Introduction

In August, the Mint Blockchain team proposed a groundbreaking NFT asset protocol standard—ERC-7765. This protocol was designed to enhance the capabilities of NFTs by integrating them with real-world assets (RWA) and enabling holders to exercise specific privileges associated with those assets. As blockchain technology evolves, the need to bridge the gap between onchain assets and real-world utilities has become increasingly apparent. ERC-7765 aims to fulfill this demand by expanding the usage scenarios for NFTs and promoting the deeper integration of blockchain technology with real-world applications.

The Rise of Real World Assets (RWA) in NFTs

NFTs (Non-Fungible Tokens) have primarily been known for their use in digital art, collectibles, and virtual worlds. However, a growing number of projects are now exploring the potential of NFTs that are tied to real-world assets, such as physical products, property, and financial instruments. These RWAs often come with privileges or ownership rights that can be exercised by the holder. The challenge has been creating a standard that allows these privileges to be executed seamlessly both onchain and offchain, a challenge that ERC-7765 seeks to address.

What Is ERC-7765?

ERC-7765 is a proposed protocol standard specifically designed for NFTs that represent real-world assets with associated privileges that can be exercised by the NFT holder. The standard is built upon the widely adopted ERC-721 standard, which defines how NFTs are transferred and approved. ERC-7765 extends this by introducing new functionalities that allow the exercise of privileges associated with a given NFT.

In short, ERC-7765 enables NFT holders to perform specific actions, such as redeeming real-world products, using the onchain representation of those privileges.

Key Features of ERC-7765

1. Inheritance of ERC-721 Transfer Logic

ERC-7765 retains all of the transfer and approval logic from the ERC-721 standard, meaning that NFTs created under ERC-7765 can still be transferred and approved in the same way as traditional ERC-721 tokens. This ensures compatibility with existing platforms and wallets that support ERC-721.

interface IERC7765 /* is IERC721, IERC165 */

2. Privilege Exercise Functionality

The core innovation in ERC-7765 is its ability to allow holders to exercise privileges associated with a specific NFT. This is achieved through the exercisePrivilege function, which enables an NFT holder (or a designated party) to execute privileges such as redeeming real-world products or accessing services.

event PrivilegeExercised(
    address indexed _operator,
    address indexed _to,
    uint256 indexed _tokenId,
    uint256 _privilegeId
);
    
function exercisePrivilege(
    address _to,
    uint256 _tokenId,
    uint256 _privilegeId,
    bytes calldata _data
) external;

The function includes the _to parameter, which allows the privilege to be exercised for someone other than the NFT holder, broadening the potential use cases. For example, a user could gift the redemption of a product, like a pair of shoes, to a friend while still holding the NFT.

One thing you should note is that the param address _to is included in the design so that a specific privilege of an NFT may be exercised to someone who will benefit from it other than the NFT holder or the transaction initiator. And this ERC doesn't assume who has the power to perform this action, it's totally decided by the developers who are using this standard. For example, the NFT holder can exercise the privilege of exchanging physical shoes for his friend other than himself.

Another thing you should also note is that the extra field _data is designed for extra messages or future extensions. For example, developers can use _data to exercise a privilege that takes effect directly onchain such as direct distribution of cryptocurrency assets. This greatly improves the diversity and operability of the ways in which privileges can be exercised.

3. Tracking Privilege Status

ERC-7765 introduces two important view functions—isExercisable and isExercised—that allow users and developers to check whether a specific privilege associated with an NFT can be exercised or has already been exercised.

function isExercisable(
    address _to,
    uint256 _tokenId,
    uint256 _privilegeId
) external view returns (bool _exercisable);

function isExercised(
    address _to,
    uint256 _tokenId,
    uint256 _privilegeId
) external view returns (bool _exercised);

These functions provide transparency and help maintain clear records of privilege usage.

4. Binding Privileges to NFTs

ERC-7765 also defines a method for binding specific privileges to NFTs. Through the getPrivilegeIds function, users can query the privileges associated with any given NFT.

function getPrivilegeIds(
    uint256 _tokenId
) external view returns (uint256[] memory privilegeIds);

This helps ensure clarity on what rights or utilities a particular NFT grants its holder.

5. Metadata for Privileges

Similar to how ERC-721 provides metadata for NFTs, ERC-7765 introduces metadata for the privileges associated with the tokens. This metadata includes details like the name, description, and resource related to the privilege, enabling users to understand what each privilege entails.

interface IERC7765Metadata /* is IERC7765 */ {
    function privilegeURI(uint256 _privilegeId) external view returns (string memory);
}

Practical Use Case: Rare.Shop

The ERC-7765 standard is already being put to practical use. Rare.Shop, the world’s first consumer-oriented RWA NFT platform, leverages ERC-7765 to offer NFTs that represent real-world products. For instance, when a user buys a physical item such as a wallet or hardware through Rare.Shop, they receive an NFT bound to that product, which carries the privilege of redeeming the physical product. The entire process is seamlessly managed using ERC-7765, allowing the user to exercise this privilege at any time.

Mint Blockchain’s Vision for ERC-7765

The Mint Blockchain team recognized the need for a protocol that could securely and transparently handle RWAs, while providing developers with a flexible toolset. With ERC-7765, Mint Blockchain contributes to the broader blockchain ecosystem by offering a scalable and versatile framework for developing RWA NFT projects.

By allowing NFTs to carry real-world privileges, ERC-7765 expands the scope of NFT applications beyond digital assets, promoting the integration of blockchain with real-world use cases. This opens up new possibilities for NFTs, from representing physical products like art, fashion, or hardware, to representing services, memberships, and other utilities.

The Future of ERC-7765

While still in its draft stage, ERC-7765 holds tremendous potential for further development. As more projects adopt this standard, the integration between the blockchain and the physical world will become more streamlined. The protocol will continue to evolve as developers explore new ways to leverage the flexibility offered by ERC-7765, creating more opportunities for innovation in both the NFT space and the wider blockchain industry.

Conclusion

The ERC-7765 standard, proposed by the Mint Blockchain team, represents a significant advancement in the NFT and blockchain space. By enabling NFTs to carry real-world assets and privileges, this new standard promotes a closer integration between blockchain technology and the physical world. With its versatile design and wide-ranging applications, ERC-7765 is set to play a key role in the evolution of NFTs and the adoption of blockchain-based assets in everyday life.

The introduction of ERC-7765 demonstrates Mint Blockchain’s commitment to innovation and its role as a driving force in the development of cutting-edge blockchain protocols. As the protocol is adopted by more projects, including Rare.Shop, the potential for NFTs to serve as a bridge between digital and physical realms will continue to grow.