TreeTrunk Technology Inc., a ConsenSys Mesh company, has submitted a new draft standard for NFTs to the Ethereum Foundation. Ethereum Improvement Proposal EIP-4910 is the first to enable the collection and distribution of royalties to BOTH creators and affiliates securely, immediately and irrevocably on-chain. EIP-4910 eliminates the risk of centralized platforms failing to pay royalties from secondary sales correctly or on time.
The draft ERC will now progress through the community review process.
Why EIP-4910 is important for creators, collectors and the NFT community
EIP-4910 is an extension of the venerable ERC-721 token standard. The 4910’s interfaces comply with the 721, but inside, the 4910 smart contract does a lot of work not contemplated by the original ERC.
It’s fun to note that 4910 is a nice number to succeed 721: 7*7=49 and 7+2+1=10.
Traditional NFTs were a great step forward. They set the trend for securing rights to digital creative assets and financially empowering creators. Thanks to the wave of NFT popularity in 2021, many artists and other creators found themselves able to pay the bills on returns from their work for the first time in their lives. And NFTs made it possible for platforms to track subsequent sales and pay royalties to the creator whenever the NFT was sold from anyone to anyone.
However, at the end of 2021 there was still no way to distribute royalties from subsequent sales immediately, directly and securely on-chain. Centralized platforms were required to do this. That meant royalty payments were not immediate when sales occurred, and there was always a risk that the platform vendor could disappear and leave creators unpaid. EIP-4910 solves this.
The 4910 smart contract distributes royalties from all sales – from anyone to anyone – to royalty accounts on-chain. These royalties are solely accessible to the blockchain wallets that own them. If the platform that a creator is using to manage their NFTs disappears, their funds stay safely on the blockchain.
On-chain royalties are a great improvement over traditional NFTs, but the EIP-4910 approach seeks to do more. Even though the wave of enthusiasm for NFTs in 2021 and 2022 has made some creators of digital assets a lot of money, it’s still largely a tournament game: Artists tend to make little-to-nothing on their work until something happens to make them famous, and then they make “all the money.” That’s a rough life (and the way it’s been for most of history). Traditional NFTs don’t change this fundamental structure. It’s still a tournament game, though market exuberance in 2021 masked this fact.
The TreeTrunk NFT, combined with the TreeTrunk Crypto Lithography technique, lets a creator generate a family of editions, earn royalties from its many branches, and let each digital print – not just the NFT record on the blockchain, but the actual file of the creative work – prove its relationship to the original.
That means every holder of every print can become a distributor of the work to others. They earn royalties for themselves while continuing to flow royalties to the creator. That can lead to a motivated network of distributors with a real incentive to keep the creator’s product moving in the market.
Will EIP-4910 Replace the ERC-721?
The 4910 is based on the 721, and there are a lot of uses for NFTs that don’t involve royalty distribution, so the 4910 is an extension, not a replacement. That said, there are many problems in the NFT space today that are addressed by EIP-4910, and the viral distribution model it supports has the potential to outpace both the number of 721-based NFTs and the earnings generated by them.
Does EIP-4910 work across platforms and blockchains?
An NFT created by the EIP-4910 smart contract can be sold on any platform that supports the standard. As both an open source EIP and an open source reference implementation, the EIP-4910 can be supported by any platform that chooses to implement it. TreeTrunk.io was first conceived as a demonstration to other platforms, though the reaction to the work was strong enough that the team has now decided to run it as a full production platform.
EIP-4910 can run on any EVM compatible blockchain. Because it performs more functions than a traditional ERC-721, the 4910 is not practical to be deployed on Layer 1 chains like the Ethereum Mainnet, which makes EIP-4910 one of the first draft token standards to be purpose built for Layer 2 solutions like Polygon.
Can I upgrade my ERC-721 to become a 4910?
It is possible to upgrade ERC-721’s to the new draft standard, though the implementation for this has not yet been written.
TreeTrunk Technology Inc. is a subsidiary of ConsenSys Mesh and was incubated in its Applied R&D Lab, which uses zero-knowledge cryptography to address multiparty coordination problems (see Baseline Protocol for details). The TreeTrunk approach was conceived and articulated by ConsenSys Mesh group executive John Wolpert. Dr. Andreas Freund refined the approach and designed the required smart contract, zero-knowledge circuits, processes and services, and platform architecture. ConsenSys Mesh and Envision Blockchain implemented the TreeTrunk smart contract and the NFT platform TreeTrunk.io. The TreeTrunk legal-tech framework was developed by Ira P. Rothken. Enterprise use cases and payment transparency priorities for TreeTrunk were developed by Richard Taub, CFA. The TreeTrunk go-to-market strategy was designed and executed by Sarina Charugundla.