NFT leasing: how the new NFT token standard opens the next generation leasing market

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  • EthereumThe token standard "erc-4907" became "final" (final version) in late June, opening up the potential of rentable NFTs.

  • Once implemented in smart contracts, rentable NFTs can promote the development of blockchain based games and metauniverse land sales.

In late June, a new Ethereum token standard named "erc-4907" became the standard with the status of "final"; This standard will allow users to lend their non homogenous tokens (NFT).

"Erc-4907" adds a new role in the NFT standard, separating the ownership and use rights of NFT - making "leasing" possible.Renters can use NFT until the lease expires, and NFT will automatically return it to its owner after the lease expires.

Before the emergence of "erc-4907", every time you transfer NFT, you will lose its ownership, "said lareina, the development director of double protocol (a start-up company that establishes a rentable NFT infrastructure and is also the developer of the new token standard). However, by dividing ownership and use rights, the NFT of" erc-4907 "standard can be lent and leased without permission.

To be sure, rentable NFTs have not been officially available before. Reaching the "final" status means that Ethereum proposals, or projects aimed at improving the Ethereum blockchain, can no longer be updated. Other builders can now incorporate this proposal into smart contracts without worrying that developers will change it later.

Once it is built into the smart contract,Rentable NFT may subvert blockchain games, metauniverse land sales and blockchain based media platforms.

How to make rentable NFT

Most well-known NFT projects, such as bored ape Yacht ClubCryptoPunks And azuki are both cast or packaged according to the "erc-721" token standard, which represents the ownership of digital or physical assets and can be verified on the Ethereum blockchain.

These token standards provide that owners of NFT can use the digital assets. For example, to use play to ear games Axie Infinity Tokens in Axie #5. You must have the NFT in your wallet. To have NFT in your wallet, you must cast the axie or buy it in the secondary market.

In other words, buying the axie is the basis for you to use it - just like other NFTs cast according to the "erc-721" standard.

The NFT cast according to the "erc-4907" token standard divides the ownership and use rights of digital assets. The "erc-4907" token standard can be wrapped on the existing NFT cast according to the "erc-721" or other Ethereum standards, allowing the wrapped NFT to be read by the smart contract in the rentable NFT market and be borrowed or leased - just as it was originally cast according to the "erc-4907" standard.

In addition, the owner can set a time parameter to determine when the renter can use the NFT he rents. At the end of the time, the user can no longer use the NFT, and the leased NFT will return to the original owner - the owner does not need to manually return their assets.

Usage scenarios and future prospects of rentable NFT

Sharing the right to use NFT is not new. The game guild buys NFTs that are too expensive for most players and lends them in exchange for a portion of the players' profits. Such guilds, such as yield guild games (YGG), appeared in succession with axie infinity in the late summer and early autumn of last year, when the popularity of the game was at its peak.

"When the owners transfer the rights (of their NFT) to the guild, they face great risks," shrug Newton, the builder of double protocol, told the block in an interview. "You must trust the guild. If the guild disappears, you will lose your assets." 

However, "erc-4907" allows users to manually create a union using the valuable NFT they own, in which the lender can charge a rental fee while the user can retain the profits from the game. Lareina said that they can do this without trust and without permission by using Ethereum smart contracts.

Although this seems to be a threat to the guild's business model, the double protocol believes that the game guild based on the blockchain can become a market maker that can lease NFT - buying and selling securities and often serving as an entity that provides liquidity. Mature guild organizations like YGG can use "erc-4907" to make their guilds more decentralized.

Lareina added that double protocol believes that the game association is a major stakeholder in the rentable NFT market, so it also hopes to cater to them as much as possible. This may include creating tools that allow guild organizations to create new guilds by clicking a button, and controlling the distribution of game revenue between lenders and renters.

In addition to games, rentable NFT can also increase the use of metacosmic land. Lareina pointed out that the landowners of the metauniverse can rent their property for activities. If investors buy a piece of metacosmic land, but lack the ability to build on it, they can lease the land to another party for construction and earn rental income. At the same time, landowners can also protect these assets by removing any other property they own on the metacosmic land during the lease term and rejoining it after the end of the lease term.

Lareina added that this technology can also promote the free trial of new products or book lending based on Web3, as well as other fields.

In short, rentable NFTs unlock a new market for NFT usage rights because it has been decoupled from ownership. Lareina said: "we are building our products on this concept."