Exploring Semi Fungible Token Development

Before starting on semi-fungible tokens, it is important to understand what fungible and non-fungible tokens are, and what exactly is even a token itself.

What is a Token

In a blockchain ecosystem, a token can be any digital asset that users can transfer. It might represent money, voting rights, stakes, etc. Interestingly, a token is not limited to a single duty and may handle several responsibilities in its original environment.

A token might represent a utility or a company's asset. It is mainly categorized into three types: fungible, non-fungible, and semi-fungible.

Fungible Vs. Non-Fungible

Fungible tokens are tokens that can be readily exchanged with a similar token. These tokens are identical and dividable. Cryptocurrency like Bitcoin is an example of such tokens.

On the other hand, non-fungible tokens (NFTs) are unique as each of them represents a unique asset. Thus, they are not interchangeable.

Semi Fungible Tokens (SFTs)

Semi-fungible tokens (SFTs) are a novel type of token that are both fungible and non-fungible during their existence.

Initially, SFTs function similarly to conventional fungible tokens. Users can exchange them for other identical SFTs.

The defining feature that distinguishes these "semi-fungible" tokens is that once redeemed, the fungible tokens lose their face value. Semi-fungible tokens derive their name from the process of converting from a fungible to a non-fungible token upon redemption.

Semi-Fungible Tokens with ERC1155

ERC1155 is a new protocol for creating semi-fungible tokens. These are new forms of tokens that combine various aspects of previous token standards. Consider it the best of both worlds.

Consider this instructive analogy. You may create a shop voucher, a fungible token, that retains its worth until it is redeemed.

After redeeming the coupon, it has no monetary value and the voucher holder cannot trade it as a standard fungible token. The used coupon becomes unique with information about the item redeemed, the client, the price, and so on. As a result, it becomes non-fungible.

However, a semi-fungible token standard like ERC1155 may represent both.

ERC1155 is a unique way to token definition, according to the Enjin blog. Multiple objects can be kept in a single contract with the least amount of data required to differentiate them from one another. Enjin further states that "the contract state comprises configuration data per token ID as well as all the behavior guiding the collection."

Therefore, you can use this new token standard to create utility tokens such as BNB and NFTs such as CryptoPunks and CryptoKitties. Its optimization makes transactions more efficient and secure. Unlike ERC-721, ERC1155 bundles transactions and reduces gas charges.

In addition, the ability to create efficient NFTs and substitutable tokens at the same time demonstrates that it is an evolution of both ERC-20 and ERC-721.

Explore: A Quick Guide to Ethereum ERC Token Standards

Semi-Fungible Token Development

Example: Game Token Development

The following token will contain a basic item required for a game token like gold and silver. It will be used as currency and weapons like swords and hammers.

1. Go to open Zeppelin Wizard

2. Select the 1155 tab and click on mintable

3. Copy the contract from the wizard and add the token's name and mint them inside the constructor as shown below:

Example: Concert ticket

The following token will contain general seat, VIP, and rsvp tokens.

Follow the steps in the previous example and edit it as follows:

The general and rsvp tokens are fungible tokens whereas the vip one is non-fungible.

Also, Check: How NFT Ticketing Disrupts The Ticketing Industry

Conclusion

Semi-fungible tokens combine the properties of fungible and non-fungible tokens. Businesses can create these tokens to get benefits like flexibility and readability. However, the SFT development process requires expertise that only top-notch blockchain service firms can offer.

Oodles can be your ideal blockchain service partner. We provide business-oriented semi-fungible token development services. Contact our blockchain developers today to avail yourself of our services.