A Quick Guide to Understanding Semi-Fungible Tokens

Blockchain has led to the rise of many crypto-assets in the past. One such remarkable crypto asset is non-fungible tokens (NFTs), which came into the limelight in 2017. They are different from fungible tokens (FTs), like cryptocurrencies, as they give ownership rights to the creators. Apart from FTs and NFTs, there exists another type of token called semi-fungible tokens (SFTs), which have properties of NFTs and FTs. We can develop SFTs with NFT development services. They are changing the gaming experience and the digital world more. In this article, you will learn more about these relatively new tokens. 

Understanding Semi-Fungible Tokens (SFTs)

It is crucial to understand the basics to gain a better understanding of semi-fungible tokens (SFTs). As mentioned earlier, SFTs are a fusion of NFTs and FTs, so we have given brief information about these two tokens: 

Fungible Tokens (FTs)

Fungible tokens (FTs) are descriptions of assets on blockchain that share the same characteristics or values. They are not unique, and therefore, they are interchangeable. Some well-known examples of FTs are cryptocurrencies like Bitcoin and Ether. 

Non-Fungible Tokens (NFTs) 

NFTs are digital representations of specific items, arts, or collectibles. Businesses utilize smart contract development to develop these tokens that can certify ownership of unique assets. Thus, you cannot interchange them with each other. The Beeple’s digital artwork and Bored Ape collection are some examples of NFTs. 

Semi-Fungible Tokens (SFTs) 

SFTs are comparatively new types of tokens that combine the properties of NFTs and FTs. Initially, these tokens act like fungible tokens, i.e., you can interchange them with similar tokens. Later, they turn into NFTs when they lose their face value.

An example of an SFT is an event ticket. You can interchange it with another ticket for the same event before the show, meaning it is an FT. But once the event ends, you cannot exchange the ticket for another show, so it becomes an NFT. This flexibility of SFTs has opened the door to many opportunities. 

NFT vs SFT 

Let’s dive into some of the major differences between NFT and SFT.

Also Read | Understanding ERC-404 | The Unofficial Token Standard

SFTs Development 

You can mint SFTs on multiple blockchains. Ethereum Request for Comments (ERC) 1155 is the data standard for developing SFTs. The Sandbox, Enjin, and Horizon Games introduced this ERC standard by mixing the NFT standard (ERC-721) and FT standard (ERC-20). Developers purchase Ether to create SFTs.

Apart from Ethereum, you can create SFTs on XRP Ledger, Solana, Bitcoin Cash, Stacks, and Flow. 

Read more: A Quick Guide to Ethereum ERC Token Standards

Advantages of SFTs 

SFTs can gradually take over the digital world due to the following advantages:

Flexibility

Since you can easily swap SFTs with similar tokens, they exhibit more flexibility than FTs and NFTs. This advantage of SFTs makes it easier for developers to code and players to purchase in-game assets. 

Utility 

SFTs have multiple uses in the digital sector. You can use the token in games, asset trading, and more.

Blockchain technology will facilitate saving the history and value of a particular token. This will make the tokens widely accepted by people since users have confidence in them. 

Liquidity 

SFTs retain value even after trading with another individual, provided you have not redeemed the token. Therefore, they offer more liquidity to the asset's value.

Fractionalization 

Unlike NFTs, you can buy or sell SFTs in fractions. SFTs behave both as NFTs and FTs. Therefore, you can fractionalize these tokens. 

Also, Read | NFT (Non-Fungible Tokens) | Taking the Crypto Space by Storm

Uses of SFTs 

People can use SFTs in gaming, e-commerce, and more sectors. The following are the uses of SFTs:

Future of SFTs 

Today, SFTs are still nascent, and people are gradually becoming aware of this new type of token. They give flexibility, traceability, and more to their users.

Moreover, semi-fungible tokens have overcome the problem of non-fungible tokens. They are ideal options for gaming platforms where users require fungibility.

Furthermore, SFTs are safer than digital and physical currencies. These tokens are here to stay and can shape the future of the digital world. 

Also, Read | Emerging NFT (Non-Fungible Tokens) Use Cases Beyond the Hype

Looking for an SFT Developer? 

If you want to stay ahead in the race, then SFTs can be a game changer for your business. With the help of Oodles Blockchain, you can develop your crypto tokens. We use ERC–1155 standard to create SFTs. 

Our technical experts have extensive experience developing SFTs. We offer product customization so you will get the product according to your requirements.

Additionally, we offer one of the best token development services at affordable prices. So, connect with our NFT blockchain developers today for semi-fungible token development services.