Author: William M. Peaster, Bankless; Translated by: Deng Tong, Golden Finance
If DeFi has “money Lego”, then NFT has “cultural Lego”.
Another way to put it? NFT primitives.
In cryptocurrency, primitives are basic building blocks that can be used to create more complex systems or applications.
NFT primitives are important because they pave the way for new innovation and new use cases around NFTs, enabling developers to build more complex and versatile experiences.
To give you a better idea of the programmable possibilities here, let’s look at 8 examples of some of the most notable NFT primitives available today.
1. Zora Protocol Rewards
When creators select the “Free + Rewards” pricing option when minting an NFT on Zora, they become eligible to receive protocol rewards by splitting the 0.000777 ETH Zora minting fee.
As new coins are minted, these rewards are accumulated into an escrow contract and can be withdrawn by creators at any time.
Developers or platforms that promote the creation of NFT collectibles or recommend collectors to mint NFTs will also receive rewards. This includes "creation recommendation" rewards for those who bring creators to the platform and "minting recommendation" rewards for those who bring collectors.
Therefore, Zora Protocol Rewards introduces a base reward mechanism that can be leveraged to create new applications, such as self-funding alternative Zora frontends. It can also be easily integrated into existing NFT projects and platforms.
2. ERC-6551
ERC-6551 brings fundamental changes to the NFT space, enabling NFTs to act as their own smart contract accounts.
ERC-6551 significantly extends the basic properties of ERC-721 tokens by allowing NFTs to own assets, interact with web3 applications, and act as on-chain identities. The composability of ERC-6551 means it can be used in conjunction with other protocols and applications to create new innovative NFT utilities.
For example, the original architecture of the AI-based simulation game Parallel Colony was inspired by ERC-6551 because the standard allows the game’s AI agents to act as wallets and manage their own token assets.
3. Boosts
Boost is a distributed incentive protocol. It enables the deployment of incentives (i.e. tokens) to spur targeted on-chain actions, and recently we have seen an increase in the number of people deploying Boost to drive participation in the minting of new NFTs.
For example, you could set up a Boost so that the first 100 minters of the latest NFT mint each receive $2 in OP as a reward. However, how you set the parameters is completely arbitrary and up to you.
Nonetheless, Boost’s open and composable design enables easy integration with other applications, making it an incentive lever for anyone who wants to take advantage of its capabilities.
4. DN-404
DN-404 is an optimized version of the ERC-404 experiment, which helped popularize a new way to create hybrid tokens that can function as both fungible tokens (ERC-20) and non-fungible tokens (ERC-721).
As such, DN-404 can be used for a variety of applications, such as enabling fractional ownership of NFTs, increasing liquidity for NFT projects, and creating new trading mechanisms that leverage fungible and NFT properties.
5. Nouns Protocol
One of the most popular NFT primitives is the Nouns protocol.
With this system, Nouns pioneered an all-in-one model for ongoing NFT generation, auctioning, and community governance. To date, this foundation has inspired and been modified by dozens of spinoff projects, giving rise to the phrase “Nounish DAO”.
The fully on-chain nature of the Nouns protocol also means that developers can launch new applications around Nouns at will.
6. Liquid Delegates
Created by the Delegate team, Liquid Delegates introduces a novel mechanism that allows delegation rights to be wrapped into tradable NFTs.
By allowing NFTs to delegate rights, Liquid Delegates adds the ability to trade those rights, claim airdrops, access token-gated communities, and more, all without transferring ownership of the underlying asset.
Projects can use this feature for a variety of purposes, but we typically see it integrated so that people can mint or claim tokens securely from their vault wallets.
7. Non-Fungible Vaults (NFVs)
Developed by Open Dollar, the Non-Fungible Vault (NFV) ties collateralized debt positions (CDPs) to transferable NFTs instead of protocol accounts.
This primitive makes ownership of stablecoin borrow positions liquid and transferable, thereby improving capital efficiency and flexibility.
In other words? NFVs pave the way for the first secondary lending market in DeFi, and since they exist as NFTs, they can be integrated into DeFi in new ways.
8. Liquid Listings
One of the newer NFT primitives is Flayer’s Liquid Listings, which allows rarer non-reserve NFTs to be deposited into a collection pool in exchange for “reserve tokens.”
These tokens (e.g. ƒMILADY) represent the reserve price of the NFT and can be sold to provide immediate liquidity, while the remaining value of the listing will be realized upon the eventual sale of the NFT.
Notably, this primitive uses Harberger fees to ensure fair pricing, making it easier to sell non-reserve price NFTs and quickly gain liquidity in a frictionless manner.
