How do on-chain NFTs help refine how NFT projects approach Web3? | by Stanley Thomas | December 2022

Ever since the popularity of NFTs spread far and wide, there have been conversations portraying these blockchain-powered tokens as the ultimate cure the world needed to stay true to the spirit of humanity.

But are all NFTs really stored on the blockchain? If so, how can someone hack and steal millions of dollars worth of NFT items? If these questions pop into your head quite often, trust me, you’re not alone! In fact, most NFT skeptics are driven by these questions without knowing the full story, unlike you, who will be exposed to the concept on-chain NFTs which will certainly put some punches for the Web3 world.

Although I might want to say “Yes”, at least to please someone, in most cases they are not. Most collections do not use the concept of NFTs on chain. Instead, they use several external options to store data. Here, data refers to the element itself (whether it is an image or artwork) and the metadata (descriptions, editions and properties).

Coming back to how most projects store NFT data, they tend to have smart contracts on the blockchain and most data off-chain. Servers, cloud infrastructure and IPFS (Interplanetary File Storage) are often used by NFT projects to hold their data. While it’s good to have some degree of blockchain protection, what’s better than having all the protection possible?

While this is a complicated question to answer in a world where almost 89% of people are unaware of blockchain technology, my answer as a Web3 enthusiast would be a resounding “Yes.”

But how? Speaking of the modern methods that NFT companies use to store data, servers have gained a negative reputation in recent times due to several data breach scandals, apart from struggling to store large amounts of data such as images.

When it comes to cloud infrastructure, even if the need for physical server rooms is eliminated, the possibility of hacks and outages still exists, eliminating them from being the saviors of the Web2 to Web3 transition, despite their ability to handle data files of enormous size.

IPFS tends to solve these problems (at least for now) through distributed storage worldwide and based on the peer-to-peer working mechanism. While this is potentially enough (most NFT projects use it proudly), there is room for improvement.

First, the NFT should be cached from the IPFS facility if a user wants to access it, despite having the smart contracts on the chain. If the system goes down for any reason, it becomes impossible for anyone to retrieve the NFT asset, rendering the purchase useless.

On the contrary, on-chain NFTs fully utilize the power of blockchain technology to store all NFT data using a primary method of data processing. They contain data (including NFT metadata and the actual resource) in low memory-intensive states using formats such as Base64 and Scalable Vector Graphics (SVG).

Storing NFTs on the chain can be useful for NFT holders even if the classic doomed accident of project developers avoiding the community occurs. On a positive note, if a project decides to become fully decentralized, NFT resources on the chain can be instrumental in transitioning it from developer to community driven seamlessly.

Despite being a newer concept (on the basis of taking shape), there are more than a handful of NFT projects using on-chain storage. Let’s see some examples.

• CryptoPunks – Surprised? Yes, Larva Labs moved all of its CryptoPunk NFTs to on-chain in 2021, making all data available for public viewing and verification on the Ethereum network.
• Arpeggio — Arpeggi is the first NFT music platform on the chain that allows creators to compose music, collaborate with other musicians and sell their albums on the chain in the ARP network.
• Noun — Substantive is a generative NFT project on the Ethereum network based on pixelated images. A fact to note here is that the platform is handled by a DAO, which makes it completely decentralized.
• Rodents — Gnars is an extension of the Substantiv NFT collection (with a collection that looks similar, of course) with a DAO that concentrates on sponsoring extreme athletes.
• OCM Genesis– OCM Genesis is an on-chain NFT collection where images are generated on the flow of the underlying smart contracts, and data is stored on-chain.

Here we should not forget the fact that using chain storage entails high gas costs, even if things are greener on the other side after the process.

Despite spending a significant portion of their budget on on-chain NFT generation, the above projects have tasted success as businesses due to many reasons. Using the power of blockchain networks to the fullest, decentralization of projects becomes easier for ventures (yes, they can still be part of participating in the community). They can also have the highest security without fear of breaches and random interruptions (no, blockchain interruptions do not count here). All in all, a bet can win hugely by going for NFT assets on the chain.

As of now, we can say that using NFTs on the chain can be ideal for businesses to stay true to Web3’s core aspects while earning handsomely in a number of different ways. The space is free to explore, making it perfect for niche businesses to jump into the Web3 realm quickly. If you are an entrepreneur looking to leverage the efficiency of blockchains through on-chain NFTs, now is the ideal time to start. It is recommended to work with experienced professionals in NFT development to provide the best possible result for your business.