A gaming organization creates a new standard for Ethereum NFTs, ERC-721R, that allows trustless refunds to be added to non-fungible token smart contracts to ensure investor safety.
A new standard for non-fungible tokens (NFTs) has been created on Ethereum, which is still little used. However, it provides a new, higher level of security and trust for those participating in the NFT market.
This is the standard ERC-721R, created by the Crypto Fighters Alliance organization to introduce trustless refunds functionality to non-fungible token smart contracts, built on the ERC-721 and ERC-1155 standards.
Projects developed under this NFT standard give investors the possibility of returning, within a set period ranging from 30 to 45 days, the minted NFT tokens, at the minting cost, to receive a refund of the deposited ETH. In this way, the risk that exists when participating in new NFT projects is minimized, the organization explains.
The conditions set by the ERC-721R standard commit developers and creators of NFT projects to greater responsibility with their community. The ERC-721R was created in collaboration with Ethereum contributors Amir Hagafny y Eliezer Steinbock, as shown on GitHub.
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What is the ERC-721R standard?
ERC-721R is a standard for non-fungible tokens on the Ethereum blockchain, which adds trustless refunds to NFT smart contracts, giving investors the ability to return their NFT to the smart contract and receive their ETH back within the specified time.
To protect investors, NFT projects created under this standard lock investors' funds, preventing their creators from using or withdrawing funds from the smart contract during the established refund period. This ensures that funds are available in the event of a refund request.
ERC-721R seeks to provide greater trust, legitimacy and security in the NFT market, to ensure its development and generalization.
The Crypto Fighters Alliance points out that many of the problems currently facing the NFT market are related to scams of the type Rug Pull, so the idea of ​​refunds is to provide more protection to buyers and more legitimacy to creators.
Responsibility in the NFT market
NFTs have seen great growth thanks to their ability to create digital items or tokenize real-world objects along with certificates of ownership that, thanks to blockchain, are unique, immutable and non-transferable.
This has popularized NFTs within industries such as art, collectibles, sports, and video games. Currently, NFTs have become a market that surpasses 30.000 million in trading volume.
However, while these digital assets represent an opportunity for many developers, creators, and artists, there are also malicious actors looking to cash in amid growing demand. So much so that some consider NFTs a sector of the crypto industry rife with crime and scams.
To prevent potential fraud related to these digital assets, the Crypto Fighters Alliance allows NFT investors the possibility of observing whether the projects they have invested in fulfill the promises of the creators or artists or the way in which they manage the community.
“If the buyer doesn’t like how the project is going, they can return their NFTs and get a refund”, say the creators of the NFT standard. “If creators decide to withdraw, buyers will request their funds back before the waiting period is complete, only losing the gas costs of the transactions.”.
Currently, the ERC-721R standard is implemented by a small group of NFT projects, although the Crypto Fighters Alliance is committed to driving further adoption.
$2.800 billion lost to scams according to Chainalysis
The new standard benefits investors by mitigating the possibility of fraud, while creators have the opportunity to build a more engaged community based on responsibility.
According to Chainalysis, in 2021, rug pull scams in the NFT market and crypto industry took a toll 2.800 million in losses. This represented, according to the firm, 37% of all scams executed within the crypto industry; a quite significant figure compared to the 1% seen in 2020.
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