Arweave paves the way for creators: Atomic assets are the right NFTs
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Author: Kyle @ Contributor of PermaDAO
Translator: Kyle @ Contributor of PermaDAO
Reviewer: Xiaosong HU @ Contributor of PermaDAO
Introduction
On August 18, 2023, Sam, the founder of Arweave, changed his Twitter avatar, and soon after, many core builders in the ecosystem followed suit, all adopting the same avatar. This series of actions garnered widespread attention.
So, what exactly happened? Let me explain.
The avatar that everyone changed to is called "Permaweb mfers," an atomic asset on Arweave that sold out on the BazAR marketplace within hours of its launch.
Image Caption: Permaweb mfers
Image Source: https://bazar.arweave.dev/
From any perspective, Permaweb mfers hold special significance in the Arweave ecosystem. It's not only the pioneer of atomic assets on BazAR but also an explorer of innovative protocols.
Atomic assets can be considered the native NFT standard in Arweave. By combining the UCM and UDL protocols, atomic assets can unleash their full potential, presenting a significant opportunity for Web3 creators.
For those unfamiliar with the new terms or concepts mentioned earlier, it might be helpful to first get acquainted with the "elder" in this field—ERC-721. By exploring the history and evolution of ERC-721, we can better understand atomic assets and discuss the opportunities for Web3 creators within them.
ERC-721 Pioneering the NFT Era
Undoubtedly, the most mainstream and widely used NFT standard to date is the ERC-721. ERC-721 was first introduced by the CryptoKitties project in 2017 as an Ethereum Improvement Proposal, breaking away from the standardized era of ERC-20. Unlike ERC-20, ERC-721 tokens are non-fungible, each with unique properties and value, opening up new possibilities for digital art, virtual real estate, and more. Subsequently, non-fungible tokens (NFTs) rapidly gained prominence.
However, ERC-721 is not without its flaws. It cannot fully meet the evolving demands of NFTs. As the first NFT protocol standard, ERC-721 had relatively long transaction times, and each transaction could only support one NFT. In this context, several new NFT standards emerged, aiming to address the shortcomings of ERC-721 and expand to adapt to more use cases, whether it's the more flexible and cost-effective ERC-1155 protocol or the leasing-focused EIP2615 protocol.
Ownership for Creators
For creators, the ERC-721 standard brought new opportunities and possibilities. By monetizing their works as non-fungible NFTs, creators gained ownership of their digital assets while ensuring their creative rights.
Furthermore, the ERC-721 standard provided new ways for creators to monetize their content. Creators could directly generate income by selling their works on NFT marketplaces. Additionally, with the introduction of smart contracts, creators could receive a percentage of royalties when their works were resold. This automated royalty payment mechanism allowed creators to continually earn from their works without relying on traditional royalty processes.
However, despite the transparency and fairness that smart contracts brought to royalty payments, there were still issues within the NFT trading market. NFT platforms often used mandatory and non-uniform royalty distribution methods, or had unfriendly policies, limiting the potential and rights of creators. Fortunately, the Ethereum community and creator groups did not stand idly by, and they introduced some improved NFT protocol standards for royalty.
Royalty Protocols under ERC-721
"Under the current ERC-721 standard, royalties are essentially a business agreement, not enforceable on-chain." — TechFlow Research
Here, we'll focus on two representative standards—EIP-2981 and ERC-721C, both of which are improvements to the ERC-721 standard.
EIP-2981 is an innovative standard introduced in September 2020, aiming to address the issue of cross-platform royalty payments in the NFT space. Whether in the past or present, different NFT marketplaces often had unique royalty requirements, and creators and users had to adhere to each marketplace's royalty settings. The birth of EIP-2981 aimed to standardize the retrieval of royalty information, ensuring that every creator or holder of an NFT could receive the expected royalty when transacting in any marketplace. Additionally, EIP-2981 supports various types of royalty settings, including fixed royalties, diminishing royalties, and dynamic royalties.
ERC-721C, introduced by the game development studio Limit Break in May 2023, aims to give NFT creators more control and customization over royalties. Based on the ERC-721C standard, creators can choose diverse royalty handling methods. They can choose royalty sharing, where only the minter receives royalty income, conditional royalty payments, and transfer royalties. This diversity not only allows creators to better adapt to market changes but also enriches the possibilities for the NFT ecosystem.
The introduction of EIP-2981 and ERC-721C brought innovation in royalties and creator control to the NFT space. EIP-2981 standardized royalties in the NFT market, while ERC-721C gave creators more flexibility in royalty handling.
