The ERC-6551 token standard, explained

The NFT Unicorn 3dc95fc2a8d9fa43dc352d033a453456 The ERC-6551 token standard, explained Crypto News

What is ERC-6551?

ERC-6551 adds smart contract functionalities to NFTs, making them capable of owning assets, interacting with applications directly, holding tokens and working as an on-chain identity.

ERC-6551, a token standard introduced on the Ethereum mainnet on May 7, 2023, aims to enhance the functionality of NFTs by adding smart contract capabilities. Implementation of this token standard assigns an Ethereum account to the NFT, setting up a token-bound account (TBA). Thanks to ERC-6551, nonfungible token (NFT) are able to own assets and interact with applications directly.

With TBAs, developers can build a smart contract wallet for each ERC-721 token, which can facilitate transactions, interact with other decentralized applications (DApps), function as an on-chain identity, or hold tokens. As TBAs are backward-compatible with the ERC-721 standard, ERC-721 tokens can enact the ERC-6551 standard without any major modifications.

How is ERC-6551 an improvement on ERC-721?

NFTs integrated with ERC-6551 enhance the capabilities of ERC-721 NFTs across several parameters, such as metadata flexibility, trackable history, composability and on-chain interactivity.

The purpose of the ERC-721 token standard was to implement a minimum standard interface for NFTs. However, NFTs created under ERC-721 cannot be associated with other on-chain assets, making it difficult to create digital assets representing several real-world assets. 

The standard wasn’t compatible with DApps and smart contracts across the Ethereum ecosystem. The ERC-6551 standard has been introduced to enable NFTs to execute arbitrary operations, own other NFTs and assets, use accounts across multiple chains, and control multiple independent accounts.

Metadata flexibility

Static JSON metadata makes ERC-721 tokens inflexible regarding uniform resource identifiers (URIs), efficiency and security. The standard also gets around the problem of inflexibility in ERC-721 NFTs, where the data, once minted, cannot be altered by accommodating additional data and values.

Trackable history

Another area where the ERC-6551 token standard scores a major advantage over ERC-721 because it provides more detailed information about an asset’s utility and transaction history, leading to a better understanding of an NFT’s value and its past interactions.

More composability

ERC-6551 supports integrating NFTs with related assets, such as other NFTs and other tokens, within a single TBA. Consolidating NFTs, tokens and assets enables straightforward asset transfers and coherent switching between platforms, resulting in greater composability.

On-chain interactivity

Implementing ERC-6551 empowers one to use the NFT address as their on-chain identity, which facilitates interaction with on-chain smart contracts and DApps.

How do ERC-6551 NFTs work with existing ERC-721 tokens?

The integration between ERC-6551 NFTs and the existing ERC-721 tokens works via a proxy contract, imitating the properties and metadata of the existing ERC-721 NFTs.

The ERC-6551 standard uses an open registry system in sync with existing ERC-721 tokens. For TBAs, this registry operates as both a creation hub and a management tool. Individuals are required to initiate a function on the registry and pay a fee to create a TBA for an ERC-721 token. The registry now sets up a proxy contract, simulating the metadata and properties of the original ERC-721 token.

The proxy contract facilitates the TBAs to authenticate signatures and sign messages on behalf of the NFT. Thanks to this feature, TBAs can engage with various smart contracts on the network. 

What are the use cases of ERC-6551?

ERC-6551 tokens are usable in several domains, such as fashion, gaming, B2C business and decentralized autonomous organizations (DAOs).

Let’s understand how ERC-6551 enhances the NFT technology stack and powers a string of use cases:


ERC-6551 was introduced by developers of Future Primitive, an on-chain product studio led by Benny Giang and Steve Jang, when they wanted a way to enable on-chain avatars to own their digital clothing. With ERC-6551, NFTs can own more assets, opening up the possibility of trading features. 

For example, an NFT profile with a bag can trade it or get as many hats as they want. The breakthrough technology suits digital fashion more, where several artists can collaborate to combine their NFTs into a new artwork. 

Moreover, the unit NFTs in the combined piece are still identifiable with their creators. This new possibility would foster more creative collaborations between artists, giving a boost to digital fashion.


ERC-6551 adds another frontier to gaming, enabling avatars to accumulate assets and cryptocurrencies and store them safely in their wallets. It also enables game characters to exchange their accumulated assets and crypto for other assets, giving the players yet another reason to play the game. 

The token standard takes character customization to the next level as well. TBAs enable developers to create “Network Playable Characters” that help in the monetization of in-game assets. It also cracks open opportunities for NFT creators to earn rewards.

B2C business

ERC-6551 provides developers with a deep insight into the transaction history of an asset, equipping them with clear information about the past interactions of users with NFTs. A business-to-consumer (B2C) organization can draw on this information to chalk out in-game rewards, loyalty programs and airdrops. Retail organizations can associate NFTs with their products and utilize the new functionality to set up ratings depending on the value these NFTs generate.


TBAs can be a tool to identify DAO members. It will eliminate the need to segregate the history of a DAO member between an NFT and a wallet, as all details can be placed into a single NFT. It enables people to enjoy full functionality as DAO members and engage in signing contracts, accessing services and voting.

What are the limitations of ERC-6551?

Methods used by several NFT projects might not be in sync with the ERC-6551 token standard. These tokens might also become the target of hackers.

Whenever a new technology emerges, a critical challenge is finding adoption from existing projects. Various NFT projects use different methods for their functionalities, some of which might not be in sync with the ERC-6551 token standard. For example, projects like CryptoPunks, which don’t follow the “ownerOf” method, will not be able to sync with the ERC-6551. The ownerOf method in ERC-721 standard NFT contracts identifies the current owner of a specific NFT by returning their Ethereum address. 

CryptoPunks, predating ERC-721, lack this method, complicating integration with newer standards like ERC-6551. There will also be a learning curve for developers to understand how to use the new token efficiently.

Some platforms may not be keen on integrating with the ERC-6551 standard for business reasons. Therefore, despite the introduction, all collectors and creators may not have access to ERC-6551 NFTs.

As ERC-6551 tokens are more in vogue, they are also likely to become targets of hackers. As the NFTs integrate with the ERC-6551 standard, they own assets and interact with applications, so hackers will be eager to exploit vulnerabilities.

Source: Cointelegraph