• J McGlynn and M Bacina

NFTlord? New Ethereum token standard allows for NFT loans and rentals


NFT owners can now rent out their digital assets for use by others following a new Ethereum token standard being finalised.


The new standard “ERC-4907” is the newest of many of Ethereum development standards which set out rules, conditions and functions a token must follow in order to operate as intended on the Ethereum blockchain.


Standards are essentially a list of functions, or a "blueprint" a smart contract should include for creating tokens with certain features. These are usually made available from the Ethereum Foundation following approval of a project with the same feature, for instance ERC-20 (one of the most well-known) a standard, which must be followed to create fungible tokens on the Ethereum network.


According to thirdweb, a software developer which specialises in web3 app building, the this exciting new standard follows a clear market demand for NFT rentals:-

People often want to access the utility of certain NFTs without making the commitment to purchase them. 'Renting' NFTs lets people pay a fraction of the price to hold the NFT in their wallet temporarily, using the NFT to unlock utility or digitial experiences.

Introducing an entirely new use case for NFTs, the “ERC-4907” standard introduces two roles a NFT holder can now assume - "owners" and/or "users", allowing adopters of the standards to separate NFT ownership and usage rights - which in effect automates NFT “leasing” without additional smart-contract functionality, the standard includes an expiration date for the rental as well.


ERC-4907 unlocks some exciting prospective applications:-

  • Video game trait NFT rentals, for example backing esports teams by loaning them assets for use in-game;

  • Temporary membership of a token gated clubs;

  • Temporary usage of token gated software;

  • NFTs as collateral for loans; and

  • NFTs which represent real world rentable assets, (ie. vacation home, such as an smart lock which opens if an NFT rented to a particular user interacts with the lock).

The ability to rent NFTs has massive potential for both lenders and borrowers. For the borrower, it allows them to try out an NFT community or take advantage of an NFT’s utility they otherwise wouldn’t be able to afford without buying the NFT. For lenders, it represents ways to earn money on their NFT collections, rent out art to digital galleries, share NFTs with others, and potentially activate whole new business models without requiring substantial additional effort and cost.