Bottlenecks of Mainstream Standards Represented by ERC-721
We cannot deny the strong dominance and market coverage of ERC-721, but that doesn't mean we should overlook its most significant existing problem: storage. In simple terms, ERC-721 solved the ownership problem but never addressed the issue of storage.
The reason for this bottleneck is easy to understand. Ethereum has long been dubbed the "aristocrat chain," characterized by high transaction fees and slower transaction speeds. For on-chain NFTs, to save costs, their asset data (such as images) is often stored off-chain on centralized third-party servers or temporarily stored on-chain. Therefore, NFT assets under the ERC-721 standard are at risk of losing asset data. In other words, digital assets under the ERC-721 standard do not fully belong to creators or holders.
However, the missing piece of the puzzle under the ERC-721 standard is addressed by atomic assets on Arweave.
Arweave Creates the Right NFTs
Quoting Sam, the founder of Arweave: "Atomic assets on Arweave are the right NFTs; they represent not only sales rights but also true ownership of permanent digital content."
Image Caption: Atomic assets Image Source: https://twitter.com/CommunityLabs/status/1678857765165363201?s=20
Atomic Assets
Atomic assets represent a novel on-chain data and NFT paradigm based on Arweave. It considers all data uploaded to Arweave as atomic assets, including images, videos, web pages, and applications. What sets atomic assets apart is their complete on-chain data storage within a single Arweave transaction ID, making them common and easily recognizable digital assets within the Arweave ecosystem.
Differences Between Atomic Assets and ERC-721
Atomic assets significantly differ from ERC-721 in their core nature. To better understand these differences, let's acknowledge that NFTs typically consist of three components: asset data, metadata, and smart contracts.
For the most popular ERC-721-based standards, including EIP-2981 and ERC-721C mentioned earlier, their essence is essentially the same. The asset data, metadata, and smart contracts are separate. Smart contracts and metadata are stored on the blockchain, while asset data is stored off-chain, often on centralized third-party servers (usually AWS). This poses a problem since if the third-party server experiences issues, the asset data of the NFT, such as images, faces the risk of loss. While some NFT asset data is stored on decentralized IPFS, it's important to note that IPFS, although decentralized, still functions as a temporary storage solution and is susceptible to data loss.
The biggest differences between atomic assets and ERC-721 are primarily in three areas:
Fully On-Chain Data: Atomic assets store all their asset data, metadata, and contracts permanently on the Arweave network, bound within a single Arweave ID. Therefore, for atomic assets, the smart contract's address is the same as the NFT data's address.
Permanent Storage: All data related to atomic assets is permanently stored on the Arweave network, eliminating the risk of NFT asset data loss and ensuring constant accessibility.
No Storage Capacity Limits: Arweave imposes no limits on the data storage capacity for atomic assets, allowing them to encompass not only common media like images, audio, and video but also applications or larger datasets. This feature opens up new possibilities for tokenizing digital content.
Atomic Assets Go Beyond
Image Caption: Universal Data License and Universal Content Marketplace Image Source: https://twitter.com/rakis_me/status/1688988561088057344?s=61&t=6eoc1cy89EKUZgbfvU2w_Q
As you delve deeper into atomic assets, you'll be pleasantly surprised.
Atomic assets not only address creators' ownership concerns regarding their digital assets, similar to ERC-721 standards but also ensure fully on-chain data storage, permanent storage without data loss, and versatility beyond what EIP-2981 and ERC-721C face in the Arweave ecosystem. Through integration with the UDL protocol, atomic assets can achieve customizable royalties, extending beyond royalties alone. Moreover, with the introduction of the UCM protocol, atomic assets can be traded, further unlocking their potential.
UDL Protocol – Extending the Rights of Atomic Assets
The Universal Data License (UDL) is one of the groundbreaking protocols in the 2023 Arweave ecosystem. It allows creators to set personalized usage terms for their content uploaded to Arweave. In simple terms, UDL enables creators not only to monetize their content but also to customize their content's usage rights flexibly.
UDL operates ingeniously. Creators can programmatically define license terms through predefined tags and attach these tags to their uploaded content as "licenses."
These tags cover various aspects, including:
Allowing adaptations, and derivative works (setting revenue shares, attribution, source identification).
Permitting commercial use (one-time payment, monthly payment).
Choosing the currency for payments ($U or $AR, defaulting to $U).
Setting the license's duration (any duration, with different revenue-sharing rates for different durations).
Payment methods (random payments, proportional payments).
Receiving addresses (specifying one or multiple addresses).
UDL benefits developers in the Arweave ecosystem as well. UDL specifies data usage rules, enabling developers to select data they may need or find suitable for their applications without the need for explicit permissions, fostering trust and collaboration.
