xNFTs: Non-Fungible Tokens with Embedded Applications
Airdrops within the Solana ecosystem continue to be a key interest driver for this blockchain. A prime example of this trend is xNFTs, specifically Mad Lads, whose holders have received DYM (Dymension) tokens and are likely to receive W (Wormhole) as rewards.
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xNFTs are a type of non-fungible tokens that combine the features of a standard NFT with an embedded application. An xNFT holder gains ownership not just of a unique token but also of the tokenized code within it. The prefix “x” stands for “executable.”
Some xNFTs from the Mad Lads collection. Source: support.backpack.exchange
xNFTs are created on Solana as SPL tokens (the equivalent of Ethereum's ERC-20 standard), using the React xNFT development platform. When a user opens an xNFT, the application code runs within a sandbox in the browser. This is a built-in isolated online environment in Chrome, Firefox, and Edge by default, which prevents the potential spread of malware.
Since an xNFT is already an application, users don't need to connect their wallet to any website to access assets (as is the case with DEXs and other dApps). Using xNFTs allows for enjoying games, listening to music, and accessing DeFi protocols in a unified environment.
What is Backpack?
Backpack is an xNFT operating system. Source: twitter.com
Backpack is a cryptocurrency wallet tailored for interacting with executable NFTs (xNFTs), while also supporting traditional NFTs and tokens within the Solana ecosystem. It is available as a browser extension or a mobile app for iOS and Android.
Imagine Backpack as an operating system akin to Windows or macOS, but instead of running desktop applications, it facilitates the operation of xNFTs and other crypto assets on Solana. It provides users with a comprehensive view of their digital assets, including token listings, wallet balances, and liquidity pool statuses, among other financial indicators.
Developed by the Coral developer community, Backpack initially served as a simple crypto wallet. However, in November 2023, the founders expanded its functionality to include the Backpack Exchange, transforming it into a centralized trading platform. Notably, the project is led by former FTX employees Armani Ferrante and Can Sun.
Differences Between NFT and xNFT
Traditional NFTs (Non-Fungible Tokens) serve as unique digital tokens that establish the authenticity and ownership of digital or physical assets. xNFTs share this core functionality but differ in several key aspects:
- xNFTs are exclusive to the Solana blockchain, whereas traditional NFTs are predominantly minted on Ethereum.
- xNFTs enhance the utility of NFTs by embedding executable code, allowing for the direct operation of applications without the need for external websites.
For instance, engaging in staking with traditional NFTs typically requires users to connect their cryptocurrency wallets to decentralized applications (dApps), posing potential security risks due to data exposure. xNFTs eliminate the need for such integrations, leveraging the Backpack wallet for direct interaction.
Expanding xNFT Creation with Solana Mobile Stack
The Solana Mobile Stack (SMS) is an open-source Software Development Kit (SDK) that equips developers with the tools necessary for building apps on the Solana crypto smartphone. SMS comprises two main components:
- SDK, which provides libraries and APIs for Android developers to create a wide range of applications, including crypto wallets, games, NFT platforms, and DeFi solutions.
- Seed Vault, a security feature that ensures the safe storage and use of private keys, enabling transactions to be signed with a fingerprint for enhanced security.
With SMS, xNFTs gain broader accessibility beyond web browsers, extending to mobile devices. This development poses an intriguing question: will SMS facilitate a quicker rollout of DOOM within the xNFT framework?
Ways to Use xNFTs
Contrary to the singular use-case scenario of traditional NFT collections, xNFTs find application across a broad spectrum of domains. Here's an in-depth exploration of their diverse applications.
DeFi. The integration of xNFTs within the Backpack wallet facilitates a more seamless interaction with financial decentralized applications (dApps). For example, the Solend lending protocol can leverage xNFTs as a platform for borrowing, allowing users to loan funds or accrue interest from lending operations.
Another instance of xNFT utility in the DeFi space involves Mango Markets, which has introduced xNFTs to enable user-friendly management of trading accounts through the Backpack Exchange.
Gaming. Games serve as an accessible gateway for users to engage with new technologies. Sporting F1, an xNFT-based game, exemplifies this by allowing players to design, exchange, and optimize F1 cars for competitive racing. This gaming experience is enriched with a wagering system, rewarding players with SOL tokens for securing top positions in races.
Social Media Platforms. The capacity for xNFTs to facilitate message exchanges introduces innovative interaction models among users. Solcial, a decentralized social media platform, uses xNFTs for content sharing, enabling users to earn rewards for their contributions.
The Future of xNFTs
Looking forward to February 2024, achieving compatibility remains a pivotal goal within the xNFT ecosystem. Collaborative efforts are essential for mainstreaming xNFTs, necessitating the development of interoperable applications that can seamlessly integrate with each other and with projects beyond the Solana ecosystem.
While the full capabilities of xNFTs are still unfolding, the community is already beginning to explore potential applications. There's a possibility that future developments in this domain could rejuvenate the NFT market, potentially mirroring the enthusiasm and popularity witnessed during the 2021 bull market.
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