Merge pull request #183 from thisisobate/session-14

Author: Emmanuel-Tyty

website/docs/working-group/sessions/q1-2026/14-CIP-68 NFT-Standard/Recording/readme.md

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+---
+title: "Session 14: CIP-68 NFT Standard"
+sidebar_label: Session
+sidebar_position: 1
+slug: /working-group/q1-2026/sessions/14-cip-68-nft-standard/session
+---
+
+# Session 14: Recording
+
+## 🎥 CIP-68 NFT Standard
+
+<iframe
+  src="https://www.youtube.com/embed/v4eeyg_i9LI?si=oxO60BgZJxQG5SQA"
+  title="Session 14: CIP-68 NFT Standard"
+  width="100%"
+  height="480"
+  allow="autoplay"
+  allowfullscreen
+  style={{border: 0, borderRadius: '12px', boxShadow: '0 16px 40px rgba(1, 40, 170, 0.18)'}}
+/>
+
+---
+
+*This document is part of the Q1 2026 Developer Experience Working Group session "CIP-68 NFT Standard".*

website/docs/working-group/sessions/q1-2026/14-CIP-68 NFT-Standard/session-notes/readme.md

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+---
+title: "Session 14: CIP-68 NFT Standard"
+sidebar_label: Session
+sidebar_position: 1
+slug: /working-group/q1-2026/sessions/14-cip-68-nft-standard/session-notes
+---
+
+# CIP-68 NFT Standard — Lecture Notes
+
+## 1. Background
+
+Early Cardano NFTs followed **CIP-25**, where metadata was stored in the minting transaction.
+
+### Limitations of CIP-25
+
+- Metadata becomes **immutable after mint**
+- **Smart contracts cannot read metadata**
+- Difficult to build **dynamic or evolving NFTs**
+- Requires **off-chain infrastructure** for interpretation
+
+To solve these limitations, Cardano introduced **CIP-68**, a modern NFT architecture enabling **programmable assets**.
+
+---
+
+# 2. Core Idea of CIP-68
+
+CIP-68 separates **NFT ownership** from **metadata storage**.
+
+Instead of minting a single token, a project mints **two tokens**:
+
+### User NFT
+- Held in a user's wallet
+- Represents the actual NFT
+
+### Reference NFT
+- Stored in a smart contract UTxO
+- Contains metadata in the **datum**
+
+This structure allows metadata to be **read by smart contracts and updated if allowed by the script**.
+
+---
+
+# 3. Token Labels
+
+CIP-68 uses labels defined in **CIP-67** to distinguish token types.
+
+| Label | Purpose |
+|------|------|
+| 100 | Reference NFT (metadata holder) |
+| 222 | User NFT |
+| 333 | Fungible Token |
+| 444 | Rich Fungible Token |
+
+Example:
+
+```
+(222)DragonSword
+(100)DragonSword
+```
+
+Both tokens share:
+- the same policy ID
+- the same asset name
+- but use different labels.
+
+# 4. Metadata Storage
+
+Metadata is stored inside a datum attached to the UTxO holding the reference NFT.
+
+Example structure:
+
+```
+datum = [
+  metadata,
+  version,
+  extra
+]
+```
+
+Example metadata:
+
+```
+{
+  "name": "Dragon Sword",
+  "image": "ipfs://Qm123...",
+  "description": "Legendary weapon",
+  "attributes": {
+    "damage": 120,
+    "rarity": "legendary"
+  }
+}
+```
+
+Advantages:
+- Metadata lives on-chain
+- Smart contracts can read and validate metadata
+- Metadata can be updated under controlled conditions
+
+
+# 5. Metadata Lookup Process
+
+When a wallet encounters an NFT:
+
+`policyID.(222)DragonSword`
+
+The system derives the reference token:
+
+`policyID.(100)DragonSword`
+
+Then:
+
+- 1. Locate the UTxO containing the reference NFT
+
+- 2. Read the datum attached to that UTxO
+
+- 3. Decode the metadata
+
+This process ensures deterministic metadata discovery.
+
+
+# 6. Smart NFT Capabilities
+
+CIP-68 enables programmable NFTs.
+
+Examples:
+
+**Dynamic NFTs**
+
+NFT attributes evolve over time.
+
+```
+level
+skills
+appearance
+```
+**Membership NFTs**
+
+```
+tier
+expiration date
+privileges
+```
+
+**Reputation NFTs**
+
+```
+DAO participation
+achievements
+contributions
+```
+
+**DeFi Position NFTs**
+
+NFTs representing:
+
+```
+liquidity positions
+loans
+staking records
+```
+
+# 7. Development Stack
+
+Typical Cardano NFT development stack:
+
+**Smart Contracts**
+
+- Plutus V2
+- Aiken
+- Helios
+
+**SDKs**
+- Lucid
+- MeshJS
+- Cardano Serialization Library
+
+**Infrastructure**
+
+- Blockfrost
+- Ogmios
+- Kupo
+
+**Storage**
+
+- IPFS
+- Arweave
+
+
+# 8. Minting Flow
+
+Modern NFT minting using CIP-68 follows these steps.
+
+1. Create Minting Policy
+
+Defines mint conditions.
+
+**Examples:**
+
+- one-time mint
+- time-locked mint
+- DAO-controlled mint
+
+2. Mint Two Tokens
+
+For each NFT:
+
+```
+(222)UserNFT
+(100)ReferenceNFT
+```
+
+3. Lock Reference NFT
+
+Send the reference NFT to a script address.
+Attach metadata inside the datum.
+
+4. Distribute User NFT
+
+The user token (222) is sent to the buyer’s wallet.
+Wallets and marketplaces retrieve metadata from the reference NFT.
+
+
+# 9. Best Practices
+
+When designing NFT projects:
+
+**Decide Metadata Type:**
+- immutable
+- semi-dynamic
+- fully dynamic
+
+**Separate Components**
+
+Recommended architecture:
+
+- mint policy
+- metadata contract
+- application logic contract
+
+**Secure Metadata Updates**
+
+Ensure only authorized scripts can update metadata.
+
+**Store Media Off-Chain**
+
+Images and large files should be stored on:
+
+- IPFS
+- Arweave
+
+The blockchain should store references and hashes.
+
+# 10. When to Use CIP-68
+
+Use CIP-68 when NFTs require:
+
+- dynamic metadata
+- smart contract interaction
+- on-chain logic
+- evolving assets
+
+Examples:
+
+- games
+- DAO memberships
+- DeFi positions
+- identity systems
+
+For simple static art collections, CIP-25 may still be sufficient.
+
+# 11. Summary
+
+CIP-68 introduces programmable NFTs to Cardano by:
+
+- separating ownership from metadata
+- storing metadata on-chain
+- enabling smart contract interaction
+
+This architecture forms the foundation for:
+- dynamic NFTs
+- decentralized identity
+- on-chain gaming assets
+- financial NFTs
+
+CIP-68 is now considered the modern standard for advanced NFT development on Cardano.