In May, a new type of non-fungible token (NFT) called ERC-6551 was introduced to the Ethereum market. These tokens, also known as bound account tokens (TBAs), function as crypto wallets and have been a huge success on the Polygon blockchain.
ERC-6551 is a token standard that allows developers to improve the design of NFTs to the point where they take on the appearance of a crypto wallet. The standard was proposed in February 2023 and experiments started in May. The aim was to overcome limitations of the ERC-721 standard and make the market for NFTs more dynamic and interactive.
The main feature of ERC-6551 tokens is that they act as real cryptocurrency wallets, capable of holding assets. This is the first time in crypto history where a token contains other tokens inside it. This innovation opens up a world of possibilities, especially in the gaming context, where AI could revolutionize the industry.
Another interesting property of these NFTs is that they can sign cryptographic messages and verify signatures, allowing them to interact directly with smart contracts. This introduces a social governance property to NFTs, allowing for the implementation of dynamic personalities and characteristics.
On the technical side, ERC-6551 uses an ERC-721 NFT-compatible unlicensed registry to act as a directory for TBAs. The registry distributes a proxy contract for TBAs, which inherits the metadata of the original ERC-721 token. Assets contained within these tokens can be transferred to other TBAs via a function on the proxy contract.
Since July, the trend of NFTs acting as crypto wallets has gained significant traction on the Polygon blockchain. According to data from Dune Analytics, 18,116 ERC-6551 accounts have been activated to date, with 7,581 NFTs being held within TBAs. The real boom occurred between the end of August and September, with over 8,900 ERC-6551 accounts activated in the last week of September alone.
The NFT collections on Polygon that use this standard the most and implement the crypto wallet feature are Dippi TBA, Lens Protocol Profiles, and OrbSoulbound. These three collections manage 77% of all accounts created.
Looking at the general market, including the Ethereum network, there has been a discontinuous but overall growing activity from May until today. In total, 26,334 token-bound accounts were activated across all EVM chains, with 1,520 transactions and 11,270 NFTs held within them.
Given the potential of the ERC-6551 standard, it is expected that more and more TBA accounts will be created in the coming months. This trend will likely expand and become mainstream as web3 game producers start implementing TBAs within their virtual experiences, creating new ways to experience sociality in the context of blockchain.
Overall, ERC-6551 and its bound account tokens have revolutionized the NFT and crypto wallet market, offering exciting possibilities for the future of blockchain technology.