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Semi-fungible Tokens Explained

May 18, 2023
4 min read

This blog post will cover:

  • What is an SFT?
  • What are the use cases for SFTs?
  • What projects use SFTs?

At this point, it is quite hard to find a person who has never heard of non-fungible tokens (NFTs), even if they are far from the World of Crypto. And while the NFT craze has decreased a bit lately, there are still many intriguing projects appearing regularly. However, semi-fungible tokens (SFTs) are a much less known thing. 

In this article, we are going to discuss these unique digital assets that are similar to NFTs, but there is a twist: they can be partially interchangeable.

What is an SFT?

SFTs are digital assets that are in part fungible and non-fungible. This means that while each SFT is unique, some of its properties can be exchanged for other tokens of the same type. Say, you have an SFT that represents a rare card in a game. The card itself is one-of-a-kind and cannot be replaced, but its attributes, such as its level or attack power, can be exchanged for other SFTs of the same type.

SFTs are more flexible than NFTs, which can only represent a single unique asset. With SFTs, developers can create a set of tokens that share some properties, but also have unique attributes that make them different from each other. This allows developers to create more complex applications that require more flexibility.

Another peculiarity of SFTs is that they are more efficient. NFTs are typically stored on the blockchain as individual assets, which can make them hard to manage and transfer. SFTs, on the other hand, can be stored as a set of tokens with shared properties, which makes them easier to manage and transfer.

What are the use cases for SFTs?

Semi-fungible tokens (SFTs) have a variety of potential use cases, some of which include:

  • Gaming and digital collectibles
    SFTs can be used in gaming as unique digital items that can be traded, collected, and owned by players. For example, in a fantasy role-playing game, SFTs can represent different types of weapons or armor, each with unique attributes that can be exchanged with other players.
  • Real estate
    SFTs can represent fractional ownership of a property. Such ownership shares can be traded or sold among investors, providing a more flexible way to put money into
    real estate.
  • Digital art
    SFTs can be used in the art world to represent ownership shares of a piece of art, similar to the real estate sphere. This allows art investors to own a portion of a valuable piece.
  • Tickets
    Event organizers can use SFTs as redeemable tokens.
  • Supply chain management
    SFTs can be used to track and manage supply chains. For example, with their help, it is possible to track the origin and authenticity of a luxury handbag, allowing consumers to verify the authenticity of the product.
  • Tokenized securities
    SFTs can represent ownership shares of traditional assets, such as stocks and bonds. This allows investors to trade ownership shares of these assets in a more efficient and flexible way.

What projects use SFTs?

An example of using such tokens is Genopets. This is a game that utilizes two concepts: Play-to-Earn and Move-to-Earn at the same time. Two types of in-game assets are semi-fungible: Crystals and Seeds.

What is more, Enjin, a blockchain-based platform, uses the ERC-1155 standard which allows developers to create gaming tokens. They can also mint, trade, and manage SFTs on the platform.

To sum up, SFTs offer the unique properties of NFTs, but with the added flexibility and efficiency of partial fungibility. As the market for SFTs continues to grow, we are probably going to see more innovative applications for them.

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