A new standard has emerged in the NFT market called semi-fungible tokens (SFTs).
This combines the properties of fungible tokens such as cryptocurrencies that are exchangeable with each other and non-fungible tokens (NFT) that represent a unique digital or real asset.
This combination can currently be mined with Ethereum's ERC-1155 standard smart contract. The SFT smart contract includes a feature that allows tokens to change their status from fungible to non-fungible.
Initially, they are fungible tokens and can therefore be exchanged for other identical SFTs at this stage. However, if a certain trigger event such as expiry or equivalence of a token has already taken place, the fungible token becomes a collectible and thus acquires the status of an NFT and therefore a completely different value. SFTs currently exist mainly in the (metaverse) gaming sector, for example to facilitate the exchange of in-game money for collectibles, such as additional items.
Likewise, a token can be an NFT at the beginning and serve to generate in-game money, which then turns it into a fungible token.
With SFTs, different attributes or trigger events can be defined for individual token IDs. For example, it can increase the value if a special player held the item as an NFT before the transformation to fungible tokens. Furthermore, with this new smart contract, tokens for different target groups can be created and combined with different functions in one smart contract. It is also possible to transfer only fractions of a token.
An additional advantage of SFTs is that transactions can be carried out more cheaply and quickly than, for example, with NFTs based on a different standard (ERC 712).
SFTs are already in use by some game providers, such as Enjin, Horizon Games or The Sandbox.
Even if SFTs are currently only used sporadically by marketplaces, decentralised applications and metaverse environments, it clearly shows that fungible and non-fungible tokens can be combined for complicated business logics, which also reduces costs and transaction times.