Summary

As the digital asset space expands, the storage of Non-Fungible Tokens (NFTs) on-chain has become a notable talking point in the world of cryptocurrencies. The Breakpoint 2023 session by Hamster Sol, founder of Blockrons, provides a detailed examination of the nuances involved in storing Solana NFTs on-chain, bridging the gap between token representation and asset reality. The discussion ventures into the territory of understanding the difference between NFT tokens and assets, the practicalities and economies of on-chain storage, and the implications for investors and collectors.

Key Points:

On-Chain vs. Off-Chain NFTs

NFTs embody two distinct components: the token and the represented asset. While the token itself is stored on the blockchain, often what it represents—an image or another digital asset—resides off-chain, typically on centralized servers or other chains. This delineation sparked concerns within the digital asset community, particularly when highly valued NFTs are merely pointers to external URLs. The push to merge the token and the asset onto a singular blockchain platform ensures the durability and integrity of the NFT.

Historical Context and Current Challenges

Contextualizing the current endeavor stems from 2021, when limited collectible NFTs captured mainstream attention. The scarcity inherent in these collections added speculative value. Yet, underlying vulnerabilities surfaced, pointing to the fact that many costly NFTs could devalue if the off-chain linked assets were lost. Solving this, Ethereum-based projects like CryptoPunks moved their assets on-chain by employing SVG file storage, yet Solana required a native solution.

Solving the On-Chain Dilemma on Solana

The Metaplex standard on Solana is crucial for NFT realism but historically limited by an inability to embed raw asset data. This led to innovative solutions like embedding SVG strings into Solana accounts. Blockrons, among other projects, trailblazed the on-chain NFT storage practice on Solana, facing challenges such as connecting the tradable token to its stored asset. The proposed workaround involved using a dummy URL with an appended Solana account at the URI's end to ensure that images and metadata are verifiably on-chain.

The Cost of On-Chain Storage and the Road Ahead

Storing NFT assets on-chain on Solana incurs costs relative to the resolution and size of the digital asset, with 10 KB pixel art costing around 0.07 SOL and 10 MB high-resolution images costing 70 SOL. Nevertheless, this expense can be reclaimed, unlike gas fees on Ethereum, due to Solana's rent mechanism. The future looks bright for on-chain NFTs with new projects like hyper glyphs and Libre Flex pushing the boundaries of on-chain generative art and new protocol standards.

Facts + Figures

• On-chain storage binds the token and the asset together on a blockchain.
• Assets of NFTs are frequently stored off-chain, leading to potential risks.
• Limited collectible NFTs gaining mainstream traction in 2021 increased the value of on-chain storage.
• CryptoPunks, an Ethereum-based project, moved from storing mere hashes to full SVG files on-chain in 2021.
• The cost of storing pixel art on-chain on Solana can be as low as 0.07 SOL, with the advantage of reclaimable rent.
• Blockrons was launched in December 2022 as the first native on-chain NFTs on Solana.
• Projects like hyper glyphs and Libre Flex are contributing to the development of on-chain NFT standards on Solana.

Top quotes

• "Non-fungible tokens are on chain, but we're only talking about the token side."
• "Assets can be anything, but let's not kid ourselves. Majority of NFTs right now are just JPEGs."
• "Your million-dollar NFT can break tomorrow if you're not careful."
• "The art isn't even on-chain."
• "CryptoPunks... stored them on-chain as SVG files."
• "I decided to put NFTs on-chain on Solana."
• "We can now store the image directly into the JSON."
• "The important question is, how much does it cost to put these images on-chain?"
• "It helps because we now have a reason to have premium NFTs."
• "In all practical purposes, we have an on-chain NFT."

Questions Answered

What is an on-chain NFT?

An on-chain NFT is a digital asset whose token and the represented content (often an image or another digital asset) are both stored on the blockchain. This ensures both components of the NFT are secure and verifiable within the blockchain infrastructure, as opposed to just the token being on-chain and the asset being stored externally.

Why is it important for NFTs to be stored on-chain?

It is important for NFTs to be stored on-chain to enhance their security and authenticity. On-chain storage ensures that the asset cannot be lost or tampered with, as the blockchain maintains a permanent, unalterable record. Additionally, it provides a form of verification that what you own is genuine and not just a URL to an image hosted elsewhere.

How did Ethereum-based projects like CryptoPunks transition to on-chain storage?

Ethereum-based projects such as CryptoPunks transitioned to on-chain storage by utilizing SVG (Scalable Vector Graphics) files. This enablement allowed these images to be stored directly on the Ethereum blockchain, making them more dependable and resistant to external changes or data loss.

What is the cost of storing NFTs on-chain on Solana?

On Solana, the cost of on-chain storage for NFTs varies. For simple pixel art, the cost is approximately 0.07 SOL for 10 KB. For higher resolution images of up to 10 MB, the cost increases to around 70 SOL. However, unlike Ethereum's gas fees, these costs on Solana are considered rent and can be reclaimed by the user.

What is the future of on-chain NFTs on Solana?

The future of on-chain NFTs on Solana looks promising, with various projects pioneering new standards and methods of storage. Innovations like hyper glyphs and new protocols such as Libre Flex are setting the stage for a more robust and diverse ecosystem of on-chain NFTs, potentially leading to increased precedent for high-quality and premium digital assets on the Solana blockchain.