ERC-4907: The NFT Rental Standard & How to rent NFTs

ALOHA!

We talked to you about NFTs (EVERYTHING YOU NEED TO KNOW ABOUT NFT NETWORKS!) and buying land from the metaverse. (WHY PEOPLE BUY LAND IN METAVERSE AND HOW TO BUY? STEP BY STEP GUIDE !)
And finally, we took a look at the Play to Earn Games of the NFT world together.
I would like to introduce you to the new Ethereum Token Standard, ERC-4907, which allowed me to add to my NFT Networks article.

ERC-4907, allows an NFT owner to permit another individual to use their NFT for a designated period of time. After that time ends, the user no longer has access to the NFT.

Play-to-earn (P2E) games are still a relatively new phenomenon in both crypto and gaming. Having said that, the industry has enormous growth potential due to its powerful combination of two things that everyone desires:

Entertainment

&

Money.

NFT rental services have been growing in popularity, making it easier for people to get into the P2E space. These services allow players to rent NFTs without any virtual strings attached. In turn, lenders get a chance to make money off of the players’ earnings. Owners of non-fungibles also get a chance to make some passive income.

If you are not familiar with NFTs, Web 3.0 and NFT networks, please check my old articles first.

What is an NFT rent?

NFT Rentals is just like any other rental service. If you need a car for a few days, it’s more cost effective to rent one than to buy a new one. The same goes for renting an NFT for a short amount of time. Just make sure you return it on time!

Why NFT renting is important?

NFTs can have a lot of different uses. NFT renting is a good way to get started with this kind of asset. This is important because more and more people are getting interested in NFTs, and this industry makes it easier for them to try them out.

NFT rentals benefit both owners and renters by allowing renters to use NFTs they might not be able to afford and giving owners a way to monetize their NFTs.

There is potential for a lot of people to rent things using blockchain technology. You can rent digital art, land in virtual worlds, and game assets. If this technology becomes popular, then there will be a lot of things that people don’t use that can be rented out. It is important to have a strong rental market so that these things can be used.

The lack of liquidity in NFT markets is a problem that has been proposed to be solved in many ways, one of which being the maturation and strengthening of the rental industry.

Existing ways to rent NFTs

There are currently two ways to rent out NFTs:

1. secured rent
2. unsecured rent

One advantage of leasing NFTs is that the owner can give the tenant ownership of the asset at the end of the lease. However, this can also put users at risk. For example, if the lease ends, the original owner can’t control the asset anymore. In addition, the owner must manually return the asset after it expires.

The new generation of blockchain technology, called ERC-4907, eliminates the roles of the owner and the tenant. With this new system, the tenant’s privileges automatically expire at the end of the lease.

The NFT rental standard: ERC-4907

The NFT rental marketplace Double Protocol is credited for submitting the rentable NFT standard “EIP-4907,” which passed the final review by the Ethereum development team on June 28 and became the 30th ERC standard.

ERC-4907 is an extension of ERC-721 that lets people play two roles with NFTs. The “owner” is the person who owns the NFT, and the “user” is the person who uses it. ERC-4907 makes it easier to rent NFTs by setting a time limit on how long someone can use them.

ERC-4907 can be easily implemented by adding just a few lines of code. Adopting this model for NFTs may help the ecosystem grow faster.

What problems does ERC-4907 offer?

Clear Rights Assignment

When you create a coding system for “owners” and “users,” it makes it much easier to separate the rights of lenders and borrowers. This way, owners can control what each person can do with their NFTs. This also makes it more convenient for owners to manage their assets and lets someone else use their NFT for a set amount of time, after which they will no longer have access to the NFT.

Coding-in the dual roles ‘owner’ and ‘user’, makes it easier to manage NFTs.

Simple On-chain Time Management

When a rental period is over, the user role is automatically reset. The renter then loses their access and rights to use the NFT. This was done in the past by doing a second on-chain transaction, but that method was gas-inefficient and imprecise. With ERC-4907, there is no need for this extra transaction because the “user” role automatically expires after the predetermined expiration date.

ERC-4907 allows for users of NFTs to automatically lose access and rights after their rental period expires.

Backwards Compatibility

ERC-4907 can be made compatible with ERC-721 by adding a set of extension functions. These new functions are similar to the existing functions in ERC-721, which makes it easy for developers to adopt the new standard. Existing and future NFTs created as regular ERC-721 can be upgraded to ERC-4907 or wrapped to use the same extension function set.

ERC-4907 is an upgrade to ERC-721 that allows for the use of NFTs with more functionality.

Easy Third-party Integration

ERC-4907 will help simplify the way different applications work together on Ethereum. This will make it easier for games, membership cards, and other applications to interact with each other. ERC-4907 also makes it cheaper to develop and use utility NFT leases in these applications.

ERC-4907 allows for easier management of NFT usage rights without permission from the issuer or application. For example, you could use a PFP NFT on a rental platform. People can rent the NFT for 30 days. You can also use it on a mortgage platform. People can “rent to own” the NFT through a payment plan.

ERC-4907 is a standard that allows for easier management of NFT usage rights.

Making NFTs More Accessible

In the traditional NFT rental system, renters need to provide collateral, usually in stablecoins or ETH. This often requires over-collateralization, which forces renters to lock up more capital than the value of the NFT they are renting. This limits who can rent NFTs because of the substantial amount of capital required upfront, especially for pricier NFTs.

In the traditional NFT rental system, over-collateralization forces the renter to lock up more capital than the value of the NFT they are renting.

Increasing market liquidity

ERC-4907 will help with the renting of virtual objects and also create new types of virtual objects. This can be used for various purposes, including gaming, art, PFP, music, and membership NFTs. As more people use the Metaverse and Web3, they will need ways to access virtual objects without having to buy them.

ERC-4907 aims to create a system for renting virtual objects, so that people can access them without having to buy them.

Where Can You Rent NFTs

The market for renting NFTs is still new. That’s why there aren’t many rental marketplaces yet. The most popular ones are reNFT, Vera and Trava NFT.

Wrap Up

We are embarking on a historical journey into the future of NFTs.
The digitization of assets is a revolution in how ownership is defined.
The ERC-4907 standard is a revolution in how ownership is defined and it eliminates the need for collateral in lending and borrowing NFTs.

However, there are still some concerns about the completeness of the ERC-4907 protocol and it has not yet been deployed by any projects. We’ll have to wait and see how effective it is and if this innovation can move us closer to a decentralized society (DESOC) and the democratization of NFTs for the benefit of all.

You can also follow me on my Linkedin and Twitter accounts!🐞

Financial Disclaimer: This is not financial advice. I am not a financial advisor. This account is for entertainment and expressing my opinions. Please do your own research and make your own decisions.

See you in the next articles!