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ERC-721
ERC-721: Non-Fungible Token Standard
A checkmarked checklist next to four connected puzzle pieces each with a different color and unique barcode, representing ERC-721
ERC-721 illustrated with checkmarks and puzzle pieces representing standardized properties, compatibility and non-fungibility
Year started2017
First published2018
SeriesEthereum Improvement Proposals (EIP)
AuthorsWilliam Entriken, Dieter Shirley, Jacob Evans, Nastassia Sachs
PredecessorERC-20
DomainNFTs
CopyrightCreative Commons CC0
Websiteeips.ethereum.org/EIPS/eip-721

The ERC-721 Non-fungible Token Standard is a technical framework, defining a set of rules and interfaces for creating and managing unique, non-fungible tokens (NFTs) on the Ethereum blockchain.[1][2][3] ERC-721 is recognized for formalizing the concept of an NFT and establishing the foundation of the multi-billion dollar digital collectibles ecosystem that emerged alongside its adoption. It is one of the most widely used NFT standards across use cases and has been utilized in various high profile projects.

The development of the standard was a community-driven effort that was formally published into a paper of the same name in 2018 and is accredited to William Entriken and co-authors Dieter Shirley, Jacob Evans, and Nastassia Sachs. ERC stands for "Ethereum Request for Comments," and is a part of the Ethereum community's peer-review process in which new proposals are considered for publication; the "721" is a unique identifier, each proposal is assigned one arbitrarily after an editor approves it in the draft phase.[4][5] The blockchain game featuring digital cat artworks known as CryptoKitties is credited with pioneering ERC-721 when it achieved mainstream attention shortly after its launch in 2017.[6] [1]

History

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Digital collectibles prior to ERC-721

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The concept of non-fungible digital assets that could be owned on a blockchain predated ERC-721, with projects like Colored Coins on Bitcoin in 2012.[7] In 2017, just prior to ERC-721’s publication, Larva Labs launched the CryptoPunks NFT project on Ethereum using ERC-20 (a fungible token standard). CryptoPunks served as a direct inspiration for ERC-721’s initial drafting.[1][8]

Formalizing the term "NFT"

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The term "non-fungible token" (NFT) is not known to have been used to refer to NFT projects prior to ERC-721.[9][10][11] ERC-721: Non-Fungible Token Standard is credited with formalizing and defining the term NFT.[12]

During the standard's drafting phase, lead author Entriken held a vote among the stakeholders where different words were considered including deed, title and asset, but ultimately "NFT" was chosen for the standard's final publication.[12][13]

Use of the term's popularity grew through CryptoKitties, the blockchain game featuring digital cats NFT utilizing ERC-721.[10][9]

Initial adoption

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CryptoKitties

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The blockchain game CryptoKitties by Dapper Labs of which the CTO Dieter Shirley is a fellow co-author of ERC-721, is recognized as the earliest pioneering and popular instance of the ERC-721 standard.[1][14][15] It utilized an early version of ERC-721 that was not fully compliant with the standard published in 2018.[16] CryptoKitties is regarded as among the first NFT applications to achieve widespread adoption, earning millions of dollars initially and taking up to 70% of Ethereum's usage capacity at its height in some moments.[17][18][19]

Su Squares

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Launched in 2018 by Entriken and inspired by the Million Dollar Homepage, this NFT project is the first fully compliant demonstration of the ERC-721 NFT standard.[20][21]

NFT marketplaces

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In 2017, one of the earliest and most successful NFT marketplaces, OpenSea, was launched by co-founders Alex Atallah and Devin Finzer who intended to capitalize off of the emergence of ERC-721 NFTs on Ethereum. They initially focused on capturing the market activity around the blockchain NFT game CryptoKitties, which was one of the first use cases of ERC-721, and ultimately planned to scale the platform for other emerging projects utilizing it.[22]

With the introduction of ERC-721, it felt like such an idea was possible for the first time.

— David Finzer, How one company took over the NFT trade – The Verge

The NFT marketplace SuperRare also emerged in 2018 to enable trading of tokens of this standard.[1]

Notable functionality

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Custom metadata

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ERC-721 implementation requires "name" and "symbol" identifiers, and the token is assigned a contract address upon deployment to the blockchain.[23][24] Also, a mechanism to implement a URI (Uniform Resource Identifier) to the contract, is defined in the standard, providing functionality to assign each NFT unique metadata.[1]

Though not required, most NFTs implementing ERC-721 will also implement the OpenSea Metadata Standard.

