NRC20

This document introduces the NRC20 token standard, an extension of ERC20, aimed at addressing the challenges of NFT liquidity and utility. NRC20 allows NFTs to issue fungible tokens, enabling decentralized trading and derivative NFT creation. The protocol seeks to unlock the IP value of NFTs while fostering a scalable and efficient trading ecosystem.

Background

Non-Fungible Tokens (NFTs) and ERC20 tokens represent two key pillars of the blockchain ecosystem. While ERC20 tokens are fungible and widely used in financial applications, NFTs are unique and tailored for digital asset ownership. However, both standards have limitations:

1. ERC20 Limitations:

   • Fungibility restricts the representation of unique assets.

   • Tokens lack inherent ties to intellectual property (IP).

2. NFT Limitations:

   • Illiquidity due to reliance on peer-to-peer trading.

   • Underutilized IP value with minimal integration into financial systems.

By combining the strengths of ERC20 and NFTs, NRC20 seeks to address these limitations while unlocking new opportunities.

Problem

The current blockchain ecosystem is constrained by:

• Limited integration of NFTs into DeFi and other financial applications due to their non-fungibility.

• Inefficiencies in NFT trading stemming from illiquidity and fragmented markets.

• A lack of mechanisms to derive additional value from NFT-based IP.

Solution

The NRC20 protocol provides a structured framework to overcome these challenges by introducing:

• Fungible Representation of NFTs: Each NFT can issue a unique NRC20 token, allowing its value to be represented in a fungible, tradeable form.

• Customizable Bonding Curve Liquidity: NRC20 tokens use a Bonding Curve model to ensure continuous liquidity. The specific curve is determined by the implementing project, allowing for flexibility.

• Derivative NFT Creation: Users can burn NRC20 tokens to mint derivative NFTs, fostering creativity and enabling new use cases.

• Integrated Incentive Mechanisms: NRC20 introduces fee-sharing systems to align the interests of creators, traders, and derivative holders.

Comparison

NRC20 vs. ERC20:

• Fungibility: Both are fungible, but NRC20 is tied to unique NFTs, representing distinct IP values.

• Liquidity Model: NRC20 introduces Bonding Curve-based liquidity, unlike ERC20’s fixed supply model.

• Application: NRC20 extends ERC20 functionality to integrate unique asset representation and derivative creation.

NRC20 vs. NFTs:

• Tradability: NRC20 tokens are traded on decentralized exchanges with continuous liquidity, overcoming the illiquidity of traditional NFTs.

• Utility: NRC20 enables derivative creation and financial integration, while NFTs are primarily static digital assets.

• Incentives: NRC20 includes mechanisms to reward both original NFT creators and derivative holders.

Implementation

Each NFT can initialize a unique NRC20 token with no fixed supply cap, enabling flexible issuance and adaptation to project-specific needs. Liquidity is maintained using a customizable Bonding Curve model, which ensures continuous and decentralized trading. Users can burn NRC20 tokens to create derivative NFTs, linking these assets back to the original NFT and preserving on-chain provenance. The protocol supports optional mechanisms for incentivizing creators and derivative holders, fostering a sustainable and engaged ecosystem.

Technical Interface

The following interface extends ERC20 to include functionalities specific to NRC20:

interface INRC20 is IERC20Metadata {
    function initialize(
        address share_,
        address initialMintTo_,
        uint256 initialMintAmount_,
        string memory name_,
        string memory symbol_
    ) external;

    function burn(address account, uint256 value) external returns (uint256);

    function mint(address account, uint256 value) external returns (uint256);

    function consume(address account, uint256 value) external returns (uint256);

    function consumed() external view returns (uint256);
}

Benefits

• Enhanced Liquidity: The Bonding Curve model ensures that NRC20 tokens remain liquid and tradeable, even in volatile markets.

• Realizing IP Value: Fungible tokens derived from NFTs unlock their potential for broader financial applications.

• Incentivized Participation: Fee-sharing mechanisms reward ecosystem participants, promoting sustainability.

• Creative Expansion: Derivative NFT creation enables new opportunities for creators and traders to build upon existing works.

Conclusion

NRC20 combines the strengths of ERC20 and NFTs to address the challenges of liquidity, utility, and engagement in the blockchain ecosystem. By enabling fungible tokenization, continuous trading, and derivative creation, NRC20 creates a robust framework for NFT assetization and innovation.