What are Semi-Fungible Tokens and What are They Used For?
The term fungibility has gained much relevance and traction over the last year or so. This is primarily because of the rise of non-fungible tokens (NFTs) in the crypto space. The blockchain sector continues to explore different dimensions in terms of functionality.
The interest and hype around newly-popularized concepts such as NFTs and the metaverse are reaching new highs. NFTs are now attracting a lot of interest from fields such as sports, entertainment, and media. By addressing the complicated issues of copyrights and intellectual property, as well as offering numerous other functionalities, NFTs have earned a respectable stature in the industry. The trading and sales volume of NFTs have posted staggering growth over the past twelve months, as 2021 proved to be a record-breaking year for the sector.
A few NFT projects, like CryptoPunks and Bored Apes Yacht Club, sold and auctioned NFTs for millions of dollars. Additionally, several NFT marketplaces, like OpenSea, linked the consumer sector with the world of NFTs. These exchanges attract a vast audience, and their sales figures are also increasing with every passing day. A growing number of exchanges are now hitting the market in order to offer services to an expanding audience.
On the other hand, metaverse projects certainly didn’t lag behind. Metaverse projects have performed incredibly in the past 6 months, adding to the market cap of over $30 billion.
It goes without saying that there is a great overlap between technologies such as NFTs, SFTs, Virtual Reality, and Augmented Reality, which promise to turn the current metaverse from a futuristic concept into a global and incredibly lucrative industry.
An Introduction to Semi-Fungible Tokens
While NFTs have taken the world by storm in a short time span, they have encountered some problems along the way — one of them being the lack of liquidity and valuation metrics. This has led to the emergence of a new type of tokens — semi-fungible tokens (SFTs). These tokens have the properties of both regular (fungible) tokens, and NFTs. SFTs cannot be staked as they are only redeemed for assets of the same valuation. Also, the actual owner gets all the royalty for their SFTs. Once their SFTs are traded or sold by their rightful owners, they become non-fungible.
Semi-fungible tokens have the ability to be fungible and also non-fungible during their lifecycle. Like regular fungible tokens such as Ether, SFTs can also be traded with other identical SFTs. However, as these SFTs are redeemed, they are not fungible anymore. The expired SFT can be considered collectibles, but they could not be called fungible.
SFTs are built using the ERC-1155 standard of the Ethereum blockchain, or other EVM-compatible blockchains. The ERC-1155 standard is a mix of ERC-20 and ERC-721 standards. Both of these are used in fungible and non-fungible tokens, respectively. A single self-executing smart contract can manage SFTs because of the ERC-1155 standard, which was not possible in only the ERC-20 or ERC-721 standards.
Semi-Fungible Tokens and Their Use Cases
Now that we know what SFTs are all about, let’s see how they can be utilized in the crypto world and beyond. Since they act as both fungible and non-fungible throughout their lifecycle, they can have some very interesting use cases. At the moment, their largest use case is in gaming, where SFTs can represent items usable on different platforms, which can be seen on platforms such as Enjin, The Sandbox, or Horizon Games.
As an example, Enjin has numerous gaming and non-gaming projects built on top of their platform, that achieve interoperability in terms of assets by utilizing ERC-1155 tokens. Users that hold a certain SFT are able to use that item in numerous games, access various features on non-gaming platforms, or sell it on the Enjin marketplace.
However, while they are currently most used for gaming, SFT’s functionality can extend beyond gaming and apply to numerous other industries, such as the financial industry. In this case, SFTs could be utilized to provide a range of functionalities on different platforms, therefore acting as membership tickets, VIP cards, etc.
They are more flexible than regular NFTs, as they integrate both the fungible and non-fungible parts of the equation.
Semi-Fungible Tokens — the Underdogs of the Crypto World!
The concept of SFTs has not been around for long, but the idea itself looks to be groundbreaking in the field of crypto, especially now that the general public has accepted both the concept of regular tokens, and NFTs. The crypto community seems to be steering towards SFTs more and more lately, especially with the rise of metaverse projects, which could find SFTs incredibly useful.
The possibility of players having assets that are valuable on multiple platforms, as well as beyond them, seems quite interesting. For this reason, SFTs are enhancing the gaming experience of players around the world, and we have yet to see which industry will be next.
SFTs also provide a range of opportunities to content creators, app developers, and project sponsors.
iBNB and Gamification
Through gamification, iBNB plans to develop its own play-to-earn game, MetaBunnies. The game will allow players to compete with each other, and earn rewards based on their performance. The network makes use of NFT gamification throughout the dynamics of the game. Almost everything is linked to NFTs. Player skins, weapons, wearables, and other features are presented as NFTs.
The platform, however, doesn’t limit itself to only MetaBunnies in its current form, or NFTs. iBNB plans to launch more products within the game and will also offer mystery packages for gamers to earn additional rewards. MetaBunnies aims to transform into a 3D metaverse, which will increase player satisfaction, and allow for the introduction of novel concepts such as semi-fungible tokens.
The network believes that gamification is a process that provides more opportunities and options for investors in the crypto world. In its true essence, iBNB focuses on financial literacy and helps investors make more sustainable and informed choices, all while having fun in the process. Therefore, gamified iBNB will introduce its users to new functionalities using this novel technology.
What Does the Future Hold for SFTs?
At a time when digital transformation has become the main competitive advantage in the modern world, SFTs have the chance to place themselves at the forefront of this trend. Conceptually, these are single-use items, and they cannot be traded again once the real owner sells or trades them. Therefore, SFTs have applications that can be used when other fungible tokens do not work.
These SFTs can be widely adopted by organizations, institutions, and business models. It will also be easier to introduce new features and components to SFTs as they are built on the Ethereum blockchain. It can also have access to a wider audience, and they will be more accessible to them.
Semi-fungible tokens seem to have a competitive advantage over other forms of tokens for a number of functionalities. Its interoperability, efficiency, and security might help the concept grow and prosper in the coming years. And while it might take SFTs a while to come to the level of NFTs in terms of volume, we are certainly seeing this versatile type of token as a valuable asset in any project’s arsenal.
On the other hand, people are becoming increasingly linked with the gaming world in modern times. Therefore, the connection of the gaming industry with the NFT and SFT sector is getting stronger with every passing day. NFT and SFT gamification is certainly a potent concept, especially for projects such as iBNB, as they can facilitate their users with more services and target a significant sector of the market.
By initiating new internal projects, as well as cooperating with external ones, iBNB aims to become a hub for users that seek top-of-the-line profits, but also want to have some fun in the process.