NFTs have come a long way — from simple pixelated JPEGs to desirable utility NFTs. Then along came technological advancement, and we got another plot twist.
NFT renting has become a growing use case for utility-based NFTs – for example, virtual land in the metaverse or in-game NFT assets.
The newly adopted ERC-4907 standard marks the beginning of the era of rentable NFTs.
It has set new rules for the blockchain and is about to drive the NFT market. What exactly has ERC-4907 brought to the table? Let’s break it down!
→ ERC-4907 is an extension of ERC-721.
→ The new standard splits up ownership and usage rights, making it possible for NFTs to be loaned out.
→ Renters are allowed to use borrowed NFTs but not transfer them.
→ Their “user” role expires after a designated period, and the assets automatically return to the owner’s crypto wallet.
The new NFT standard, ERC-4907, will allow NFTs to be rented.
First, it switches the rights of NFT owners and users for a period of time. At the end of the lease, the token returns to the OG owner.
Imagine if u could rent your ship, jetpack, gold, shoes, studio—yo!
Before ERC-4907 came into effect, leasing NFTs was a complex deal. Renters had to provide collateral and lock up more capital than the value of the NFT leased. The new standard eliminates the need for collateral in this process
The ERC-4097 standard will facilitate market growth in the near future: it streamlines the NFT rental experience, adds more security for lenders, and makes life easier for game developers.
So now, are you wondering what this improvement does for NFT users like you or me?
Let me decode it for you!
- ERC-4907 defines clear rights assignments: This is between the NFT lender and NFT renters. With ERC-4907, “owners” and “users” have clearly defined rights and renting periods. This feature improves safety for both parties involved.
- ERC-4907 implements on-chain time management: This means NFT lenders do not have to execute a second on-chain transaction to claim their NFT. Also, with the expire feature, the render rights will automatically expire after the rental period ends. This will reduce the cost for lenders and improves liquidity in the renting market.
- ERC-4907 improves the integration of NFTs on Ethereum: All ERC-4907 NFTs are compatible with the current ERC-721 NFT standard. With the strong set of guidelines all token developers adopt, projects also incur fewer costs.
- ERC-4907 removes the need for collateralization: NFT renters cannot transfer the NFT nor alter the rental period. In turn, this reduces the costs of NFT renting.
With all these benefits, these standards will improve the NFT renting experience and for sure be a game changer. Unfortunately, ERC-4907 has not yet been deployed on Ethereum.
But for sure, its launch will inevitably push the NFT space forward!