UCM Protocol – Connecting Atomic Assets and Exchanges
The Universal Content Marketplace (UCM) is another groundbreaking protocol after UDL. It acts as Arweave's on-chain order book contract, enabling atomic assets to be traded on the Permaweb without the need for trust. Unlike traditional NFT markets, UCM is not limited to specific types of assets; it can trade papers, domains, components, or even applications – that's what makes Permaweb special.
UCM not only creates a decentralized and transparent trading environment for creators and users but also provides developers with ample room for growth. Anyone with programming knowledge can build a front-end UI based on the UCM protocol, meaning anyone has the opportunity to create their atomic asset marketplace, further promoting the circulation of digital content. BazAR, as mentioned earlier, is the first atomic asset marketplace built on the UCM protocol.
UCM also introduces its native token, $PIXL, used to incentivize those who purchase atomic assets in the UCM market. According to the token's incentive mechanism, the daily $PIXL reward is distributed based on the weight of consecutive days of purchase; the more consecutive days purchased, the more $PIXL can be obtained.
The Atomic Asset Ecosystem Surrounding BazAR
BazAR is a decentralized atomic marketplace built on the Permaweb. As a front-end interface for the UCM protocol, BazAR offers an intuitive and user-friendly platform for buying and selling various types of atomic assets, including images, videos, audio, web pages, and applications.
BazAR's unique significance lies in being the first atomic asset exchange built on the UCM protocol. All atomic assets on BazAR can choose to attach UDL protocol tags, adding flexibility to atomic asset management and providing multiple choices and opportunities for creators, developers, users, and other stakeholders.
$U – Liquidity Token
$U is not an abbreviation for USDT; it is a token issued based on Smartweave and circulates exclusively within the Permaweb, designed to stimulate the vitality of the Permaweb and its ecosystem.
Currently, $U is primarily used to pay storage fees and is gaining support from various projects in the ecosystem. However, for users of BazAR, $U is also the sole payment method for purchasing atomic assets.
Users can acquire $U in various ways, such as:
Converting AR tokens to $U with a 1:1 ratio by paying storage fees.
Trading for $U on the decentralized exchange Permaswap.
Visiting https://getu.arweave.dev/#/burn/ and directly acquiring $U by burning AR tokens (sending AR tokens to the Arweave donation fund to mint $U).
STAMP – Reputation System
Stamp is a content curation protocol built on Arweave, allowing users to "STAMP" content on the Permaweb, similar to clicking a "Like" button on social media.
BazAR has integrated the Stamp protocol and embedded STAMP buttons. When users "STAMP" atomic assets they appreciate on BazAR, both the user and the creator can earn $STAMP tokens. The token incentive mechanism of the Stamp protocol motivates user interaction and enhances creator enthusiasm.
Furthermore, each STAMP is genuine and valuable because each address needs to verify its human identity through the Vouch Twitter service before "STAMP." Thus, the Stamp protocol establishes a trustworthy reputation system for BazAR, helping users filter optimized content.
Universal Commenting Protocol – Freedom to Express Opinions
The Universal Commenting Protocol allows anyone to interact with content on Arweave, currently supporting commenting functionality. This protocol fills the gap in commenting functionality on the Permaweb.
Now, the BazAR marketplace has integrated the Universal Commenting Protocol, allowing anyone to comment on atomic assets listed on BazAR. The Universal Commenting Protocol records the history of each atomic asset, adding cultural and historical value. Additionally, the comments left on atomic assets provide valuable information to collectors and better decision-making references for future buyers.
Conclusion: Arweave Cultivates a Fertile Ground for Creators
Arweave has long been known as the infrastructure for permanent storage, but what many don't realize is its application scenarios go beyond mere storage. It can host a rich ecosystem similar to public blockchains. On Arweave, you can not only build applications but also create and trade NFTs.
Arweave's atomic assets, as a new NFT paradigm, fill the gaps left by the ERC-721 protocol, ensuring creators' ownership rights genuinely. Furthermore, atomic assets, through their integration with UDL and UCM protocols, gain greater flexibility and functionality. Specifically, the atomic asset marketplace BazAR, built around atomic assets, provides a trading market and introduces $U payment tokens, Stamp protocol, and Universal Commenting Protocol, constructing a complete atomic asset ecosystem.
Web3 should not be limited to ERC-721 and its improved protocols. We are delighted to see Arweave's atomic assets bringing innovation and possibilities to the NFT space. Moreover, the atomic asset ecosystem built by Arweave allows creators to claim more of the rights originally belonging to the real world in the virtual world. This time, Arweave tells a grander narrative, paving the way for the migration of future creators.
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