Double Protocol launches EIP 4907 rental NFT standard, expected to have first application in May
The Rise of Utility-Focused NFTs
Contrary to what skeptics predicted, the nascent but thriving NFT market is now demonstrating that it was never built around mere hype and FOMO. The underlying technology and the economy that powers it grows stronger every day to promote and support real-world use cases.
At least that’s what it looks like, as more and more utility-focused NFTs are coming out, as opposed to most first-gen NFTs that were basically avatar-based. The rapid growth of the metaverse and NFT play-to-earn games has been particularly instrumental in helping the NFT market evolve and mature.
The key takeaway from this trend is that NFT ownership and use cases are likely to be on an upward trajectory for the foreseeable future. And as you’ve probably already noticed, NFT rental marketplaces have a big role to play here.
NFT Rental – How It Makes NFTs More Accessible To The Masses
If 2021 was the year the NFT ownership economy ruled the roost, 2022 could very well be the year NFT rentals become the dominant trend. The signs are already there, especially with the emergence of NFT rental platforms such as Double Protocol.
For those unaware, the idea behind NFT rental is as simple as it sounds. Just like you would rent a luxury car for the weekend without having to own it, NFT rental also allows you to experience or use NFTs for a limited time without having to own them.
Generally speaking, you will find all kinds of NFTs, including in-game assets, virtual domains, digital art, financial NFTs, collectibles, and more. in an NFT market like Double Protocol. A smart contract enforces the terms of the lease agreement between lender and borrower, making the whole process transparent, decentralized, and independent of a third party.
Advantages of NFT rental
While NFTs are undoubtedly growing in popularity, the cost of ownership can sometimes be a major hurdle limiting its mass adoption. Yes, NFTs can be really expensive, especially when it comes to the most popular ones that create a lot of buzz.
NFT rental is by far the most convenient way to circumvent the cost factor as it allows even the most expensive NFTs to be accessible to users who could not otherwise afford them.
At the other end of the spectrum, it also makes financial sense for users who buy NFTs as an investment (without necessarily intending to use those NFTs themselves). By renting out their NFT stash, these users can make huge gains as passive income.
So far so good – but there are a few bumps along the way that make the whole NFT rental process more complicated than most users are comfortable with. And this is precisely where a platform like Double Protocol intends to create the difference by smoothing out these bumps and thus lowering the threshold for web3 users to access GameFi and metaverses of their choice via NFT rentals.
How Dual Protocol Aims to Make NFT Rental Efficient and More Impactful
Separating right of use from ownership is a fundamental condition that must be met for NFT tenancy to work properly. One way to comply with this condition so far is to add the role of an operator or controller who can perform specific actions with an NFT but can never transfer the asset to a third party or assume it. full control (as the owner would).
If the owner decides to make an NFT accessible to a controller/operator for a limited time via an NFT rental platform, he must perform two on-chain transactions. Once at the beginning and once at the end of said period.
Without going into technical details, as NFT applications and subsequently NFT rental continue to grow rapidly, the need of the hour is to develop a framework to effectively manage user rights management. A viable way to accomplish this goal is to create and enforce a unified standard that makes it easier for all applications to work together.
EIP4907 dual-protocol dual-role NFT standard
The key component that enables Double Protocol to achieve its goal of enabling the lending of NFTs without requiring the transfer of ownership (by the lender) is the dual role parameter of the NFT smart contract. To help more projects monetize their NFTs, Double Protocol has come up with the NFT standard with the dual role parameter – EIP 4907.
By applying EIP 4907, the right of use could be easily extracted from the property, which is the key to the rental.
In addition, the dual role standard is expirable, which means that lease NFTs come with an automatic expiration date, which means that the borrower’s use rights automatically terminate at the end of the rental period without any additional on-chain transactions.
This is how it works:
- Double Protocol deploys the dual role contact to ensure that the in-game asset has 2 roles: owner and user. And then create a doNFT corresponding to the original NFT to represent the user’s right.
- Once the borrower has paid the rent, the doNFT will be issued to the tenant in accordance with the doNFT contract.
- During the lease period, the lessee is entitled to a diverse range of usage rights which may include subletting, splitting, merging, as well as even financial derivatives, among others.
- At the end of the rental period, the doNFT contract automatically revokes the borrower’s rights of use.
Benefits of the Double Protocol dual-role standard include:
- No need to worry about credit risk.
- The borrower does not have to pay heavy guarantees.
- The owner does not have to worry about the security of the rented property.
- The rental conditions are flexible and can be split, combined or exchanged several times.
- The ability to integrate rental agreements into third-party products and applications.
For more information, please visit the Dual Protocol website and Twitter for the latest news and updates regarding the Double ecosystem.
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