Metadata: The Hidden Key to Unlocking the True Value of NFTs
When people talk about NFTs, the focus is usually on the media content or the token on the blockchain. But there is more NFT than that; one key aspect that most people ignore is the metadata.
The metadata is a fundamental part of any NFT. While this might be a surprise, most of the media files in NFTs are not on the blockchain, they are hosted on external servers, and the links are added to the metadata. NFT creators generally use metadata to save costs.
Here, we discuss what metadata is and how it can unlock the true value of NFTs.
What is NFT Metadata
NFT Metadata is the set of data making up the NFT. It contains attributes and properties of the NFT such as name, date of creation, serial number, artist signature, traits of NFT character, etc. It can also include links that direct you to media content such as images, videos, GIFs, MP3s, etc. The metadata is stored in JavaScript Object Notation (JSON) format.
NFT metadata can be stored on-chain, but this is rarely done for financial and technical reasons. Only a few NFTs on smart contract networks are stored on-chain. This is because the size of NFT with its media files and metadata makes it expensive to mint on the chain and will consume a lot of block space.
Gemini research estimates that minting 1 gigabyte of data into NFT on Ethereum will cost about 17,500 ETH. This is not only prohibitively expensive for creators but will also consume a lot of block space on the network, leading to unnecessary congestion.
Thus, most NFT metadata and other parts of the NFTs are stored off-chain. This can be on centralized servers such as Google Drive and Amazon Web Services or the distributed peer-to-peer InterPlanetary File System (IPFS). The metadata is stored as Uniform Resource Identifier (URI) link inside the NFT contract, and the link references the location of JSON. This way, the metadata is permanently on the blockchain and cannot be altered.
How Metadata Can Improve NFT Value
Without a doubt, metadata is crucial to the creation of NFTs. But the value of metadata goes beyond its cost-effectiveness in creating NFTs. Metadata can play a more significant role in increasing the utility of non-fungible tokens if developers can focus on the value of these data. Here are some of the ways metadata can achieve this:
- Proving the Authenticity of NFTs
Metadata can make it easier to determine the origin of each NFT and prove its authenticity. In a world with millions of NFTs, one of the criticisms of the technology is how it has also become a tool for copycats to abuse the intellectual property rights of others. But with the metadata providing more comprehensive information such as the date of creation, artist name, digital signature, title, additional resources about the work, etc., potential buyers can easily determine which NFT is genuine. This will encourage more creators to opt for NFTs, and collectors can have more certainty about what they acquire.
- Higher Level of Decentralization
When people buy NFTs, they are mostly placing their trust in the creators. Most NFTs are not centralized, which means they can disappear at any time due the NFTs are not decentralized, putting them at risk of being lost at any time.
But NFT metadata can be decentralized, thereby ensuring that the content of the NFT remains safe and secure regardless of what is happening with the hosting server.
- Improved and Dynamic Experience
NFTs might have attained mainstream popularity. But they are still lacking when it comes to acceptance. This is mainly because of the need for more utility of most NFTs. Metadata offers an opportunity to improve the experience of holding an NFT, enhancing its utility and unlocking new values.
For instance, Dynamic NFTs that can change based on real-world triggers are only possible with metadata that includes the proper codes and scripts.
Such NFTs with programmable features have a utility that cuts across several industries and can change how people perceive and value NFTs. With dNFTs, even PFPs, generally static and rarely have utility, can become valuable assets. Lineage Protocol is already enabling this.
- Composability and Interoperability
Metadata can make it possible for NFTs to interact with several digital assets across blockchains without relying on bridges with vulnerabilities.
The ability of NFTs to integrate with several ecosystems can be a game-changer that will facilitate better experiences and applications.
Lineage protocol prioritizes chain agnosticism, meaning users can use their NFT in different environments on different chains.
- Collaborations in NFT Creation
The creation of NFTs is mainly done individually or by just one team. This usually means restrictive metadata and utility.
But it is possible to collaborate among several creators, all contributing to the NFT metadata.
Lineage protocol, a decentralized NFT metadata platform, allows this, making it possible for multiple people to work together on one NFT.
Imagine writers, artists, and developers all adding utility directly to an NFT as co-owners while maximum control and security are guaranteed.
This is what Lineage offers, enabling creators to add new data sets to the NFT, and each data set can exist and evolve independently.
With this feature, there can be new and independent representations for an existing NFT. For example, you can add a 3D character data set to a PFP collection, enabling the same NFT to be represented differently in various ecosystems.
- Transparency
Transparency is a major issue for most NFTs as they only provide insufficient data on crucial information such as traits and attributes of NFTs, rights of the holders, creators, etc. This lack of sufficient information discourages several collectors interested in acquiring NFTs.
But such information could be embedded in the metadata to provide investors with all the insights they need to decide. With Lineage protocol’s metadata explorer, users can query and evaluate metadata to ensure its security and transparency.
Conclusion
NFT metadata has clear benefits that could contribute significant value to NFTs if adequately utilized. For this to happen, there is a need for developers and creators to focus more on the metadata that constitutes the
NFTs rather than the unique tokens on the blockchain. There are four considerations to look at when determining whether metadata can improve NFT utility and value. These are provability, retrievability, traceable mutability, and combinability.
Fortunately, Lineage Protocol allows the developers to create NFTs that meet all these conditions, thereby expanding the horizon of what is possible with NFTs.
