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8 NFT Primitives You Should Know About
If DeFi has âmoney legos,â then NFTs have âculture legos.â
Another way to put this? NFT primitives.
In crypto, a primitive is a fundamental building block that can be used to create more complex systems or applications.
NFT primitives matter because they pave the way for new innovations and new use cases around NFTs, enabling developers to build more sophisticated and versatile experiences.
To give you a better sense of the programmable possibilities here, letâs run through 8 examples of some of the most notable NFT primitives today.
1. Zora Protocol Rewards
When a creator selects the "Free + Rewards" pricing option while minting their NFTs on Zora, they become eligible for Protocol Rewards via the splitting of the 0.000777 ETH Zora Mint Fee.
Upon new mints, these rewards are accumulated into an escrow contract and can be withdrawn by the creator at any time.
Developers or platforms that facilitate the creation of NFT collections or refer collectors to mint NFTs also receive rewards. This includes âcreate referralâ rewards for those who bring creators to the platform and âmint referralâ rewards for those who bring in collectors.
Accordingly, Zora Protocol Rewards introduces a foundational reward mechanism that can be leveraged to create new applications, e.g. self-funded alternative Zora frontends. It can also be readily integrated into existing NFT projects and platforms.
2. ERC-6551
ERC-6551 introduced a foundational change to the NFT space by enabling NFTs to function as their own smart contract accounts.
By allowing NFTs to own assets, interact with web3 applications, and act as onchain identities, ERC-6551 significantly extended the basic properties of ERC-721 tokens. The composable nature of ERC-6551 means it can be combined with other protocols and apps to create new innovative NFT utilities.
For example, the original architecture of AI-based simulation game Parallel Colony was inspired by ERC-6551, as the standard allowed the gameâs AI agents to act as wallets and manage their own token assets.
3. Boosts
Boost is a distributed incentives protocol. It enables the deployment of incentives, i.e. tokens, to spur targeted onchain actions, and recently weâve increasingly seen boosts deployed to drive engagement for new NFT mints.
For example, you could set up a boost so that the first 100 minters of your latest NFT drop receive 2 $OP each as a reward. How you set up the parameters is entirely arbitrary and up to you, though.
All that said, Boostâs open and composable design allows it to be readily integrated with other applications, allowing it to serve as an incentivization lever for anyone who wants to tap into its capabilities.
4. DN-404
DN-404, an optimized version of the ERC-404 experiment, helped popularize a new way to create hybrid tokens that act as both fungible (ERC-20) and non-fungible tokens (ERC-721).
Accordingly, DN-404 can be used in a variety of applications, such as enabling fractional ownership of NFTs, increasing liquidity for NFT projects, and creating new trading mechanisms that leverage both fungible and NFT properties.
5. Nouns Protocol
One of the most popular NFT primitives is the Nouns Protocol.
With this system, the Nouns pioneered an all-in-one model for continuous NFT generation, auctioning, and community governance. This foundation has inspired and been modified by many dozens of spinoff projects to date, leading to the phrase âNounish DAOs.â
Nouns Protocolâs entirely onchain nature also means that developers can spin up new apps around Nouns however they please.
6. Liquid Delegates
Created by the Delegate team, Liquid Delegates introduced a novel mechanism that allows delegation rights to be wrapped into tradeable NFTs.
By enabling NFTs to delegate rights, Liquid Delegates added the ability to trade these rights, claim airdrops, access token-gated communities, and more, all without transferring ownership of the underlying asset.
Projects can use this capability toward various ends, but we've commonly seen it integrated so people can safely mint or make token claims from their vault wallets.
7. Non-Fungible Vaults (NFVs)
Developed by Open Dollar, Non-Fungible Vaults (NFVs) tie collateralized debt positions (CDPs) to transferable NFTs instead of protocol accounts.
This primitive makes the ownership of stablecoin borrow positions liquid and transferable, improving capital efficiency and flexibility.
