Contrary to the predictions of skeptics, the nascent but booming NFT market is now making a strong case that it was never built on mere hype and FOMO. The underlying technologies and economies that power it are getting more powerful every day to facilitate and sustain real-life use cases.
At least that’s what it looks like, as more and more utility-centric NFTs emerge, and most first-generation NFTs are basically avatar-based.
The rapid growth of the Metaverse and earning NFT games has played a particularly important role in helping the NFT market grow and mature.
The key takeaway from this trend is that NFT ownership and use cases are likely to be on the rise for the foreseeable future. As you may have noticed, the NFT rental market can play an important role in this.
NFT leasing – how it makes NFTs more accessible to the masses
If 2021 was the year the NFT ownership economy reigned supreme, then 2022 is likely to be the year NFT leasing becomes the dominant trend. The signs are already there — especially with the emergence of NFT rental platforms like Double Protocol.
For those unaware, the idea behind NFT leasing is as simple as it sounds. Just like you can rent a luxury car for the weekend without having to own it, NFT rentals also allow you to experience or use NFTs for a limited time without actually owning them.
In general, you’ll find a variety of NFTs in NFT marketplaces like Double Protocol, including in-game assets, virtual assets, digital art, financial NFTs, collectibles, and more. Smart contracts enforce the terms of the lease agreement between lenders and borrowers, making the entire process transparent, decentralized and independent of third parties.
Benefits of NFT Leasing
While the popularity of NFTs is undoubtedly skyrocketing, the cost of ownership can sometimes be a big barrier to their mass adoption. Yes, NFTs can be very, very expensive – especially when it comes to popularity that creates a lot of buzz.
NFT leasing is by far the most practical way around the cost factor, as even the most expensive NFTs can be used by users who would otherwise not be able to afford them.
On the other hand, it also makes good financial sense for users who buy NFTs as investments (not necessarily intending to use these NFTs themselves). By renting their NFT storage, these users can earn substantial income as passive income.
So far so good – but there are a few hurdles along the way that make the entire NFT leasing process more complicated than most users would accept.
And this is where platforms like Double Protocol intend to create a difference by removing these barriers, thereby lowering the barriers for web3 users to access GameFi and the metaverse of their choice via NFT rentals.
How Double Protocol aims to make NFT leasing more efficient and impactful
The separation of usage rights and ownership is a basic condition that must be met for the smooth operation of NFT leasing.
So far, one way to comply with this condition is to add the role of an operator or controller, who can use the NFT to perform specific actions, but can never transfer the asset to a third party or have full control over it (like an owner would do like that).
If the owner decides to give the controller/operator access to the NFT for a limited time through the NFT leasing platform, they will need to make two on-chain transactions. Once at the beginning and end of the period.
Without delving into the technical details, as NFT applications and subsequent NFT leasing continue to grow rapidly, there is now a need to develop a framework to effectively handle user rights management.
One possible way to achieve this goal is to create and implement uniform standards to facilitate collaboration among all applications.
Dual protocol dual role NFT standard EIP4907
A key component that enables Double Protocol to achieve its goal of transferring NFTs without transferring ownership (by the lender) is the dual role setup of NFT smart contracts.
To help make NFTs rentable for more projects, Double Protocol has proposed an NFT standard with dual role setup – EIP4907.
By applying EIP 4907, user rights can be easily extracted from ownership, which is the key to rental.
Additionally, the dual role criterion is expirable, which means that leased NFTs have an automatic expiry date, which means that the borrower’s usage rights are automatically terminated at the end of the lease period without any additional on-chain transactions.
Here’s how it works:
Double Protocol deploys dual role contacts to ensure that in-game assets have 2 roles: owner and user. A doNFT corresponding to the original NFT is then created to represent the user rights. Once the borrower pays the rent, the doNFT will be minted for the lessee according to the doNFT contract. During the lease period, the lessee enjoys a wide range of rights to use, which may include sublease, split, merger, and even financial derivatives. At the end of the lease period, the doNFT contract automatically revokes the borrower’s usage rights.
The benefits of Double Protocol’s dual role standard include:
No need to worry about credit risk. Borrowers do not have to pay huge collateral. Owners do not need to worry about the security of their leased assets. Flexible lease terms can be split, combined or traded multiple times. The ability to integrate rental agreements into third-party products and applications.
Visit the Double Protocol website to learn more about how Double Protocol and its doNFT contracts work. As the platform is still in development, you may want to subscribe to their Twitter to get the latest news and updates about the Double ecosystem.
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