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What is ERC-6551? And Why Does it Matter?

Key Takeaways
  • To deal with the throttling challenges in front of NFTs, ERC-6551 has been introduced
  • ERC-6551 introduces a system that enhances ERC-721 tokens by giving them individual smart contract accounts
  • With ERC-6551, NFTs can have extra assets, engage with applications, and even partake in voting or governance processes
20 May 2023 By: Anirudh Trivedi
What is ERC-6551? And Why Does it Matter?

The world of cryptocurrency and blockchain changed when Ethereum came into existence with its ability to deploy smart contracts on the mainnet. This unleashed a community of developers who have been working for years to make Ethereum the most important blockchain in the DeFi world. 

However, things changed dramatically when ERC-721 was introduced which enables the minting of Non-Fungible Tokens on Ethereum. This standard paved the way for the widely prevalent market of NFTs and made it possible to declare immutable ownership of digital assets on a blockchain network. 

Now when NFTs are becoming more important in the DeFi dialogue, there are certain limitations that are throttling its growth. And to deal with that, ERC-6551 has been introduced. 

What is ERC and Why Are Numbers Around It Always?

ERC stands for Ethereum Request for Comments. It is a process used by the Ethereum community to propose and develop standards for the Ethereum blockchain. These standards, called ERCs, define a set of rules and interfaces that ETH developers can follow. This allows them to create compatible tokens, contracts, and protocols on the Ethereum network.

The numbers with the ERC represent the specific proposals or standards within the ERC framework. 

Each number represents a distinct proposal or standard that has been suggested and accepted by the Ethereum community. These numbers help to differentiate and categorize the standards and make it easier to reference and discuss them.

To understand ERC better, here are some of the ERC standards that you should know about:

  • ERC-20: This is the most widely adopted token standard on the Ethereum network. It defines the interface for fungible tokens, which are tokens that are interchangeable with each other. ERC-20 tokens are often used to represent digital assets, such as cryptocurrency or utility tokens.

  • ERC-721: This standard introduced the concept of non-fungible tokens (NFTs) on Ethereum. NFTs are tokens that are unique and cannot be divided into smaller units. ERC-721 tokens are used to represent art, collectibles, music, or any other form of digital asset that can have unique ownership

  • ERC-1155: This standard is a hybrid of ERC-20 and ERC-721. It allows developers to create both fungible and non-fungible tokens within a single smart contract. ERC-1155 tokens are used to represent those assets that have both fungible and non-fungible properties.  Virtual land or in-game currency falls into this category.

ERC standards are an important part of the Ethereum ecosystem. They provide developers with a set of rules and interfaces to follow. They help to ensure that tokens, contracts, and protocols are compatible with each other. This makes it easier for developers to build new applications and services on the Ethereum blockchain.

What is ERC-6551? 

ERC-6551 introduces a system that enhances ERC-721 tokens by giving them individual smart contract accounts. These token-bound accounts allow ERC-721 tokens to own assets and engage with other blockchain applications. All this without necessitating modifications to existing ERC-721 smart contracts or infrastructure.

The process of ERC-6551 operates as follows:

  • A unique identifier is assigned to each ERC-721 token within the blockchain.

  • The token's identifier is utilized to establish a dedicated smart contract account for that specific token.

  • The smart contract account is linked to the token's owner.

  • With a smart contract account, owners can store assets and interact with various applications.

The introduction of ERC-6551 signifies a substantial advancement in the ERC-721 standard. It transforms NFTs from mere static assets into dynamic entities with newfound capabilities. With ERC-6551, NFTs can have extra assets, engage with applications, and even partake in voting or governance processes. This development unlocks a myriad of possibilities for NFTs, leading to their widespread adoption.

Here are some examples of how ERC-6551 could be used:

  • A character in a role-playing game could accumulate assets and abilities over time based on actions they have taken.

  • An automobile can consist of a combination of fungible and non-fungible components.

  • An automated investment portfolio can consist of a diverse collection of fungible assets.

  • A punch pass membership card provides access to a venue while also maintaining a record of previous interactions. 

These are just a few examples of how ERC-6551 could be used to enhance the functionality and interactivity of NFTs. As the NFT space continues to grow, it is likely that we will see even more innovative and creative uses for ERC-6551.

Benefits of ERC-6551 With Examples

Here are some of the key benefits of the ERC-6551 standard that can change the world of NFTs for good. 


Token-bound accounts enable composability, allowing NFTs to bundle related assets. This includes other NFTs and tokens that can be stored in a single profile. When an ERC-6551 NFT is sold or transferred, all the assets contained within it are transferred together. This improves the user experience, especially in Web3 games. With this, game-related assets can be stored within the ERC-6551 token instead of as separate tokens in a wallet.


ERC-6551 NFTs possess unique identities and have autonomous interactions with decentralized applications (DApps). They are not dependent on the holding wallet and can be linked to an on-chain identity. This unlocks the potential for loyalty programs and in-game rewards based on an NFT's historical actions. Additionally, platforms can leverage an NFT's identity and reputation to assess its creditworthiness. This can also be used to mitigate counterparty risks.


ERC-6551 increases the provenance of NFTs by providing a complete transaction history and utility beyond proof of ownership. 

It offers insights into an NFT's past transactions and interactions. These details are particularly valuable when NFTs are sold over the counter. With token-bound accounts, users can access more detailed information about an NFT's history. That increases transparency and accountability of the token.


ERC-6551 enables NFTs to interact with other on-chain assets or platforms independently. This enhances their functionality and value. An ERC-6551 NFT can own other assets or tokens that enhance its performance or appearance. It can also interact with other platforms or smart contracts, giving the NFT its own on-chain personality and story. This increased interaction and dependency make the NFT more engaging and interactive.

Problems with ERC-6551

  • Lack of support from existing NFT projects and platforms. This especially those not following the ownerOf method like CryptoPunks.

  • Some popular and valuable NFTs may not be able to enjoy the token-bound accounts feature due to non-compliance with ERC-6551.

  • The inability of certain NFT platforms to integrate with ERC-6551 either due to technical difficulties or business reasons.

  • Security concerns arise as token-bound accounts become more prominent, potentially increasing the attack surface for hackers.

  • The need for a user-friendly and intuitive experience for ERC-6551, as it introduces complexity and requires a new level of understanding and awareness from users.

  • Users may need knowledge and familiarity with this new protocol. Familiarity with creating, accessing, managing, and transferring token-bound accounts.


ERC-6551 can end the year-long static development in the NFT world and bring the long-required freshness to the industry. This standard empowers NFTs to become more than just a certificate of unique ownership and embrace other properties and seamlessly interact with other contracts. 

Even though there are some challenges that are yet to be dealt with, ERC-6551 is going to change the way we perceive and interact with NFTs for good. 

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