Trackable ownership

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Trackable ownership is the key feature which adds non-fungibility to the ERC-721 standard.[25] Each NFT is assigned a token identification number, and linked to its owner through the "ownerOf" function. Through the optional "ERC-721 Enumerable" extension, functionality for full ownership tracking is implemented. This differs from the ERC-20 token standard, which only tracks an owners token balance though ERC-721 also tracks it as well.[26]

Security

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The ERC-721 standard defines both safe and unsafe transfer functions, offering different levels of security for various implementations.[27] These functions allow transfers initiated by the token owner, or an approved operator of their individual tokens. Further, developers can implement custom logic to these transfer functions, providing the functionality for NFT protocols to operate. For example, marketplaces like OpenSea, make use of approved operators to facilitate the sale of NFTs.[28]

Influence of work

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The influence of the paper ERC-721: Non-Fungible Token Standard that Entriken lead authorship of spans across various sectors, profoundly shaping the landscape of digital collectibles and the use cases within the broader NFT eco-system.[24]

ERC-721 was awarded rank #1 in ArtReview's Power 100 in 2021 indicating it as "the most powerful art entity in the world" and being the first non-human entity to be ranked as such.[29][30]

Derivative standards

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Several months after ERC-721: Non-Fungible Token Standard was published, a semi-fungible token standard was introduced, called ERC-1155, that was intended to expand on the functionality and flexibility of ERC-721's purpose.[31]

The same ERC-721 standard is utilized on the Polygon blockchain.[32]

Criticisms

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The basic version of the ERC-721 standard, as published in ERC-721: Non-Fungible Token Standard, has been criticized by Omar et al for offering limited functionality for the execution of smart contracts associated with NFTs.[25]

Certain NFT use cases demand some features that are not offered by the standard ERC721 and must be created and arranged; such features include the following options: token creation, token deletion, contract access control, and others.

— Ali et al, A review of the key challenges of non-fungible tokens, [33]

Arcenegui et al. points out possible deficits regarding the user in the ERC-721 basic smart contracts and proposes properties to improve and expand its functionality.[24]

