NFT (non-fungible tokens) is one of the main driving forces of GameFi, and even redefines the world's perception of gaming. In blockchain games, owning an NFT refers to the ownership of a game item, like digital lands, creatures, swords, helmets, magic potions, skins, etc. The mechanism of smart contracts in NFT allows players to earn rewards. For example, When a digital creature wears a limited skin during a battle, players can earn extra rewards like an in-game token or gaming item(another NFT) after winning a battle.
There are quite a few NFT standards in the blockchain industry that apply to developing games. Currently, the most commonly used ones include ERC-721 and ERC-1155. Since BNB Smart Chain(BSC) is Ethereum Virtual Machine (EVM) compatible, all NFT standards adopted in Ethereum can be deployed in BSC. This attracts hundreds of games with various genres to join the robust BNB Chain ecosystem.
This article will introduce various NFT standards for blockchain games in the easiest way. Meanwhile, The BNB Chain community has also invited Joe Zhow, the co-founder and CMO (Chief Marketing Officer) of Ultiverse to discuss the future trend of NFT standards development.
The following session will explain common NFT standards, including ERC-721 and ERC-1155. At the same time, other NFT standards that are suitable for developing blockchain games would also be mentioned.
ERC-721 is the most common NFT standard created due to the inability of ERC-20 in 2018. ERC-20 are functionally identical, interchangeable, and are not suitable to prove the ownership of a game item. While ERC-721 is unique and indivisible, it can be the certificate of ownership of a digital good or real-world asset that’s supposed to be made in a limited quantity. Therefore, Game studios usually adopt ERC-721 as a certificate to prove the ownership of a game item.
The most typical example of using ERC-721 is Cryptokitties, the first blockchain game that adopted ERC-721. In Cryptokitties, players can own and breed digital kitties. Each kitten is represented by an ERC-721 token, which proves the ownership and differentiates it from other kitties in the game. Each kitten also has a different price in the marketplace.
The emergence of ERC-721 allows the technologies of NFT to be perfectly integrated with games. Thousands of game developers are inspired to develop their blockchain games, including the famous Axie Infinity. However, the limitations of ERC-721 were also discovered after its wide adoption. High transaction costs and limited data storage are some of the limitations. To enhance the utility of NFT, a lot of developers have tried to extend its functionality of NFT by creating various advanced NFT standards.
The high gas fees are the main problem when users mint multiple ERC-721 NFTs at a time. Recently, Azuki, the top hit NFT project has made ERC-721A public, which is the extension of ERC-721. The Azuki contracts will enable minting multiple NFTs for essentially the same cost as minting a single NFT.
BEP-721 is a BNB Smart Chain token standard that allows for creating non-fungible tokens (NFTs). Same with ERC-721, each BEP-721 token is unique and is not interchanged with any other token. BEP-721 token transfers require BNB for gas fees. BEP-721 tokens can be created on various platforms in the BNB Chain ecosystem.
ERC-1155 is the extension of ERC-721, which was developed by Enjin Project Team, a blockchain game solution company, to overcome the shortcomings of ERC-721. Each ERC-721 token is represented by a single smart contract, which requires a single transaction, and players may need to pay a high transaction fee when minting or transferring an NFT. The emergence of ERC-1155 allows users to share multiples of ERC-721 by a single smart contract. For example, if users want to sell hundreds of gaming items in a game, they can use ERC-1155 to transfer them all in one go.
In MOBOX, one of the most popular games in BNB Chain, the project team adopted ERC-1155 for their Common, Uncommon, and Rare MoMo NFTs because these NFTs usually have a higher quantity. Players may often transfer many of them at a time. Meanwhile, Unique, Extraordinary, and Legendary MoMo NFTs, which are scarce in amount, are usually represented by ERC-721 tokens. Some Games would also adopt ERC-1155 to deploy the mystery box.
So far, the ERC-721 standard is the most common NFT standard adopted in blockchain games. However, ERC-721 also has some limitations. To solve its shortcomings, NFT developers have created various advanced NFT standards so that the utility of NFT can be improved. Besides the ERC-1155 mentioned above, other NFT standards could solve the limitation of ERC-721 and enhance the utility of NFT in games.
The function of ERC-998 enables ERC-721 tokens to own other ERC-721 tokens and ERC-20 tokens. In this case, ERC-998 would act as a “Parent token” with “Child contract address” (ERC-721) and “Child Token”(ERC-20). For example, under the smart contract of ERC-998, when buying an in-game character, you can own the character, its wearables, accessories, and some in-game tokens. All assets and tokens will also be sold if you sell and trade the character. ERC-998 can also be an option to create a mystery box in games.
BEP-129, as an extension of ERC-721, introduces a simple data structure to store attributes. This allows players to customize their digital assets according to their favorite. For example, roles in games can change their clothes' color, and NPCs in games can change their skills. This NFT standard can enrich players’ experience in-game. While the existing ERC-721 standard is not compatible with these kinds of use-cases.