In other words? NFVs pave the way for the first secondary loan markets in DeFi, and they can be integrated across DeFi in new ways thanks to existing as NFTs.
8. Liquid Listings
One of the newer NFT primitives around is Flayer's Liquid Listings, which allow rarer non-floor NFTs to be deposited into collection pools in exchange for "Floor Tokens."
These tokens, e.g. ÆMILADY, represent the floor value of the NFT and can be sold to provide immediate liquidity, with the remaining value of the listing realized upon the final sale of the NFT.
Notably, this primitive uses Harberger Fees to ensure fair pricing, making it easier to sell non-floor NFTs and access liquidity quickly in a smooth fashion.
#NFT #ZORAREWARDS #ERC
Another way to put this? NFT primitives.
In crypto, a primitive is a fundamental building block that can be used to create more complex systems or applications.
NFT primitives matter because they pave the way for new innovations and new use cases around NFTs, enabling developers to build more sophisticated and versatile experiences.
To give you a better sense of the programmable possibilities here, letâs run through 8 examples of some of the most notable NFT primitives today.
1. Zora Protocol Rewards
When a creator selects the "Free + Rewards" pricing option while minting their NFTs on Zora, they become eligible for Protocol Rewards via the splitting of the 0.000777 ETH Zora Mint Fee.
Upon new mints, these rewards are accumulated into an escrow contract and can be withdrawn by the creator at any time.
Developers or platforms that facilitate the creation of NFT collections or refer collectors to mint NFTs also receive rewards. This includes âcreate referralâ rewards for those who bring creators to the platform and âmint referralâ rewards for those who bring in collectors.
Accordingly, Zora Protocol Rewards introduces a foundational reward mechanism that can be leveraged to create new applications, e.g. self-funded alternative Zora frontends. It can also be readily integrated into existing NFT projects and platforms.
2. ERC-6551
ERC-6551 introduced a foundational change to the NFT space by enabling NFTs to function as their own smart contract accounts.
By allowing NFTs to own assets, interact with web3 applications, and act as onchain identities, ERC-6551 significantly extended the basic properties of ERC-721 tokens. The composable nature of ERC-6551 means it can be combined with other protocols and apps to create new innovative NFT utilities.
For example, the original architecture of AI-based simulation game Parallel Colony was inspired by ERC-6551, as the standard allowed the gameâs AI agents to act as wallets and manage their own token assets.
3. Boosts
Boost is a distributed incentives protocol. It enables the deployment of incentives, i.e. tokens, to spur targeted onchain actions, and recently weâve increasingly seen boosts deployed to drive engagement for new NFT mints.
For example, you could set up a boost so that the first 100 minters of your latest NFT drop receive 2 $OP each as a reward. How you set up the parameters is entirely arbitrary and up to you, though.
All that said, Boostâs open and composable design allows it to be readily integrated with other applications, allowing it to serve as an incentivization lever for anyone who wants to tap into its capabilities.
4. DN-404
DN-404, an optimized version of the ERC-404 experiment, helped popularize a new way to create hybrid tokens that act as both fungible (ERC-20) and non-fungible tokens (ERC-721).
Accordingly, DN-404 can be used in a variety of applications, such as enabling fractional ownership of NFTs, increasing liquidity for NFT projects, and creating new trading mechanisms that leverage both fungible and NFT properties.
5. Nouns Protocol
One of the most popular NFT primitives is the Nouns Protocol.
With this system, the Nouns pioneered an all-in-one model for continuous NFT generation, auctioning, and community governance. This foundation has inspired and been modified by many dozens of spinoff projects to date, leading to the phrase âNounish DAOs.â
Nouns Protocolâs entirely onchain nature also means that developers can spin up new apps around Nouns however they please.
6. Liquid Delegates
Created by the Delegate team, Liquid Delegates introduced a novel mechanism that allows delegation rights to be wrapped into tradeable NFTs.
By enabling NFTs to delegate rights, Liquid Delegates added the ability to trade these rights, claim airdrops, access token-gated communities, and more, all without transferring ownership of the underlying asset.