See also

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References

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  1. ^ a b c d e f Bamakan, Seyed Mojtaba Hosseini; Nezhadsistani, Nasim; Bodaghi, Omid; Qu, Qiang (2022-02-09). "Patents and intellectual property assets as non-fungible tokens; key technologies and challenges". Scientific Reports. 12 (1): 2178. arXiv:2304.10490. Bibcode:2022NatSR..12.2178B. doi:10.1038/s41598-022-05920-6. ISSN 2045-2322. PMC 8828876. PMID 35140251.
  2. ^ Chandra, Yanto (2022-11-01). "Non-fungible token-enabled entrepreneurship: A conceptual framework". Journal of Business Venturing Insights. 18: e00323. doi:10.1016/j.jbvi.2022.e00323. ISSN 2352-6734. S2CID 248958972.
  3. ^ "Why People Are Paying Big Money For Virtual Real Estate in the Metaverse". Time. 2022-01-20. Retrieved 2023-12-03.
  4. ^ "EIP-1: EIP Purpose and Guidelines". Retrieved 2023-11-20.
  5. ^ Anett (2021-08-08). "What the heck is EIP and how can I create one ? Ethereum Standards EIP ERC FAQs". Retrieved 2023-11-20.
  6. ^ Lindman, Kyle Wood and Taylor (2018-08-21). "Why the next CryptoKitties mania won't be about collectables". TechCrunch. Retrieved 2023-12-03.
  7. ^ Regner, Ferdinand; Schweizer, André; Urbach, Nils (2022), Lacity, Mary C.; Treiblmaier, Horst (eds.), "Utilizing Non-fungible Tokens for an Event Ticketing System", Blockchains and the Token Economy: Theory and Practice, Technology, Work and Globalization, Cham: Springer International Publishing, pp. 315–343, doi:10.1007/978-3-030-95108-5_12, ISBN 978-3-030-95108-5, retrieved 2023-11-25
  8. ^ "Jimbo Chats w/ ERC721 Creator Dieter Shirley About the Technical Origins and Future of Web3". YouTube. Retrieved 2023-11-20.
  9. ^ a b Zimmer, Ben (2021-04-16). "'Fungible': The Idea in the Middle of the NFT Sensation". Wall Street Journal. ISSN 0099-9660. Retrieved 2023-11-25.
  10. ^ a b Ostroff, Caitlin (2021-05-08). "The NFT Origin Story, Starring Digital Cats". Wall Street Journal. ISSN 0099-9660. Retrieved 2023-11-25.
  11. ^ Upson, Sandra. "The 10,000 Faces That Launched an NFT Revolution". Wired. ISSN 1059-1028. Retrieved 2023-12-03.
  12. ^ a b Ross, Dian; Cretu, Edmond; Lemieux, Victoria (2021). "NFTS: Tulip Mania or Digital Renaissance?". 2021 IEEE International Conference on Big Data (Big Data). pp. 2262–2272. doi:10.1109/BigData52589.2021.9671707. ISBN 978-1-6654-3902-2. S2CID 245956102. Retrieved 2023-12-03.
  13. ^ "Reconsider the word "deed" by fulldecent · Pull Request #2 · fulldecent/EIPs". GitHub. Retrieved 2023-11-21.
  14. ^ Nadini, Matthieu; Alessandretti, Laura; Di Giacinto, Flavio; Martino, Mauro; Aiello, Luca Maria; Baronchelli, Andrea (2021-10-22). "Mapping the NFT revolution: market trends, trade networks, and visual features". Scientific Reports. 11 (1): 20902. arXiv:2106.00647. Bibcode:2021NatSR..1120902N. doi:10.1038/s41598-021-00053-8. ISSN 2045-2322. PMC 8536724. PMID 34686678. S2CID 235266255.
  15. ^ Schroeder, Stan (2017-12-04). "How to play CryptoKitties, the insanely popular crypto game". Mashable. Retrieved 2023-11-21.
  16. ^ Vereš, Igor (April 2019). "Identification of Unusual Transactions in Blockchain Networks". Slovak University of Technology in Bratislava, Informatics and Information Technologies.
  17. ^ Regner, Ferdinand; Schweizer, André; Urbach, Nils (2022). "Utilizing Non-fungible Tokens for an Event Ticketing System". Blockchains and the Token Economy. Technology, Work and Globalization. Cham: Springer International Publishing. pp. 315–343. doi:10.1007/978-3-030-95108-5_12. ISBN 978-3-030-95107-8. Retrieved 2023-11-20.
  18. ^ "CryptoKitties Mania Overwhelms Ethereum Network's Processing". Bloomberg.com. 2017-12-04. Retrieved 2023-11-21.
  19. ^ Tepper, Fitz (2017-12-03). "People have spent over $1M buying virtual cats on the Ethereum blockchain". TechCrunch. Retrieved 2023-11-21.
  20. ^ Sherwood, Sonja. "William Entriken". Drexel Magazine. Retrieved 2023-11-26.
  21. ^ "Su Squares White Paper". tenthousandsu.com. Retrieved 2023-11-26.
  22. ^ Brandom, Russell (2022-02-02). "How one company took over the NFT trade". The Verge. Retrieved 2023-11-20.
  23. ^ Solouki, Mohammadsadegh; Bamakan, Seyed Mojtaba Hosseini (2022-01-01). "An In-depth Insight at Digital Ownership Through Dynamic NFTs". Procedia Computer Science. 9th International Conference on Information Technology and Quantitative Management. 214: 875–882. doi:10.1016/j.procs.2022.11.254. ISSN 1877-0509. S2CID 254484607.
  24. ^ a b c Arcenegui, Javier; Arjona, Rosario; Baturone, Iluminada (2023-08-11). "Non-Fungible Tokens Based on ERC-4519 for the Rental of Smart Homes". Sensors (Basel, Switzerland). 23 (16): 7101. Bibcode:2023Senso..23.7101A. doi:10.3390/s23167101. ISSN 1424-8220. PMC 10459112. PMID 37631638.
  25. ^ a b Ali, Omar; Momin, Mujtaba; Shrestha, Anup; Das, Ronnie; Alhajj, Fadia; Dwivedi, Yogesh K. (2023-02-01). "A review of the key challenges of non-fungible tokens". Technological Forecasting and Social Change. 187: 122248. doi:10.1016/j.techfore.2022.122248. ISSN 0040-1625. S2CID 254394090.
  26. ^ Konagari, Ashritha; Kusuma, Hari Priya; Chetharasi, Sangeetha; Kuchipudi, Ramu; Babu, Palamakula Ramesh; Murthy, T Satyanarayana (2023). "NFT Marketplace for Blockchain based Digital Assets using ERC-721 Token Standard". 2023 International Conference on Sustainable Computing and Smart Systems (ICSCSS). pp. 1394–1398. doi:10.1109/ICSCSS57650.2023.10169350. ISBN 979-8-3503-3360-2. S2CID 259365536. Retrieved 2024-01-13.
  27. ^ Le, Tralyn; Kim, Yoohwan; Jo, Ju-Yeon (2019). "Implementation of a Blockchain-Based Event Reselling System". 2019 6th International Conference on Computational Science/Intelligence and Applied Informatics (CSII). pp. 50–55. doi:10.1109/CSII.2019.00016. ISBN 978-1-7281-2553-4. S2CID 208631654. Retrieved 2024-01-13.
  28. ^ "OpenSea Developer Documentation". OpenSea Developer Documentation. Retrieved 2023-11-30.
  29. ^ Abrams, Amah-Rose (2021-12-01). "Non-Fungible Tokens Are Deemed the Most Powerful Entity in the Art World in ArtReview's 2021 Power 100 Ranking". Artnet News. Retrieved 2023-11-22.
  30. ^ "Nonhuman Entity Tops 2021 Edition of ArtReview's Annual Power 100". artreview.com. Retrieved 2023-11-22.
  31. ^ Madine, Mohammad; Salah, Khaled; Jayaraman, Raja; Battah, Ammar; Hasan, Haya; Yaqoob, Ibrar (2022). "Blockchain and NFTs for Time-Bound Access and Monetization of Private Data". IEEE Access. 10: 94186–94202. Bibcode:2022IEEEA..1094186M. doi:10.1109/ACCESS.2022.3204274. S2CID 252094824.
  32. ^ Sutopo, A. H. (2023). Blockchain Programming Smart Contract on Polygon (p. 58). Topazart.
  33. ^ Ali, Omar; Momin, Mujtaba; Shrestha, Anup; Das, Ronnie; Alhajj, Fadia; Dwivedi, Yogesh K. (February 2023). "A review of the key challenges of non-fungible tokens". Technological Forecasting and Social Change. 187: 122248. doi:10.1016/j.techfore.2022.122248.
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