What is Compressed NFT? Compressed NFT is a new approach to NFTs on Solana that uses a Merkle tree structure to store data. So what’s special about Compressed NFT? Let’s find out with Weakhand in this article.
Before jumping into the article, everyone can refer to some of the following articles to understand better.
- What is Solana? Overview of Solana cryptocurrency
- What is Proof Of History (POH)? Factors that make Solana the fastest
- Real Builder in Winter | Solana – The construction journey is full of hardships
What is Compressed NFT (cNFT)?
Overview of Compressed NFTs
Compressed NFTs are NFTs on Solana that store their data in a Merkle tree structure, a data structure that allows NFTs to be issued and confirmed on-chain but using Solana RPC Providers to store and process external data to minimize storage costs.
Compressed NFT uses an indexer to manage transaction data and support data querying between RPC and Smart Contract on-chain. Existing Smart Contracts must be updated to interact with compressed NFTs, or NFTs can be decompressed for use with applications on Solana. Overall, Compressed NFT offers a promising approach to reduce storage costs and manage NFT data more efficiently on the Solana blockchain.
What is Compressed NFT?
Who created Compressed NFT
Compressed NFT is the result of a collaboration between Solana Labs and Metaplex Foundation. The technology behind Compressed NFT combines Solana Labs’ Merkle tree program (called Account Compression) with Metaplex’s Compressed NFT program called Buddlegum.
Metaplex – a team spun out of Solana Labs has established new NFT standards for the Solana blockchain. Since launching in 2021, Metaplex has enabled the creation of over 22M NFTs and generated $3.36B USD in NFT revenue. The Merkle tree program on Solana is integral to creating Compressed NFTs via Metaplex as it allows these NFTs to be tokenized into the ledger on the Solana blockchain.
This partnership has resulted in a powerful combination of technology that brings significant advantages in storage efficiency and transaction speed for NFTs on the Solana blockchain. Metaplex’s success is a testament to the potential of Compressed NFTs and the broader ecosystem that has been built around them.
How Does Compressed NFT Work?
Compressed NFT’s mechanism of action
Compressed NFT allows on-chain data to be hashed, stored in a Merkle tree, and distributed via the off-chain NFT API. Compressed NFTs are stored in a Merkle tree through the Gummyroll program where:
- The root of the Merkle tree is stored and updated on-chain in the cache.
- Modifications to the tree (e.g. Mint, transfer,..) are encoded in the Solana master number.
- Off-chain indexers observe tree changes through the ledger and cache NFT-related metadata, and provide the necessary data and evidence to power dApps and Smart Contract.
Compressed NFTs are secured on-chain by hashing the state data when it is added to the Merkle tree. The Merkle root is a hash function that cryptographically secures the state data for all leaves (NFTs) in the tree.
In the unlikely event that all RPC Providers lose their data stores, the off-chain state of the Compressed NFT can be recovered by replaying the transactions. Additionally, the Metaplex Read API will further unleash the power of compression across several areas:
- Improve data reliability by normalizing NFT data delivered through the Read API.
- Improve speed and reduce the cost of querying NFT data by not relying on the resource-intensive getProgramAccounts method.
- Reduce hardware costs over time by delivering data without relying on getProgramAccountsMethod for calls to Metaplex programs.
Common Use Cases of Compressed NFTs
Compressed NFT allows users to mint NFTs at scale without incurring the high associated costs of regular NFTs. Common Compressed NFT use cases include:
Gaming
Compressed NFTs can be used as in-game assets for millions of players. Due to the potential scale of Web3 games, Compressed NFTs can save web3 game development companies costs while releasing millions of NFTs in their games.
Music and events
With millions of concert and event tickets sold each year, Compressed NFTs can save ticket companies money and act as a digital collectible for event attendees, while also providing Levels the security and authenticity of web3 products.
Metaverse
With the growing popularity of the Metaverse and games that adopt it, NFTs allow Metaverse development companies to digitize a large number of in-game collectibles for millions of players globally.
Applied in enterprise systems
From tracking goods on the Blockchain to providing a way to digitize public records, Compressed NFT can help businesses mint, store and retrieve NFTs in large quantities at a much smaller cost. compared to the cost of implementing NFTs today.
The Difference Between Compressed NFTs And Regular NFTs
Both Compressed NFT and regular NFT are issued and verified on-chain but there are 4 main differences between them as follows:
Stores NFT metadata
Compressed NFT stores data off-chain in a Merkle tree and is accessed through Solana RPC Providers. Meanwhile, traditional NFTs on Solana store data on-chain.
Expense
Because they are stored off-chain, Compressed NFTs are significantly more cost-effective than regular NFTs. To mint 1M NFT normally, it will take about 12,000 SOL and minting the same amount of Compressed NFT will only cost 5 SOL, saving up to 99.9% in cost.
In fact, the larger the NFT collection, the lower the mint cost when compressed. This is illustrated in the image below:
Mint NFT cost with Compressed NFT and regular NFT
Because the most significant cost when minting NFTs is typically paying for storage space on Solana. While Compressed NFT eliminates this, the majority of the remaining costs are simple transaction fees.
Data ownership
When wanting to modify a compressed NFT, users must cryptographically demonstrate their ability to change off-chain data. This ensures that off-chain data storage can be as reliable and secure as on-chain NFT storage.
Interact with dApps
Since NFTs are compressed to store data off-chain, it is necessary to modify the Smart Contract on Solana to be compatible with them. Additionally, Compressed NFT can be compressed for use with unencrypted Solana applications.
summary
The Web3 world is growing and will of course attract more users to NFTs. Compressed NFT appears as an essential solution for developers to release and bring their NFTs to millions of users. Above is all the information I want to introduce about Compressed NFT, hope everyone has received interesting knowledge.
