NDN Link Official
Published in

NDN Link Official

Semi-Fungible Vs. Non-Fungible Tokens

Alright, so we’ve talked about NFTs in general, we’ve defined what they are, why there’s a need for them, how they could help the industry as well as artists, we even looked at the marketplaces that allow us to create, sell and buy them. Now, let’s go over the types of NFTs that exist.

If we rule out Fungible Tokens (FTs), then for now everything pretty much boils down to Non-Fungible Tokens (NFTs) and Semi-Fungible Tokens(SFTs).

A quick recap about NFTs: they are tokens that cannot be exchanged for one another without losing value simply because each NFToken is unique. Whereas fungible tokens are not, they are all the same, 1 BTC exchanged for another BTC = same value.

However 1 NFT exchanged for another NFT ⧣ the same value.

What are SFTs then?

They are tokens that possess the properties of both NFTs and FTs. For example, if you have a coupon that expires on a certain date that coupon could be considered a FToken because you can exchange it for an identical coupon and the value would not change. However, once the coupon expires it is no longer identical to a coupon that is still valid even though they once had the same value, so this would be the NFT component.

A concert ticket could also be considered a SFT. The FT component comes from the fact that if we were to exchange tickets they technically would bring the same value in the fact that both of us would attend the concert, but the NFT component would be that our seats may be different. One ticket is closer to the scene, whereas the other one is not.

In gaming SFTs also serve a purpose of owning a bundle of items. If your character has a collection of attributes that are similar, then instead of minting an NFToken for each item, you could bundle them together and it would be presented as a single SFT that could be fractioned if needed, e.g. one of the items from the bundle could be sold or traded.

Technical Standards of NFTs and SFTs

In our previous article we’ve briefly touched upon the tech standard for NFTs. Today, we would like to expand on that and also cover SFTs.

As of now, most of the NFTs and SFTs are built on the Ethereum blockchain, however there are other blockchains like Bitcoin Cash, Flow and Tezos that also have their own technical standards and developments for those types of tokens.

In Ethereum, ERC-721 standard represents the NFT tokens and ERC-1155 represents the SFT tokens. Here’s how they are different on a technical level (taken from https://opensea.io/blog/guides/non-fungible-tokens/)

ERC-721 standard provides a mapping of unique identifiers to addresses, which represent the owner of that identifier. ERC721 also provides a permissioned way to transfer these assets, using the “transferFrom” method. Here’s how it looks in code:

interface ERC721 {

function ownerOf(uint256 _tokenId) external view returns (address);

function transferFrom(address _from, address _to, uint256 _tokenId) external payable;

}

With ERC1155, IDs represent not single assets but classes of assets.

interface ERC1155 {

function balanceOf(address _owner, uint256 _id) external view returns (address);

function transferFrom(address _from, address _to, uint256 _id, uint256 quantity) external payable;

}

The developer needs only to call “transferFrom” with the desired quantity and perform a single transfer operation. Whereas in ERC-721 there would be multiple operations for each item in the address.

As for other blockchains that have NFT and SFTokens their standards are:

Bitcoin Cash: The Simple Ledger Protocol (SLP)

Flow: the Cadence programming language represents each NFT as a resource object that users store in their accounts

Tezos: the FA2 standard that refers to a token standard (TZIP-12)

However, as mentioned before the ERC-721 and 1155 standards are the most popular as of now in the industry, but because of the increased popularity of the standards on the Ethereum blockchain, the price for minting, buying or selling the token is extremely high.

Thus other token standards such as Tezos are emerging on the market to tackle the price issues associated with the ERC-721 and 1155 standards as well as bring more features of their own. Having said that, the Ethereum team is also working on their upgrades to make the network more scalable and cheaper given the rising popularity of it.

Will Tezos become competitive enough in the realm of NFT/SFTokens to push out Ethereum? Let us know in the comments.

For more info on NDN Link, check us out here:

Website: www.ndn.link

Telegram: https://t.me/ndnlinkglobal

Twitter: https://twitter.com/ndnlink

Facebook: https://www.facebook.com/ndnlink/

Medium: https://medium.com/ndn-link-official

Youtube: https://www.youtube.com/c/NDNLinkOfficial

GitHub: https://github.com/NDNLink

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store