Non-Fungible Token (NFT)

For those familiar with cryptocurrency, NFTs (non-fungible tokens) are likely well-known. However, let’s revisit some key characteristics of NFTs to facilitate a comparison with SFTs.

An NFT is a unique digital identifier recorded on a blockchain, certifying ownership and authenticity of specific digital or physical assets, such as art, music, or sports recordings.

Unlike cryptocurrencies, NFTs cannot be copied, substituted, or subdivided. They provide a public certificate of authenticity but do not necessarily grant legal rights over the associated digital file.

A crucial point to note is that each NFT has its own identity and cannot be directly exchanged for another NFT of the same value.

Semi-Fungible Token (SFT)

SFT

Semi-Fungible Tokens (SFTs) represent an innovative approach in the blockchain space, merging the properties of fungible and non-fungible tokens. This dual nature makes them highly adaptable and efficient for a broad range of applications, from gaming and ticketing to vouchers and collectibles.

By leveraging standards like ERC-1155, SFTs offer flexibility, cost efficiency, and enhanced user experiences, paving the way for more dynamic and versatile digital asset management.

Characteristics of Semi-Fungible Tokens (SFTs):

1. Hybrid Nature: SFTs start their lifecycle as fungible tokens but can transform into non-fungible tokens based on certain conditions or after specific events. For example, tickets to an event might be initially fungible (each ticket of a certain type is the same), but once the event occurs, the tickets can become non-fungible as each one represents a unique experience or proof of attendance.
2. Use Cases:
   • Gaming: In-game assets that can be used as fungible items (e.g., currency, items) and then converted into unique collectibles.
   • Event Tickets: Tickets that are identical before the event but become unique memorabilia after the event.
   • Vouchers and Coupons: Can be used as generic vouchers initially and converted into specific goods or services.
3. Smart Contracts: The transformation from fungible to non-fungible is typically managed by smart contracts on blockchain platforms. These contracts define the rules and conditions under which the tokens change their status.
4. Standardization: Blockchain platforms like Ethereum are developing standards to support SFTs, such as the ERC-1155 standard, which allows for the creation and management of both fungible and non-fungible tokens within a single contract.

 

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Benefits of SFTs:

1. Flexibility: They provide the flexibility to utilize tokens in multiple ways, adapting to different needs and scenarios.
2. Efficiency: Managing different types of assets within a single framework can be more efficient and reduce complexity.
3. Enhanced Use Cases: They enable new and innovative use cases that were not possible with purely fungible or non-fungible tokens.

Example Scenario:

ERC-1155

ERC-1155 was proposed to address the limitations and inefficiencies of previous token standards like ERC-20 (for fungible tokens) and ERC-721 (for non-fungible tokens).

ERC-1155 is a multi-token standard on the Ethereum blockchain that enables the creation, management, and interaction of multiple types of tokens—both fungible and non-fungible—within a single contract.

This means that ERC-1155 is perfect for SFTs, as it enables tokens to transition from fungible to non-fungible. This flexibility makes ERC-1155 an exceptionally versatile and efficient standard for issuing and managing a wide range of digital assets within a single smart contract.

NFT vs SFT

NFTs (Non-Fungible Tokens) and SFTs (Semi-Fungible Tokens) are both types of digital assets on the blockchain, but they have distinct characteristics and use cases. Here is a detailed comparison between NFTs and SFTs:

Non-Fungible Tokens (NFTs):

1. Uniqueness:
   • Property: Each NFT is unique and distinct from any other NFT.
   • Use Cases: Commonly used for digital art, collectibles, real estate, identity, and items with unique attributes.
2. Interchangeability:
   • Property: NFTs are not interchangeable on a one-to-one basis. Each has unique metadata and value.
   • Example: A piece of digital art tokenized as an NFT is unique and cannot be exchanged equally with another piece of digital art.
3. Token Standards:
   • Property: ERC-721 and ERC-1155 (supports both fungible and non-fungible) on Ethereum, and other blockchain-specific standards.
   • Features: These standards ensure the uniqueness and ownership of each token.
4. Lifecycle:
   • Property: NFTs do not change their fundamental nature; they are created as unique and remain unique.
   • Example: A concert ticket represented as an NFT will remain unique to that specific concert and owner.

Semi-Fungible Tokens (SFTs):

1. Uniqueness:
   • Property: SFTs can start as fungible (identical and interchangeable) and become non-fungible (unique and distinct) over time.
   • Use Cases: Suitable for items that start as identical but can gain unique properties, like event tickets, in-game items, or vouchers.
2. Interchangeability:
   • Property: Initially interchangeable when fungible; lose interchangeability when they become non-fungible.
   • Example: Event tickets might be fungible before the event but become unique memorabilia (non-fungible) after the event.
3. Token Standards:
   • Property: Primarily ERC-1155 on Ethereum, which supports both fungible and non-fungible tokens in a single contract.
   • Features: Allows for efficient management of tokens that can change their properties.
4. Lifecycle:
   • Property: SFTs have a dynamic lifecycle; they can transition from being fungible to non-fungible based on certain conditions or events.
   • Example: A game currency token used to purchase an in-game item might be fungible initially, but the acquired item can become a unique, non-fungible token.

Detailed Differences:

1. Creation and Evolution:
   • NFT: Created as unique tokens and remain unique. They cannot revert to being fungible.
   • SFT: Can be created as fungible tokens and later converted to non-fungible tokens based on events, actions, or time.
2. Use Cases and Flexibility:
   • NFT: Ideal for assets that are inherently unique, like digital art, rare collectibles, or unique identifiers.
   • SFT: Suitable for assets that might need to start as interchangeable but could become unique over time, such as tickets, coupons, or items in dynamic environments like games.
3. Standards and Efficiency:
   • NFT: Typically use ERC-721 for uniqueness, although ERC-1155 can also be used if combined with fungible tokens.
   • SFT: Utilizes ERC-1155 for its ability to handle multiple token types and efficient batch operations, reducing the need for separate contracts and lowering transaction costs.
4. Market and Value:
   • NFT: Value is derived from their uniqueness, provenance, and scarcity. Each token has individual worth.
   • SFT: Value can shift; initially, the value is similar when fungible but can become distinct when tokens turn non-fungible.

Example Scenarios:

• NFT: A digital artist creates a unique piece of art and sells it as an NFT. Each piece has unique metadata and proof of ownership, making it valuable as a collectible.
• SFT: A music festival issues tickets as SFTs. Before the event, tickets are fungible, allowing buyers to trade them easily. After the event, each ticket is transformed into a unique digital collectible representing attendance, with added metadata like seat number and artist signatures.

In summary, NFTs are inherently unique and designed for assets that require distinct identity and provenance. SFTs offer a more flexible approach, starting as interchangeable and becoming unique when necessary, making them ideal for scenarios where assets evolve over time.

Manage NFT with KEYRING NFT Viewer

NFTs are an essential part of Web3. However, owning many NFTs across different chains can make management challenging.

KEYRING NFT Viewer helps users solve this problem. By simply logging into their wallet, users can easily see all the NFTs they own and which chains they belong to. This makes it easier to remember which NFTs are on which chain.

Additionally, users can view NFTs belonging to another wallet addresses without needing to log into a wallet. Logging in is only necessary when users want to list their NFTs on OpenSea for sale or send an NFT to another address.

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