Although non-fungible tokens (NFTs) have been around since 2014, they have only recently gained attention from both investors and famous people. It’s interesting to note that the underlying economies and technology that drive NFTs go far beyond profile pictures (PFP). Play-to-earn (P2E) and the metaverse are examples of concepts that are enabling developers to create new features and utilities for NFTs.
Unfortunately, some NFTs are expensive to purchase, which limits the market for these assets. Although the story is changing due to the emergence of NFT rental platforms, there are still problems with existing solutions, including a lack of strong security and high development/integration costs.
Through the recently released Dual-Role NFT Standard (EIP-4907), a game-changer for the NFT rental market, Double Protocol seeks to address these issues.
Double Protocol: What is it?
A decentralized NFT rental platform called Double Protocol is currently running on Ethereum and the BNB Chain. Currently, it allows for the rental of in-game items in the well-liked GameFi project Warena as well as virtual land in Decentraland.
The concept of NFT renting is straightforward. Renting an NFT enables users to enjoy the experience and use it for a limited time without having full ownership of it, much like renting a luxury home or car allows people to do.
Users have access to a wide variety of NFTs through the NFT rental marketplace, including in-game assets, virtual estates, digital art, financial NFTs, and collectibles.
The goal of Double Protocol is to increase the liquidity and functionality of NFTs while lowering the barrier for Web3 users to access the metaverse or GameFi.
A team of developers, game product experts, tokenomics designers, and marketers with more than five years of experience in the crypto space built the project.
The Dual-Role Standard For NFT Rental (EIP-4907)
The Dual-Role NFT Standard (EIP-4907), a crucial part for NFT lending that enables the project to separate NFT ownership and usage using a Dual-Role mechanism, was introduced by Double Protocol in April.
In other words, the Ethereum master branch’s merged EIP-4907 standard permits owners to rent their NFTs to other users rather than transferring ownership.
It will only require about 30 lines of code to integrate Double Protocol into any GameFi projects. This integration can be completed even more quickly and without any coding using EIP-4907.
The Dual-Role model, which divides NFT ownership and use into two distinct roles, is not being used for the first time by Double Protocol. However, the team found that there was no agreement on how to name and use the Dual-Role mechanism, which made working together challenging. In light of this, Double Protocol suggested EIP-4907.
The key to enabling rental is Double’s ability to quickly and easily separate the user rights from the ownership using the EIP-4907 on the smart contract. The dual-role standard also includes an expires() function; as a result, the borrower’s usage rights automatically expire at the end of the rental period without the need for an additional on-chain transaction.
In order to ensure that the underlying in-game asset or any other NFT has two roles, the owner and the user, Double first deploys the dual-role contact. Once confirmed, it immediately generates a doNFT to represent the user’s rights that is identical to the original NFT.
The doNFT will then be issued to the renter in accordance with the terms of the doNFT contract once the borrower has paid the rent. During this time, tenants have a variety of usage rights, including the ability to sublease, split up, merge, and even use financial derivatives.
The doNFT contract automatically terminates the borrower’s usage rights after the rental period has ended. Given that borrowers do not need to deposit significant amounts of collateral and NFT owners do not have to worry about the security of their assets or credit risks, this dual-role solution lowers entry barriers into the NFT space.
NFT with Wrapped Dual-Roles
Some products currently on the market can’t update their smart contracts to support dual roles. Double Protocol, however, also has a remedy for them known as the Wrapped Dual-Roles NFT.
The protocol creates a fresh NFT with user data and places it on top of the old one. As it corresponds 1:1 with the underlying NFT, the wNFT eliminates the possibility of double spending, much like wrapping ETH into an ERC-20 compliant wETH.
DoNFT, or a certificate for the right to use an NFT, is a new type of NFT that Double Protocol introduces. The underlying NFT usage rights will end as soon as the rental period concludes thanks to the doNFTs.
The market contract mints the doNFT for the renter through Double’s solution after they pay rent, granting them temporary usage rights of the NFT for a set amount of time until the rent is due. It’s interesting that the doNFT can be further divided for lending and renting into numerous doNFTs with shorter durations or combined with new doNFTs to form doNFTs with longer durations.
By allowing for the development of derivative financial products like installment payments and facilitating interoperability with other NFT financial protocols, doNFTs effectively address the pervasive problem of illiquidity in the NFT space.
Renting non-fungible tokens opens up a brand-new world of possibilities. Double Protocol’s EIP-4907 Dual-Role NFT standard enables it to achieve its objectives. Since NFT rentals depend on user rights being extracted from ownership, this enables the protocol to do so. If widely used as the de facto standard for creating NFTs, the Dual-Role mechanism will be the best option for fostering innovation within the NFT ecosystem.