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Home » Why is Metadata Crucial in the NFT Industry?
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Why is Metadata Crucial in the NFT Industry?

Oct. 26, 2022No Comments5 Mins Read
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Why is Metadata Crucial in the NFT Industry?
Why is Metadata Crucial in the NFT Industry?
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Storage protocols will become increasingly critical infrastructure elements in the NFT industry.

Metadata is often described as “data about data” and refers to structured data that provides information about a particular resource. It can include records of digital artwork, audio files, photos, animations, and more. Metadata can identify resources, evaluate them, and track their usage and changes.

For example, in the case of the Moon Men series, the metadata for an NFT includes the name, photo, description, and other features. In the case of NFT game cards, the metadata may include attributes such as level, rarity, quality, and more. Here is an example of the metadata for an NFT from the Moon Men series:

“name”: “Moon Men #1”,
“description”: “Moon Men is a collection of 807 community-generated NFTs rooted in utility. Contributors who receive a Moon Man can use it as a PFP of astronomical awesomeness and receive a discount on a Footprint Business Plan. There are tons of other benefits.”,
“image”: “https://static.footprint.network/moonmen/nft/1.png”

Clicking on the “image” link displays the image of the NFT.

People store NFTs for two main reasons:

1. To ensure the persistence of NFTs.
2. To reduce the risk of NFTs being tampered with or stolen.

How and where can metadata be stored?

What storage protocols do top NFT marketplaces use?

In conclusion, there are two main motivations behind storing NFTs. NFT holders do not want to wake up one day and find that the metadata of their NFTs has become a “404” invalid link. Collectors want their NFTs to be preserved permanently and at a low cost.

We often use protocols starting with “http” to open links and view content, which actually means that their metadata is stored in centralized services. If we store NFTs in protocol links, they may be modified by the centralized institutions maintaining those links. We need to fully trust that these institutions will not act against the interests of the NFTs.

There are also cases of hacking and theft. On February 1st, a collector’s NFT collection was stolen from OpenSea and LooksRare, resulting in an estimated loss of about $2.7 million at the time. How did this theft happen? According to the CTO of the digital wallet application Zen Go, the victim mistakenly clicked on a link from a certain Dapp, which directly led to the hacker’s digital wallet.

In summary, a storage protocol with high security, low storage cost, and persistence is crucial.

Here is an evaluation of some storage protocols and providers:

Poor: Project websites hosted by providers such as AWS and Geocities.
Good: IPFS, with providers such as NFT.storage and Filecoin.
Better: Arweave, with the provider being ardrive.io.
Best: Combination of Arweave and IPFS, with multiple providers.

For many users, IPFS is considered a good storage protocol. It stores metadata in the distributed storage of IPFS, following content addressing (meaning that opening the same IPFS protocol link multiple times will yield consistent content). Therefore, there is no need to worry about the metadata of purchased NFTs being tampered with. However, it is rated as “good” because it does not guarantee storage persistence, and its CID (Customer Identification) is public, requiring additional measures to maintain data privacy.

Arweave is similar to IPFS, with the main difference being that users pay a low fee of $2.927 per GB (paid in AR) for permanent data storage. Metadata cannot be tampered with by centralized institutions, but there is a risk of data loss if the metadata is damaged.

The combination of Arweave and IPFS data storage technology uploads data to IPFS and then to Arweave, with the data on Arweave stored on the user’s own IPFS node. This technology achieves data storage across multiple nodes, creating a more powerful data retention system.

Of course, there are many other storage protocols available, such as Filecoin, Storj, and Sia.

OpenSea, with over 1 million active users and a total trading volume exceeding $35 billion, is the leading NFT marketplace, further solidifying its position.

Since its establishment in 2017, OpenSea has supported decentralized metadata for NFTs. It allows creators to use IPFS and Filecoin protocols for decentralized metadata. IPFS solves the addressing of content, preventing the tampering of NFT data, while Filecoin enhances content persistence.

Other marketplaces use content storage protocols as follows:

[Image]
[Image]
Footprint Analytics – NFT Marketplace Content Storage

As all digital assets inevitably transition to permissionless blockchains in the form of NFTs or other tokens, how and where to store this valuable information becomes increasingly important.

Storage protocols will become increasingly critical infrastructure elements in the NFT industry. For NFT users, the security and persistence of metadata, as well as the ability to verify the authenticity and integrity of data through metadata, are particularly important to reduce the occurrence of providing users with incorrect information.

This article is from Footprint Analytics.

Community Contribution:
NFT

[Image]
[Image]

Further Reading:
2023 NFT Development Review | Blur Points, Elementals Controversy, Ordinals’ Popularity
Is Bitcoin Ordinals becoming mainstream? NFT project “BitcoinShrooms” appears on Sotheby’s.

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