How Nested NFT Development Revolutionizes Digital Asset Ownership in the Web3 Ecosystem?

Nested NFT Development

Key Takeaways:

  • Discover what nested NFT development is all about and how it can revolutionize digital asset ownership in the Web3 space.
  • Explore the possible use cases of ERC-7401, the token standard behind nested non-fungible tokens.
  • Check out the business prospects of creating NFTs using the novel token standard as markets become technically advanced.

Ever since their inception in the mid-2010s, non-fungible tokens (NFTs) have been a matter of immense discussion. Fast forward to today, these digital tokens representing a plethora of virtual and physical assets have become a prominent aspect of the current digital economy. Due to its greatly innovative nature, new findings have become a regular feature, with nested NFTs being the latest entrant. Although proposed in 2022, nested NFT development has gained popular attention only in recent times due to the success of several platforms. This blog will discuss nested NFT development in detail and how it could be a phenomenal business idea to adopt for aspiring Web3 entrepreneurs. 

Introducing: Nested NFT Development

Nested NFT development comes as the newer version of non-fungible tokens that look something like a set of boxes of various sizes, where a smaller one can be put into a bigger one. This type of token development enables people to own multiple tokens within a single NFT, with several projects catapulting the standard toward popularity.

  • Nested NFTs consist of Parent and Child tokens, where the former holds the latter. Every child token can become a parent, too, having its own child NFTs that can come with various use cases. These tokens can come under a variety of types, including utility tokens, social tokens, liquidity tokens, and tokenized real-world assets (RWAs).
  • The token standard based on Ethereum has the monicker ERC-7401, which is an improvised version of the earlier proposed ERC-6059 token standard. The standard taps into unique smart contracts that enable the creation of nested NFTs. Using these tokens allows people to manage entire portfolios under a single NFT, easing hassles around accessing and carrying out trading operations.
  • Creating nested NFTs using the ERC-7401 standard is useful for various classes of users, including creators and gamers. The standard enables them to gain a predefined share when NFTs are traded in the open market. It also aids in tokenized stock investments by allowing traders to enter and exit positions across an industry with a click.

Important Elements of Nested NFT Standard (ERC-7401)

The nested NFT standard (or ERC-7401 for those tech buffs) consists of several elements that come together to bring a novel concept to reality. Since the standard takes a unique approach when it comes to enabling a hierarchical tree structure for NFT assets, each of these elements is necessary to ensure optimal functionality.

  • Parent NFT: A parent NFT is a token that can hold multiple child NFTs representing various kinds of assets and properties. Every parent NFT has full control of all the child tokens created under it, allowing NFT collection projects to form specialized governance structures.
  • Nesting Chain: Every child NFT has the capability to become a parent of its own children, comprising a collection of NFTs representing diverse assets. Such a possibility creates a hierarchical nesting chain, enabling a complex network of non-fungible tokens for business purposes.
  • Nesting: Nesting is the process of adding a child NFT to a parent NFT using sophisticated smart contract programming practices based on the ERC-7401 standard. Using such a method ensures that tokens are combined in a secure and controlled manner.
  • Unnesting: Unnesting is the process of releasing a child NFT from a parent to make it part of another nested collection or an independent token. As long as the tokens involved adhere to the ERC-7401 standard, unnesting and renesting of NFTs are possible.
  • Flexible Presence: Compared to earlier token protocols that attempted nesting, the ERC-7401 standard is more open and flexible. This is because parent and child tokens can belong to different collections, and nesting them is possible as long as both come under the ERC-7401 protocol.

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Benefits of Using the ERC-7401 Token Standard

The ERC-7401 token standard for NFT nesting comes with several breakthrough benefits, just like its functional concept. The standard’s ability to encase numerous NFTs within a single token while ensuring the parent token stays an NFT without becoming a wallet. It essentially extends functionality to the conventional ERC-721 NFT standard, although existing ERC-721 tokens cannot be nested.

  • Increased Safety: The ERC-7401 standard has a structured approach for creating metadata for NFTs. This process plays a vital role in making these tokens more secure during transactions and in-app interactions, rendering any hacking threats useless.
  • Enhanced Interoperability: The token standard provides amplified interoperability that ensures the efficient transaction of data and digital assets through standardized formats. Providing such a facility is essential as the NFT space’s scope has widened, making information exchanges in various forms normal.
  • Higher Scalability: By encasing multiple NFTs within a single token, the number of individual transactions will become low, increasing the scalability of the Ethereum blockchain. Although the process is complex, its positive impact on Ethereum’s transaction throughput can make sophisticated projects like community-centric games function efficiently.
  • Advanced Utility: Nesting NFTs using the ERC-7401 token standard opens the room for bringing advanced use cases to the Web3 space, some of which we will see in the next section. By creating a wide range of opportunities for aspiring Web3 projects, the nested NFT standard makes it possible to implement blockchain functionality for highly demanding real-world applications.

Diverse Applications of Developing Nested NFTs

Creating nested NFTs has diverse use cases, which one can capitalize on to gain massive edge in the competitive Web3 space. There are various business worthy applications the ERC-7401 standard brings, the topping ones of which we will be discussing in this section. 

  • Tokenized Communities: NFT-based communities can be showered with additional benefits using nested NFTs that can be used for premium access or loyalty points.
  • Supply Chain Processes: The supply chain industry can benefit from NFT nesting by simplifying how shipments are tracked from initiation till delivery.
  • Soulbound Tokens (SBTs): Soulbound tokens (SBTs) associated with unique personal information can use the ERC-7401 token sttandard to upgrade data using the nesting process to create a solid personal record. 
  • In-game Experiences: Nested non-fungible tokens can enhance the gaming sector by enabling characters to hold weapons and armors, opening the scope for dynamic gaming experiences.
  • Multimedia Content: Nesting images, video, and music together within a single NFT becomes possible with ERC-7401 and creators can use them to provide exclusive experiences for hardcore fans. 


Hence, we have discussed the intricacies of nested NFT development and how it can revolutionize digital asset ownership and usage. With lots of promise, NFT nesting has become the next-generation norm for Web3 projects that aim to captivate the wider community. Several platforms have already mastered the trick of creating NFTs based on the ERC-7401 token standard, with results stating resounding success. If you are interested in exploring this novel Ethereum-based token standard, now is the time to begin, and our experts at Blockchain App Factory can provide you with the best-in-class NFT development services for projects with unique ideas. Speak to our professionals today to get started!

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