What is a ‘Semi-fungible’ Crypto token?
A semi-fungible token is a type of token that is relatively new and combines the characteristics of NFTs and FTs, These tokens initially function as fungible tokens, which means that you can exchange them for other tokens of a like nature. As soon as they stop having face value, they become NFTs. Event tickets are a prime illustration of an SFT. It is an FT because, before the performance, you can exchange it for another ticket to the same event. You cannot exchange your ticket for another show after the event has ended, though. So, it turns into an NFT. Since SFTs are so adaptable, a lot of opportunities have become available.
Semi-fungible tokens, an asset that straddles the worlds of fungible and non-fungible assets, advanced as a result of the astounding growth of NFTs. Currently, SFTs are primarily used in the gaming industry to bridge the gap between fungible in-game currency and non-fungible collectibles like weapons.
How to create SFTs
SFTs or semi-fungible tokens can be created using Ethereum’s ERC-1155 standard. Every time 1155 is created, a unique item is produced; it is made up of the ERC20 and 21. The standard was developed in 2017 by the blockchain game developers The Sandbox, Horizon Games, and Enjin using a combination of fungible and non-fungible token standards. Unlike NFTs, which demand a new contract for each transaction, it enables the creation of the token with just a single smart contract. Given that fungible tokens are used for transactions in the gaming industry, SFT development is ideal.
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The benefits of SFTs
SFTs have the following advantages, which can help them gradually take over the digital world:
1. Flexibility
SFTs are more flexible than FTs and NFTs because you can exchange them for other tokens that are similar with ease. SFTs’ benefit makes it simpler for developers to code and for players to buy in-game items.
2.Fractionalization
SFTs can be purchased or sold in fractions, unlike NFTs. SFTs exhibit both NFT and FT behavior. Consequently, you are able to fractionalize these tokens.
3. Liquidity
If you haven’t redeemed the token, SFT keeps its value even after being traded with another person. SFTs provide more liquidity for the asset’s value as a result.
4. Utility
SFTs are useful across a variety of digital applications. The token can be used in games, asset trading, and other activities. Blockchain technology will make it easier to preserve that particular token’s history and value. Since users have faith in these tokens, it increases their acceptance among people.
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5. Unique Selling Proposition
Business innovation frequently has its own distinctive features to gain a competitive edge in the market. Semi-fungible crypto tokens are ERC-721 compliant, which clearly gives them an advantage over rivals. However, who do not uphold these standards, in contrast to other tokens.
Uses of Semi-Fungible Tokens
1. Gaming
The ERC-1155 standard, which was developed by blockchain gaming company Enjin, gave rise to SFTs. However, in today’s time, the majority of ERC-1155’s application cases relate to video games. For instance, in the metaverse game Sandbox, SFTs duplicate the same resources.
2. Tickets and gift cards
The conventional ticketing sector has run into issues. SFTs function as redeemable tokens that, after the event, transform into NFTs that take on the characteristics of collectibles. Similar to SFTs, when a purchase is made or the voucher expires, it can convert to an NFT.
The future of Semi-Fungible Tokens
SFTs are currently in their infancy, and people are only just starting to become aware of this novel kind of token. To their user, they provide flexibility, traceability, and more. A further improvement over non-fungible tokens is the use of semi-fungible tokens. They are excellent choices for gaming platforms where users need fungibility. Additionally, SFTs are more secure than both physical and digital currencies. These tokens will be around forever and have the power to influence how the digital world develops.
Source: https://coingape.com/blog/what-is-semi-fungible-crypto-token/