Semi-Fungible Tokens
In this section, you'll learn about Semi-Fungible Tokens, including when to use them, examples, their key benefits, and how they differ from NFTs in terms of cost-effectiveness.
What are Semi-Fungible Tokens (SFTs)?
Semi-fungible tokens are a unique type of digital tokens that combine the features of both fungible and non-fungible tokens. At first, they behave like regular tokens that can be traded interchangeably with others of the same type.
However, as time passes or under certain conditions, like reaching a certain threshold of transactions or triggering events specified in the smart contract, they transform into non-fungible tokens, each with distinct values or properties. This versatility allows SFTs to serve various purposes within the blockchain ecosystem, offering flexibility in trading and ownership.
The following diagram illustrates the transforming process of SFTs into NFTs:
When to Use Semi-Fungible Tokens?
SFTs offer a unique blend of fungibility and non-fungibility, making them perfect for situations where:
Multiple copies exist, but individual items offer value: Let's use a scenario of concert tickets where everyone with a ticket gets admission, but specific seats or perks might vary. From your understanding of fungible and Non-fungible tokens, this example can be likened to fungibility in access and non-fungibility in benefits.
Limited edition items: SFTs can represent scarce collections like trading cards or artwork, where each instance has a unique ID but shares properties with others in the set.
Cost-effectiveness: Minting SFTs is often cheaper than individual NFTs, especially for large quantities with varying attributes.
Real-World Examples
Event Tickets: Concert tickets with different tiers or benefits.
Collectibles: Limited edition set of cards, figurines, or artwork.
Gaming: In-game items, characters, currencies, and resources.
Metaverse: Virtual land parcels, avatars, and wearables.
Loyalty Programs: Tiered rewards or points systems.
Note: SFTs are widely used in gaming today, offering endless possibilities for imagination. For instance, Steve Jobs’s semi-fungible figure on the Sandbox is minted as 100, allowing for either 100 different owners to use it once or one owner to use it multiple times.
Key Benefits
Flexibility: Combining fungibility for easier trading with non-fungibility for unique attributes.
Cost-efficiency: Offering a cheaper minting option than individual NFTs for large quantities.
New possibilities: Enabling novel use cases in gaming, the metaverse, and other scenarios.
SFT vs. NFT
SFTs offer a cost-effective alternative to minting individual NFTs for large quantities with varying attributes. For example, if there are 1000 concert tickets with 40 VIP options, minting 1040 NFTs is expensive. Instead, you can use two SFTs: 1,000 regular and 40 VIP tickets. This achieves the same functionality but at a lower cost.
Further Reading
To better understand SFTs, you can read this detailed article.
Next, you'll learn about SoulBound Tokens.
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