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 exist another type of token called semi-fungible tokens (SFTs) having properties of NFTs and FTs. We can develop SFTs with NFT development services. They are changing the gaming experience and more in the digital world. 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 are descriptions of assets on blockchain that share the same characteristics or values as each other. They are not unique, and therefore they are interchangeable. Some of the 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. These tokens use smart contracts to 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 can be 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 gets over, you cannot exchange the ticket for another show. So, it becomes an NFT. This flexibility of SFTs has opened the door to many opportunities. 

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-gaming 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 that particular token. It makes the tokens widely accepted among people since users have confidence in these tokens. 

Liquidity 

SFT retains its value even after trading with another individual, provided that you have not redeemed the token. Therefore, SFTs offer more liquidity to the value of the asset.

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 different sectors - gaming, e-commerce, and more. The following are the uses of SFTs:

Future of SFTs 

Today, SFTs are still in the nascent stage, and people are gradually becoming aware of this new type of token. They give flexibility, traceability, and more to its user. 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 as well as 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 in developing SFTs. We offer customization of the product. So, you will get the product according to your requirements. Additionally, we offer one of the best services at affordable prices. So, connect with our NFT developers today for semi-fungible token development services.