Projects can use this capability toward various ends, but we've commonly seen it integrated so people can safely mint or make token claims from their vault wallets.
7. Non-Fungible Vaults (NFVs)
Developed by Open Dollar, Non-Fungible Vaults (NFVs) tie collateralized debt positions (CDPs) to transferable NFTs instead of protocol accounts.
This primitive makes the ownership of stablecoin borrow positions liquid and transferable, improving capital efficiency and flexibility.
In other words? NFVs pave the way for the first secondary loan markets in DeFi, and they can be integrated across DeFi in new ways thanks to existing as NFTs.
8. Liquid Listings
One of the newer NFT primitives around is Flayer's Liquid Listings, which allow rarer non-floor NFTs to be deposited into collection pools in exchange for "Floor Tokens."
These tokens, e.g. ÆMILADY, represent the floor value of the NFT and can be sold to provide immediate liquidity, with the remaining value of the listing realized upon the final sale of the NFT.
Notably, this primitive uses Harberger Fees to ensure fair pricing, making it easier to sell non-floor NFTs and access liquidity quickly in a smooth fashion.
#NFT #ZORAREWARDS #ERC
A new Ethereum Improvement Proposal ( #EIP ), #EIP7540 , is being proposed to introduce asynchronous deposit and redemption flows as an extension to the existing ERC-4626 tokenized vault standard. #ERC -4626 sets the standards for yield-bearing vaults, which are #smartcontracts designed to execute strategies and reward token depositors. These vaults are built to be atomic, meaning that deposit and redemption happen simultaneously.
EIP-7540 is aimed at enabling asynchronous transactions, which could benefit various protocols, including those dealing with real-world assets (RWA), cross-chain lending, and liquid staking. Asynchronous transactions allow different actions to occur at different times based on specific conditions. For instance, when a lender deposits collateral, the borrower might receive their share only after meeting certain criteria.
Currently, each RWA protocol manages its unique off-chain processes, and EIP-7540 seeks to standardize how protocols handle both on and off-chain transactions. However, it's important to note that implementing asynchronous transactions might introduce more complexity and potential security risks compared to atomic flows.
Jeroen Offerijns, who is both the co-author of EIP-7540 and the CTO of Centrifuge, emphasizes the necessity for thorough testing and auditing when implementing asynchronous vaults. He also suggests that standardization can be beneficial by creating reusable property test suites. Offerijns acknowledges that asynchronous flows could put added pressure on protocols to ensure fair execution and mentions that Centrifuge has developed mechanisms to protect against frontrunning.
EIP-7540 is currently in its early stages and will undergo discussion on #Ethereum Magicians forums before progressing to review, a last call, and, ultimately, a final stage for acceptance once a consensus is reached.
EIP-7540 is aimed at enabling asynchronous transactions, which could benefit various protocols, including those dealing with real-world assets (RWA), cross-chain lending, and liquid staking. Asynchronous transactions allow different actions to occur at different times based on specific conditions. For instance, when a lender deposits collateral, the borrower might receive their share only after meeting certain criteria.
Currently, each RWA protocol manages its unique off-chain processes, and EIP-7540 seeks to standardize how protocols handle both on and off-chain transactions. However, it's important to note that implementing asynchronous transactions might introduce more complexity and potential security risks compared to atomic flows.
Jeroen Offerijns, who is both the co-author of EIP-7540 and the CTO of Centrifuge, emphasizes the necessity for thorough testing and auditing when implementing asynchronous vaults. He also suggests that standardization can be beneficial by creating reusable property test suites. Offerijns acknowledges that asynchronous flows could put added pressure on protocols to ensure fair execution and mentions that Centrifuge has developed mechanisms to protect against frontrunning.
EIP-7540 is currently in its early stages and will undergo discussion on #Ethereum Magicians forums before progressing to review, a last call, and, ultimately, a final stage for acceptance once a consensus is reached.