Why is Metadata so important in the NFT industry?

The storage protocol will become an increasingly critical infrastructure element in the NFT industry.

Oct. 2022, Vincy, Data Source: Footprint Analytics – Explore NFT Collections in Footprint

Metadata is often described as "data about data" and is used to provide structured data about some resource. It can include records of digital artwork, audio files, photos, animations, and can identify resources, evaluate resources, and track changes in their usage.

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For example, in the case of the Moon Men series, metadata includes the name, photo, description, and other characteristic features of the NFT. In the case of NFT game cards, metadata may include attributes like level, rarity, quality, etc. The data of one NFT metadata from the Moon Men series is shown below:

"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 the "image" link will display the image of that NFT as shown below:

Why Do People Store NFTs?

There are two main motivations behind storing NFTs.

1. For the Persistence of NFTs

NFT holders certainly do not want to wake up one day to find that the metadata of their NFT has turned into a "404" invalid link. Collectors want their NFTs to persist and be stored permanently at a low cost.

2. To Prevent NFT Tampering or Theft

We often open links using protocols starting with http, which actually means that their metadata is stored in centralized services. If we store NFTs in protocol links, they could be modified at any time by the centralized entity maintaining that link, requiring us to fully trust that entity not to engage in malicious behavior towards the NFTs.

There have been cases of hacker theft as well. On February 1st, a collector had their NFT collection stolen from OpenSea and LooksRare, resulting in an estimated loss of around $2.7 million at the time. How did this theft occur? According to the CTO of the digital wallet app ZenGo, the victim mistakenly clicked on a link from a certain Dapp that led directly to the hacker's digital wallet.

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

How and Where to Store Metadata?

Evaluate some storage protocols and providers:

• Poor: Project website hosting, providers like AWS, Geocities, etc.
• Good: IPFS, providers like NFT.storage, Filecoin, etc.
• Better: Arweave, provider is ardrive.io
• Best: Combination of Arweave and IPFS, multiple providers

For many users, IPFS is considered a good storage protocol. It stores metadata in a distributed storage IPFS, following content addressing (meaning the same IPFS protocol link opens the content consistently). Therefore, there is no concern about the purchased NFT metadata being tampered with. However, it is rated as "good" because it does not guarantee storage persistence, and its CID (Client Identifier) is public, requiring additional measures to maintain data privacy.

Similar to IPFS, Arweave allows users to permanently store data for a low fee of $2.927 per GB (paid in AR, dynamically calculated). While metadata cannot be tampered with by centralized entities, there is a risk of data loss if the metadata is corrupted.

The emergence of a combined data storage technology between Arweave and IPFS involves uploading data to IPFS, then uploading the data on Arweave and storing it on one's own IPFS node. This technology ensures data storage across multiple nodes, creating a more robust data retention system.

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

Which Storage Protocols Do Top NFT Trading Platforms Use?

OpenSea has over 1 million active users and a total trading volume exceeding $35 billion, leading many other NFT trading markets and further solidifying its leading position.

Since its establishment in 2017, OpenSea has supported decentralized metadata for NFTs. It allows creators to decentralize metadata using IPFS and Filecoin protocols. IPFS addresses content, preventing data tampering, while Filecoin enhances content persistence.

Other trading markets use content storage protocols as follows:

Conclusion

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

Storage protocols are becoming a more critical infrastructure element 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 risk of providing users with incorrect information.

This article is contributed by the Footprint Analytics community