Expanding Digital Assets with Compression for NFTs

What was once cryptographic fantasy and experimental approaches to blockchain tech have quickly become a fledgling industry plugging artists, founders and builders into the new age of the internet.

Since launching in August 2021, Metaplex has helped users mint over 20 million NFTs with over 5.9 million unique collectors, accounting for over 99.9% of the Solana NFT market — making Metaplex the largest protocol in the ecosystem and the primary driver of new users.

Nevertheless, we’re still at the edge of the rabbit hole, staring into the future, hoping to fall in head first. The true discovery of the web3 space and mass adoption are on the horizon, but we still need that final push to fully fall down this path.

Compression for NFTs is a critical piece to solving that puzzle. Costs will come down dramatically, and web2 players and institutional juggernauts will have an easy onramp to test and experiment in web3. Let’s explore this new technology together.

What is Compression for NFTs?

Metaplex is ushering in the next generation of NFTs on Solana by leveraging on-chain compression to dramatically lower the cost to mint and store digital assets. Solana Lab’s Concurrent Merkle Tree program (Gummyroll) and the Metaplex Foundation’s Compressed NFTs program (Bubblegum) work in tandem to allow Metaplex NFTs to be encoded into the Solana ledger.

Compressed NFTs store their state (metadata, owner, etc.) in a Merkle tree, differing from uncompressed NFTs, which store data on-chain. With compressed NFTs, detailed account data is not stored on-chain but in data stores managed by RPC providers. Compressed NFTs can also be losslessly decompressed into uncompressed Metaplex NFTs — which means users don’t sacrifice quality at any step of the process. The original quality is never compromised.

Moreover, compressed NFTs maintain backward compatibility with Metaplex NFTs and can be easily transferred, delegated and even decompressed into account space for interoperability with existing smart contracts. In the future, more infrastructure will be available so that NFTs can remain compressed at all times and function just like NFTs do today.

This is a huge step forward in many respects, especially for fledging web3 industries and institutional adoption use cases that require massive amounts of digital assets.

Why Did We Build It?

Metaplex and Solana Labs developed compression for NFTs to serve web2 and web3 enterprise customers that want to activate millions or even billions of users. Although Solana is more cost-effective than other NFT blockchains like Ethereum, powering enterprise-level activity is still expensive.

This dramatic improvement in cost will reshape the industry, elevating NFTs to new use cases such as:

Social media Applications
Gaming
Ticketing
Metaverses
Enterprise Use Cases
Much more!

Plugged into the momentum of innovation and breadth of the Solana ecosystem, the launch of Compression for NFTs illustrates why there is no better place to build than Solana.

Now, when minting NFTs with Metaplex, you can take advantage of near-zero minting costs without the security risks of Layer 2 protocols and bridges. Rent costs for NFTs on Solana are relatively cheap but scale linearly. With Compression for NFTs, these already low costs reduce dramatically.

Collection Size

Large decentralized platforms and other chains can use this feature to mint extremely large NFT collections securely and without paying huge upfront mint or storage fees. While compressed, assets still support ownership transfers and listings for sale.

What does this mean for the ecosystem? Cost-heavy use cases for NFTs, like the metaverse or gaming, can leverage compression for NFTs to power the next generation of creative projects.

When your favorite band goes on a 90-city tour, how many NFT tickets will they need to produce and store? What support will mass retail need to architect brick & mortar loyalty programs (coupons, gift cards) on NFTs? Companies, products and services with user bases ranging in the millions can enter the NFT space without as much cost-related risk, which will invigorate experimentation and growth.

How Does It Work?

At a high level, Compression for NFTs allows on-chain data to be hashed, stored in a Merkle tree and served through the NFT API off-chain. Compressed NFTs are stored in Merkle trees via the Gummyroll program where:

Roots of Merkle trees are stored and updated on-chain in a buffer stored in a program account
Modifications to a tree (e.g., mint, transfer, delegate) are encoded in the Solana ledger
Off-chain indexers observe changes to the tree via the ledger and cache NFT-related metadata, and serve data and proofs needed to power dApps and smart contracts

Compressed NFTs are secured on-chain by the hashing of the state data when it’s added to the Merkle tree. The Merkle root is a hash that cryptographically secures the state data for all of the leaves (NFTs) in the tree.

In the unlikely scenario that all RPC providers were to lose their data stores, the off-chain state of compressed NFTs could be recovered by replaying transactions (provided that the given tree was started from the beginning).

Additionally, the Metaplex Read API will further unleash the power of compression across several areas:

Improves the reliability of data by Standardizing NFT data delivered through the Read API
Improves speed and lowers costs of NFT data queries by not relying on the resource-intensive getProgramAccounts method
Reduces hardware costs over time by delivering data without relying on the getProgramAccountsMethod for calls against Metaplex programs (Especially in regards to RPC providers)

Infrastructure Needed

Compression for NFTs will have lasting effects across the Solana ecosystem. Metaplex is working with wallets and RPCs to make Compression for NFTs a reality. The following partners have started implementing solutions or are planning to shortly.

Wallets: Solflare, Phantom, Backpack
Enterprise tools: Crossmint
RPCs: GenysysGo, Triton, Helius

Final Thoughts

That’s a brief overview of Compression for NFTs. Of course, you’ll find quite a lot more to wrap your head around, whether it’s from a technical standpoint or a possible use-case perspective. Regardless, this technological breakthrough represents a revolution in how users, builders and businesses can approach NFTs.

The web3 world is growing, and soon major companies will need to adapt or be swept aside by this new wave of technology. Metaplex is working with Solana Labs, RPC providers and wallets to provide the programs and infrastructure, like Compression for NFTs, to make truly scalable NFTs a reality on Solana — making Solana the go-to blockchain for the web3 revolution.