The existing NFT standard, like ERC-721, stores metadata externally and links through URI, and the link could be fragile. Through BEP 129, metadata will no longer be stored off-chain, and BEP-129 also allows verified NFT owners to modify their NFT metadata.
ERC-4610 is a liquidity protocol for gaming NFT assets that enable non-custodial lending. It aims at allowing non-custodial, non-collateral, on-chain lending and borrowing of NFTs in-game.
ERC-4610 standardizes the play-to-earn yield generation processes from centralized scholarship programs to an NFT. The owner can delegate someone else directly to play to earn without worrying about losing their assets. For example, players can lend their magic wand (NFT) directly to other players(delegators) and earn rewards when the borrowers use their magic wand to win the battle.
The delegator has no permission to transfer the NFT. What the delegator can do depends on the design and development of the application or game. In general, without affecting the security of assets, the delegator is only an operator of the owner. When it comes to the transfer of assets, the sender should be the owner (not delegator) or other, and when the assets are to be transferred out, the recipient should be the owner or other.
EIP-3754 aims to enhance the rights of owners. Examples include giving the owner the right, but not the obligation, to purchase another ERC-721 token. An on-chain subscription business model can then be made available by this standard. This standard hence improves the conceptual clarity of an NFT.
EIP-1948 is an NFT standard that allows changeable information, and it is the extension of ERC-721. In the case of ERC-721, the data can only be added once at the time of minting and never be changed. However, this standard is extended with the ability to store dynamic data. A 32 bytes data field is added, and there is a write function that allows the owner to update it.
By adopting this standard, players in games can customize their game items according to their favorites. For instance, Crypto kitties can change their color by adopting this standard.
EIP-2615 This standard proposes an extension to ERC-721 to support rental and mortgage functions. Game developers can integrate ERC-2615 easily since it is fully backward-compatible with the ERC-721. One notable point is that the person who has the right to use an application is not the owner but the user (i.e. tenant).
With ERC-2615, players will be able to rent out their NFTs and take out a mortgage by collateralizing their NFTs. For example, this standard can apply to virtual items (i.e., in-game assets, physical items (i.e., houses), intellectual property rights, DAO membership tokens, etc.
EIP-2981 is an NFT standard that allows smart contracts of other NFT standards, such as ERC-721 and ERC-1155, to signal a royalty amount to the NFT creator or rights holder every time the NFT is sold or re-sold.
This is intended for NFT marketplaces that want to support the ongoing funding of artists and other NFT creators. The royalty payment must be voluntary. EIP-2981 is a standard that focuses on signaling to market participants the royalty payment information for a given NFT or set of NFTs.
Imagine if Minecraft launched their NFT game in the future. By adopting EIP-2981, players can sell their in-game creation, like a castle, to the others in marketplaces and earn a royalty amount every time the NFT is re-sold. This could be a massive incentive for players to create fantastic in-game items.
GameFi made a breakthrough last year. Though it is still in its early stage, we can see there are a lot of successful use cases of NFT standards in GameFi, though there are also some limitations.
It is our privilege to invite Joe Zhow, the Chief Marketing Officer(CMO) of Ultiverse, who has worked in the gaming industry since 2008, to discuss the limitations of current NFT standards towards GameFi and forecast the future development of NFT on GameFi and Metaverse.
Currently, though ERC-721 and ERC-1155 are widely adopted in BNB Chain, Ethereum, and other EVM compatible blockchains, they cannot be deployed in other non-EVM blockchains like Solana, vice versa. In other words, non-EVM blockchains’ NFT standards are also not applicable in BNB Chain, Ethereum, and other EVM compatible blockchains. This has limited the free flow of gamified NFT cross chains.
Joe believes that the metaverse would be a world similar to “Ready Player One” and “Free Guy” in the future. Players would access the virtual world with their own avatars and explore the world with different gaming assets. Gaming assets will transfer freely across chains.
“By achieving this, there will be common NFT standards that can be deployed in all chains and allow gaming items to be transferred freely. It will, and must, happen.”
NFTs still have much room for growth to achieve mass adoption. One of the main reasons is that their usage and transaction methods are still very complicated for the general public.
Joe is optimistic that this issue could be solved in the next 3 to 5 years.
“Many projects are trying to tackle these problems. For example, SafePal, a crypto wallet company, provides a “starter pack” solution. In the starter pack, there are tokens of chosen GameFi, metaverse projects, etc.”
Currently, NFT has limited storage on metadata. The digital items of owners are not stored in the NFT but stored in external servers. In the metadata of NFT, there is only a URI that refers to the location of digital assets. Digital items are stored “off-chain.” This could result in security issues if the server that stored digital assets is shut down, the digital assets could lose forever.
However, with the blockchain infrastructures are getting mature and the advancement of NFT, it is believed that the storage of NFT could be enhanced to store digital items.
Ultiverse is building the social gaming metaverse that connects Web3 with an immersive fully VR-compatible virtual world with AAA quality. By empowering players of various economic abilities to build mutually beneficial relationships, Ultiverse is aimed at creating a first-of-its-kind MetaFi. For more detail about Ultiverse, please visit: https://www.ultiverse.io/
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