Interchain NFTs are Coming to Cosmos
What is Interchain NFT Transfer？
Non-Fungible Tokens (NFTs) have changed the way we produce, distribute, trade and advertise branded goods like art, movies, and music, attracting the attention of various industries, as well as stakeholders within the Cosmos ecosystem.
Developed by Bianjie (a long-term contributor to the Cosmos Network and IRISnet) and supported by the Interchain Foundation, the Interchain NFT Transfer feature is enabled by the NFT module and the Interchain Standard-721.
The NFT Module (x/nft) is a Cosmos-style native module that allows you to conduct NFT-related queries and build your NFT applications. The original version of the open-source NFT module was adopted by Cosmos chains including IRISnet and Crypto.org to create their own NFT marketplaces. Given these positive outcomes from the ecosystem, this module further improved its design and was included in the Cosmos SDK with better capability and support for the IBC protocol.
This module is compatible with the ERC721 specification and has functions such as NFT creation and update, ownership tracking and transfers, batch operation, and more — the full technical specification can be found here.
The Interchain Standard (ICS-721) is an application layer protocol that allows cross-chain NFT interoperability between IBC-enabled chains (both homogeneous and heterogeneous). The standard designed the packet data structure, state machine handling logic, and encoding details for NFT transfer over IBC channels between two x/nft modules on separate chains. To make this standard more secure, compatible, and universal, its functionality considered smart contracts, metadata mutability, and batch transfers.
Through this standard, the non-fungibility and ownership of the asset can be preserved, the effects of Byzantine faults can be limited, and no additional permissioning is required. For more technical documentation, please refer to ICS-721 spec, implementation, and this demo.
Why do we need Interchain NFTs?
Despite the current downturn in NFT trading volume, the floor prices of some top NFT collections have actually climbed, such as the sale of CryptoPunk 4464 for $2.6 million. In addition, a recent report by SkyQuest indicates that by 2028 NFT trading volume is projected to reach a value of $122.43 billion, from $15.7 billion in 2021.
However, similar to fungible tokens, if NFTs are just tied to one blockchain, the number of transactions and size of the NFT market would be restricted. To remedy this and unleash the next level of NFT, high connectivity and interoperability are required. This is where Interchain NFTs come into the picture.
For IBC Users, NFTs provide them with ownership and sovereignty over their unique assets, and Interchain NFTs allow them more flexibility with how to use their assets in the ever-expanding interoperable Cosmos ecosystem.
At present, NFTs are to some extent fragmented and isolated on specific chains that NFT sellers or collectors must switch back and forth between. Interchain NFTs make it possible to issue NFTs on Chain A and send them to Chain B over IBC to sell, while preserving asset ownership and provenance. Users thus gain access to additional features on Chain B, such as exchange, royalty payments, or privacy protection.
For dApp Developers, NFT applications tend to be built on specific chains much like NFTs, such as NBA Top Shot on Flow or the Crypto.com NFT on Crypto.org Chain. Reaching a wider range of users is essential for any platform, and a common practice to achieve this is multi-chain deployments. One such example is the recent expansion of Solana-based Magic Eden to Ethereum.
Interchain NFTs open up the possibility of expanding a user base onto other networks via IBC, allowing NFT platforms to gain more exposure. Meanwhile, developers can utilize the benefits of many chains to fuel their own service through app-to-app connections, as well as collaborate with applications in other spaces, such as metaverse and GameFi, to infuse energy into their applications.
For IBCgang, Interchain NFTs provide the missing piece of the puzzle regarding Cosmos NFT standardization, and expand the capabilities of the IBC protocol. Through adopting the NFT module and enabling Interchain NFTs, IBCgang can benefit from expanding networks and enhancing interconnection.
New NFT-oriented developers may be attracted to participate and onboard their projects to the Interchain. At the same time, original developers from IBCgang networks have more functional options when upgrading their products. All of these NFT projects have the ability to communicate with one another over IBC, increasing the amount of activity across IBCgang networks and making the Interchain ecosystem more scalable.
Furthermore, Interchain NFTs encourage the adoption of the Interchain stack, and bring back use cases that fulfill the business needs and serve the real economy. Examples include the first artwork NFT to travel from Cosmos-tech-based WenChang Chain to Ethereum, and La Prairie launching its first NFT digital marketing campaign in travel retail using Cosmos underlying technology. As the technical cornerstone to the metaverse, this feature is able to support value ownership authentication, value circulation, and identification for use cases in Web3.
In short, Interchain NFTs will provide a richer interchain experience for users, increase opportunities for developers and networks, spawn more business use cases, and importantly capture more value for the interchain ecosystem, thereby bringing us one step closer to the Internet of Blockchains.