Introducing Metatokens
Note: This article was originally published in Lendroid’s blog site on June 20, 2020.
From the attributes of a single NFT, you can now create many NFTs. This opens up endless possibilities for NFT owners and those that seek to experience NFTs.
Metatokens are NFTs created by tokenizing one or more ‘attributes’ of an NFT.
Before we move further, metatokens are not to be confused with NFT shards, which allow partial ownership of an NFT to those that pay for it. In the case of metatokens, ownership is whole. What is shared is access, or the right to modify the NFT, in a controlled, conditional manner.
Creating a metatoken is simple. The smart contracts, coded by Lendroid, are already on the mainnet. Some early and operational examples of metatokens are the ‘leasing or renting’ tokens you create with Rightshare.Lendroid.com. Do visit that site for a feel of what metatokens can do.
Minting a metatoken is no different than minting any NFT. When you mint an NFT, you input an image or an audio clip or a 3D file, and out pops an NFT. In the case of metatokens, you input an NFT.
The big question — why?
NFTs are tokenised experiences. Everything that they represent — from art to gaming asset, from a land parcel to an avatar, represents an experience. They have unique value because they carry within them infinite combinations of attributes. But what are experiences if they cannot be shared? As things stand, there are only two ways to share NFTs — you can either sell them, or gift them. In both cases, you give up ownership of the NFT. And if you’re on the other side, the only way you can ever experience what an NFT has to offer, is by buying it yourself, or convincing the owner to transfer ownership.
And sharing need not be absolute. Some experiences are very personal and you only want to share a tiny part of them. For instance, if you own an AsyncArt piece, you might want to share with a friend the power to alter a layer, for a few days. Or share with a group of friends the right to alter only one state each of one layer. And some experiences are communal. Like sharing access to a live performance with a group of people willing to pay for it. It can be collaborative — like co-building on a plot of land, or even purely transactional — like trustless leasing.
If NFTs are tokenised experiences, metatokens represent tokenised access.
Kinds of Metatokens
The variety of metatokens is potentially limitless, as you will see in a while. However, we can broadly split them into two categories.
- Encumbered Metatokens — Conditional, in other words. These are metatokens created by ‘freezing’ the ownership of the NFT in a smart contract. For instance, truly trustless leasing of an NFT. As long as you have paid for access to an NFT, the owner should not be able to revoke your access until the expiry period. At the same time, she will always be the owner, that won’t change either. And when the lease expires, the lessee loses access to the NFT.
- Unencumbered Metatokens — No need to freeze or escrow the base NFT. Off the cuff, a timed collaboration, tickets that restrict access to just those who hold them, voting tokens to pick a mayor — say Conlan for Gangnam.
If you want an airtight financial contract between two parties, encumbered metatokens are the way to go. If you want to simply explore the full range of possibilities with NFTs, let your imagination guide you into creating your own unencumbered tokens with your NFT.
Here’s how it works
Step 1: If you have an NFT, you upload it and ask yourself the following question –
Do I want it encumbered or unencumbered? In other words, as long as the metatoken exists (a day, a month, an hour), do you want to freeze the ownership of your NFT in a smart contract?
If yes, then it’s Step 2A. If no, Step 2B
Step 2A: If you decide to freeze or lock up your NFT (which is a great idea when it comes to trustless leasing), you get an fToken or frozen token, which you can redeem for your original NFT at the end of expiry. If you haven’t created any other metatokens, you can redeem the original NFT at any time.
Step 2B: You’re now on your way to minting an NFT that represents one or more attributes of the base NFT. You can customise the way it looks — add your own image, change the frame. You can customise what it can do — set an expiry, set other conditions that will give the holder of this metatoken exactly the level of access you want to share.
{
A parenthesis on metadata –
If all this talk of attributes sounds familiar, it is no accident. There has been a recent revolution in the space to try and capture as many details about the NFT on-chain as possible. Minting an NFT with metadata is an important step in this direction. The metadata not only acts as a record for the intended purpose of the NFT, it also captures the creator’s wishes for what he wants to happen with it.
Metatokens effectively tokenize metadata. In other words, if metadata is the wish-list, then metatokens are how you make them happen.
End parenthesis.
}
Step 3: Mint.
dApp Owners’ Playground
For dApp owners, metatokens are a chance to craft their ‘infinite’ story. All NFT projects begin with a single core premise and the model either depends on scarcity of generative NFTs or a hike in value based on the popularity of sub-categories. This makes for a very thin economic model for the project, and could also mean evaporating interest for the end users.
With metatokens, dApp owners can allow their NFT holders to create their own metatokens. They can decide what form those metatokens can take on their platforms. The NFT holders can create their metatokens from the templates that dApp owners provide. And over time, there can be more varied templates with richer and more granular functionality, creating an ever-evolving cycle of utility.
Note: This article was originally published in Lendroid’s blog site on June 20, 2020.
