sent to Universal Profiles or a smart contract that can work with them, preventing the lock of NFTs.
The current standards representing NFTS are limiting the industry as they lack standardization and many powering features.
ERC-721 is the most used NFT standard but is not much more than a representation of incremental tokenIDs without proper metadata or asset representation. It has no standard interaction between sender and receivers and no security measurements to ensure safe asset transfers.
They have been designed from the ground up and have new standards for flexible metadata, more secure transfers, more asset representation, and more interactive transfer.
Combining NFTs 2.0 with the use of Universal Profiles, we could now have a way to allow creators to build on-chain reputations.
NFTs 2.0 could bring the much-needed industry's much-needed innovation if it ever wants to evolve from trading profile pictures for pure speculation.
Mint your first NFT 2.0 for free
When you start with UniversalPage, you can mint a free NFT that will hold your UniversalPageName. This name will serve as an identifier for your personal website, meaning your page will be created under the subdomain: your-name.universal.page.
You can use UniversalPage to create your personalized website to showcase and sell digital assets. Or discover and collect new NFTs on the open marketplace.