Overview

What is the CapsuleNFT Protocol?

The CapsuleNFT Protocol is a community-driven ecosystem that offers users new and revolutionary ways to interact with NFTs. The premier application of the CapsuleNFT Protocol is the ability to help users create Capsule NFTs - NFTs that are able to store other tokens within them, which may be redeemed at a later date.

While storing tokens within NFTs is a concept that has been mostly overlooked, the ability to do so opens up many new exciting opportunities for users within the cryptosphere. To list a few examples:

• Creating NFT art that has a baseline value (attributable to the underlying tokens within)

• Distributing project tokens through an ‘Initial NFT Offering (INO)’ using a Capsule NFT containing the project tokens

• Storing interest-generating tokens (Vesper’s ‘vTokens’, Aave’s ‘aTokens’, etc) within Capsule NFTs to create an interest-generating NFT

• Supporting a metaverse economy

These ideas only scratch the surface of what the CapsuleNFT Protocol can offer. There are a multitude of valuable and unique use cases that have yet to be discovered. It is our hope that providing the crypto community with the CapsuleNFT Protocol will inspire innovation and creativity far into the future of the cryptosphere. If you are interested, please visit the Collaboration section for an elaboration of the listed ideas and more interesting applications imagined by the Capsule team.

Whether you are an artist, a developer, an entrepreneur or none of the above, we believe anyone can find a home within the Capsule ecosystem.

The following documentation is meant to provide users with a technical and functional overview of the CapsuleNFT Protocol and provide guidance on how users can begin interacting with the ecosystem.

Capsule NFTs

The CapsuleNFT Protocol operates on the Ethereum blockchain and allows users to create token-storing NFTs, known as Capsule NFTs. Capsule NFTs follow the ERC-721 standard; they can be viewed, traded, bought, and sold in the same manner as traditional ERC-721 NFTs. However, there is a key difference — Capsule NFTs can be redeemed for their underlying tokens.

The process of creating a Capsule NFT is known as minting. When using the CapsuleNFT Protocol, users have the option to store tokens within a Capsule NFT at the time of mint and embed the Capsule NFT with artwork. The tokens stored within Capsule NFTs can be ERC-20 tokens, ERC-721 tokens, or ERC-1155 tokens - that's right; you can store an NFT within an NFT. The user is charged a small fee per Capsule NFT minted. After the Capsule NFT is minted, it can be viewed, traded, bought and sold as any ERC-721 NFT could.

At anytime, the owner of the Capsule NFT is able to redeem it for the tokens that were stored inside. Redeeming the Capsule NFT for the stored tokens burns the Capsule NFT in the process.

Types of Capsule NFTs

The following naming convention is used to describe the various Capsule NFTs that exist. The convention is based on the token(s) that are stored.

Type of Capsule NFT	Description
Simple Capsule NFT	A Capsule NFT that does not store any tokens. It functions as a normal ERC-721 NFT.
ERC-20 Capsule NFT	A Capsule NFT that may store any amount of ERC-20 tokens.
ERC-721 Capsule NFT	A Capsule NFT that may store any amount of ERC-721 tokens.
ERC-1155 Capsule NFT	A Capsule NFT that may store any amount of ERC-1155 tokens.