Why Composable is the future of NFTs
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The problem in ERC-721 standard
Without a doubt, ERC-721 was the first standard to create NFTs and is widely use many platforms. It is immutable and transparent in terms of ownership and security. While it is transferable, trying to transfer an entire collection with it can be slow, inefficient, and even cause traffic issues that can lead to higher gas fees.
On April 30, Yuga Labs, creators of the Boring Ape Yacht Club (BAYC), launched their highly anticipated “Otherside” virtual world land non-fungible token (NFT) mint on Ethereum. According to Coin Metrics, despite their precautions against high gas prices, NFT mints ended up incurring the highest gas fees in history at 800 GWEI over $150 million in gas fees.
The insanely high gas fees of "Otherside" NFTs show the limits of the Ethereum network and the fact that ERC 721 only enables token transfers one by one where raised the problem into a higher level. This means that if you want to transfer 20 "Otherside" NFTs to the same person, you will need 20 transactions to do that.
How ERC-998 standard works in NFTs?
ERC-998 is the extension of ERC-721 standard which means a single ERC-998 token can represent a group of assets, such as ERC-721 or ERC-20 tokens, and can also be transferred in a single transaction. Hence, transferring a ERC-998 token means transferring the entire hierarchy of an item. Take crypto kitties for instance, a crypto cat might have a hat and a feeding bowl, the dish might contain some fungible food tokens, so if I sell cryptokitty, I will sell all cryptokitty items.
It is mainly used to store the data of its child tokens. The way top-down composable works is like filling a container with some unique collectibles and then transferring it to someone else. Imagine a land with house, the house have bigger value than the land itself so you are able to set higher price for the house and lower for the land.
In bottom-up composability, information about the parent token is stored. Since bottom-up composables act as child-tokens, they attach themselves to another ERC-721. Unlike top-down composables, where ERC-721 tokens act as containers, a bunch of bottom-up composables can be transferred to regular ERC-721, which can then be transferred to someone.
Child tokens are only able to be transferred from the contract if the sender also owns the parent token ID.
You MUST trust the composable ERC-998 contract does not also have the ability to arbitrarily transfer child tokens the contact technically owns.
So what does composability really mean for builders and developers?
There are many possibilities to explore where the boundaries are for builders to build their own projects, examples of what it brings to builders and developers include:
Any kind of transaction business can be issued at one time through multiple ERC-721 NFT or even ERC-20 Fungible token synthesis, thereby improving efficiency and having more functions. It's a new way to preserve the price of the parent ERC-998 NFT, also allowing small teams to quickly launch their own projects without having to build everything from scratch.
Developers can learn and apply concepts from all walks of life. For example, by adding NFT composability to games, the owner of a parent NFT can have multiple wearable child NFTs, making the user experience in the platform more fun and gamified.
There are many interesting examples of composability use cases in NFTs including
Play-to-Earn NFT collectible
Aavegotchi is a crypto collectible game protocol built on Ethereum where participants can purchase and grow Aavegotchis. Each Aavegotchi avatar is a digital collectible that has unique attributes defined by a rarity score. The score is calculated by specific character traits, wearables attached to the avatar, a kinship score, which is based on how often the player interacts with the avatar, and the amount of Aave-powered aTokens staked to the avatar.
Aavegotchis also extended the ERC998 Composables standard, allowing them to manage child ERC721 or ERC1155 NFTs, known as wearables in the Aavegotchi ecosystem. This also means that if a user owns Aavegotchi, they can have multiple wearable ERC-721 NFTs to add or subtract certain characteristics. For example, equipping a sword may slightly boost an Aavegotchi’s aggressiveness, whereas equipping a Bob Marley shirt may decrease its energy level.
Composable NFT Marketplace
KnownOrigin is an NFT marketplace that allows budding and established artists to tokenize their work into a non-fungible token (ERC-721). KnownOrigin facilitates purchases through smart contract platform and protocol, enabling artists to receive instant financial compensation. Users can bid on artwork or buy it instantly at the asking price. Artists can control the pricing model and give away NFTs to new users.
KnownOrigin collaborated with acclaimed artist Brendan Dawes and the $Whale community, so the artwork The Composable will include 100 $WHALE tokens composed inside the NFT, ultimately stimulating a far higher overall value than might be projected for the primary artwork in isolation.
Now with composable NFTs, KnownOrigin artists can embed their own tokens into tokens, using their art as a vehicle for doing so! This means that collectors not only buy amazing art, but also have the ability to "redeem" the items inside.
As crypto builders, we should expect these composable smart contract building blocks to create more meaningful use cases for the crypto community. Ultimately, developers will be able to create their own projects by adding a layer on top of ERC-721 to deliver projects faster without inventing new wheels. For consumers, it will open up a whole new world of NFT user experiences and more accessible in the crypto space.
More Readings on ERC-998 :
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