Investigating the Application of Nested NFTs on Consortium Blockchain for Enterprise Supply Chain Traceability Management

Abstract

Consortium blockchains (e.g., Hyperledger Fabric) have been adopted for inter-organizational supply chain management, while NFTs have gained attention to represent asset uniqueness and ownership on public blockchains (e.g., Ethereum). Applying NFTs to supply chains offers the potential to track individual products and enable seamless lifecycle management, including consumer engagement. Also, standardized smart contract interfaces for NFTs (e.g., ERC721) promote interoperability across blockchain services. However, traditional NFTs are limited to single-asset representation and lack features needed for enterprise use, such as support for composite products, access control, and efficient ledger storage. Recognizing the potential of ERC-7401 (nested NFTs) for enabling hierarchical NFT structures, this study investigates its application to traceability in consortium-based supply chains. We designed a nested NFT framework on Hyperledger Fabric, incorporating attribute-based access control and block size reduction mechanisms through transient arguments and batch processing. We implemented a prototype on Hyperledger Fabric that integrates block size reduction and access control mechanisms into Nested NFTs. Through design and implementation, we demonstrated the feasibility of this approach for complex supply chain management.