Most of us in this digital generation have started getting our heads around finding ways to invest in blockchain setup. It is because the solution it can offer to the current needs captures the awe of the users.
Speaking of which, Non-fungible tokens, commonly referred to as NFTs, melded with the ownership perks traded as digital tokens – a one-of-a-kind asset. Let’s shed some light on this topic to decipher the NFT token standards and auditing best practices to safeguard them.
NFT Token Standards In Use
We shall see a list of the common NFT standards and their underpinning attribute.
ERC-721 – The Most Common One
ERC-20 was the base standard but is fungible in nature. They share common functionalities and are interchangeable. These tokens were not suitable to express the ownership of the items, representing its unique value. Then came the ERC-721 standard to solve the problem.
ERC-721 are by their very nature limited, unique and indivisible. They certify the ownership of the digital assets or real-world item which is most commonly used to create gaming NFTs. ERC-721 are most widely adopted in blockchain games
Limitations: High transaction fee and limited data storage. This challenges the minting of multiple ERC-721 NFTs as the gas cost is high.
ERC-1155 – For Bundled Transactions
ERC-1155 is an extension of ERC-721 to overcome high transaction fees for bundled transactions. It has the capability to be extended to add both fungible and non-fungible tokens.
It facilitates the user that wants to sell bunches of NFTs in one go. This standard allows the release the multiple copies of a single NFT.
Example: In NFT games, the user can trade a number of gaming items using ERC-1155 which employs a single smart contract.
Limitations: ERC-1155 stores less robust information for storing time and transaction costs.
BEP-721 – Variation to ERC-721
BEP-721 operates on Binace smart chain, and every token is unique so that one cannot be interchanged with another. It’s the same as ERC-721, which requires a gas fee.
ERC-998 – Parent token for multiple ERC-721 and ERC-20 tokens
ERC 998 acts as a parent token where the ERC-721 and ERC-20 can be stored. In the case of buying an in-game character, the wearables and accessories are all acquired with it through ERC 998.
EIP-1948 – Make modifications to NFT data
EIP-1948 is also an extension to ERC-721 but permits making changes to information. In ERC-721, the data once given during minting cannot be altered or modified, but this standard offers the capability to store dynamic data.
It has a 32-byte data field with a write function wherein the owners can update. For ex, in NFT gaming, players can customize their players with this.
Some Of The Acclaimed NFTs That Got Under The Spotlight
Created by a digital artist Pak, The Merge, is a series of NFTs that was bought by a bunch of 28,983 people for $91.8M. The art was sold on Nifty Gateway with a huge mass of buyers surrounding the art in a short span of time.
Everydays: The First 5000 Days
Digital artist Mike Beeple Winkelmann made a smashing sale of the “Everydays” digital art for $69.3M. The art is a collage of 5000 pictures that were made one per day for thirteen years. Each picture was created with a theme depicting current events or personal messages.
The NFT titled “Clock” is a creation of Wikileaks founder Julian Assange and Pal, which portrayed a digital counter of days Assange spent behind bars. The NFT was sold for $52.7M and was funded toward Assange’s defense.
The Human one is again one of the Beeple’s creations that made a whopping $28.9M at Christie’s auction. Human One is a portrait of a human born in the metaverse, and the artwork is a hybrid of physical and digital technology.
The project was released by Larva Labs, a collection of 10,000 punks, of which CryptoPunk #5822 is sold for roughly $23.7M. It is the rarest alien edition of the series, as only 9 of it exist.
What’s Happening With The NFT Security?
The cases of NFT thefts are increasing coherently with the gaining popularity of NFTs. So, here’s a follow-up on how to ensure the safety of NFT projects.
Reentrance possibilities: Reentrancy is a condition where there is an interruption in the program’s execution where the external contract drains off the fund in the original contract. So while launching NFT projects, it has to be checked.
Token compatibility: Ensure tokens are transferable and compatible with different wallets
Security checks: Validation checks are run to test infinite looping conditions, gas usage, third-party library, modifiers, transaction failure, etc.
Arithmetic check: Variable overflow is calculated for the minimum to maximum values, decimal balancing, safe math, etc.
Guideline verification: Validate the tokens are created as per the ERC-721 standard and tested for the non-duplicate token generation with an incorrect token ID.
Solidity version: Depending on the solidity version used, its respective imported libraries will be checked for the ERC-721 contract.
Oracle: Check for the oracle services and ensure the best practices are adopted.
How QuillAudits Stand Out In Providing Security?
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