NFTs
Why Solana’s New Token Extensions Are a ‘Game Changer’ for NFTs – DL News
- A new token extension allows Solana developers to natively embed metadata into NFTs.
- The development disrupts Metaplex’s monopoly, says a Solana infrastructure developer.
- The new token extensions could help Solana’s NFTs catch up to those on other blockchains like Ethereum.
Solana recently launched 13 new token extensions that bring a host of new features for developers to build on.
In developer circles, one of these new features is generating significant excitement: the ability to natively embed metadata into Solana NFTs.
Metadata is an essential tool in blockchain protocols. Among other things, it allows additional information — such as images and characteristics — to be attributed to NFTs.
Previously, Solana tokens only had the ability to include minimal metadata, such as the supply of a given token.
Solana’s new token extensions enable a generic metadata interface, not affiliated with any interested party. Developers can now create their own custom NFT standards, enabling more competition and innovation within the Solana NFT ecosystem.
It didn’t take long for developers to make use of this new ability.
Ming Ng, a developer working on the popular Solana decentralized exchange aggregator Jupiter, has already released a new Solana NFT token standard in collaboration with NFT fractionalization protocol Ovols.
A Metaplex monopoly?
Since there was previously no way to natively attach more metadata to Solana NFTs, companies independent of Solana created their own solutions.
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Metaplex, a protocol that allows the creation and minting of NFTs, was the biggest of these. It allows Solana developers to attach additional metadata to tokens. Due to the high costs of doing so, many NFT creators have chosen not to build their own metadata protocols and have instead chosen to use Metaplex.
Although much of Solana’s history $4.8 billion NFT market would not exist without Metaplex, this situation was not a good long-term solution, according to Mert Mumtaz, CEO of infrastructure provider Solana Helius Labs.
“A single, centralized, for-profit entity – Metaplex – has a complete monopoly on the NFT standard on Solana right now,” said Mumtaz DL News. “Lack of competition leads to lack of innovation.”
Nhan Phan, co-founder and CTO of Metaplex Studios, a for-profit company that uses the Metaplex protocol in its products, said DL News that Metaplex has “never been a monopoly” and that there have been several NFT standards alongside Metaplex’s that have been released in the past.
The Metaplex protocol is owned and maintained by the Metaplex Foundation, a non-profit entity. Although the Metaplex protocol code is open source, those who use it cannot withdraw its mandatory fees.
“Our focus has always been to innovate and revolutionize ourselves – for example, with compression – and this is what has kept us as the preferred option for digital asset developers,” said Phan.
One September 2022 White paper published by the Metaplex Foundation claims that its protocol has been used to mint over 20 million NFTs, representing over 99.9% of the Solana NFT market.
Phan also said that the Metaplex protocol includes more than just a metadata extension, and also provides Solana NFT tools, as well as on-chain NFT collection launches and on-chain NFT data storage.
‘There is a lot to improve’
With the ability to include NFT metadata natively, Solana’s NFT ecosystem can now keep up with that of other networks like Ethereum, where several distinct NFT standards such as ERC721, ERC1155 and most recently ERC404gained popularity.
“The new token extension is a game changer for Solana NFTs,” said a spokesperson for NFT marketplace Magic Eden. DL News. Magic Eden said the new metadata interface will empower builders and allow them to easily innovate with new token standards.
One way to do this is by combining the Metadata extension with the Transfer Hook extension. This would allow NFTs to run custom logic when they are transferred and could be used to create permissioned tokens or NFTs that automatically distribute royalties.
Magic Eden isn’t alone in highlighting the power of token extensions.
“There is a lot to be improved regarding Solana NFTs,” said Armani Ferrante, creator of the Mad Lads NFT project and the Backpack NFT exchange. DL News.
Ferrante said the new token extensions will make it easier to explore “important features like royalty enforcement” and that Backpack plans to support the new standards.
The application of NFT royalties – a small portion of each NFT sale sent to their creators – has historically been a controversial issue.
Some markets, like OpenSea, ended up choosing do not impose royalties for NFTs sold on the platform due to other popular NFT marketplaces that make royalties optional.
Some NFT collectors argue that not enforcing royalties harms NFT creators and prevents them from generating a steady stream of income from their work.
Update, February 13th: This article has been amended to clarify the differences between the Metaplex protocol, the Metaplex Foundation and Metaplex Studios.
Tim Craig is DeFi correspondent for DL News in Edinburgh. Get in touch with tips at tim@dlnews.com.