Have you heard the term “semi-fungible” token? What are SFTs?
The world knows about NFTs , although not everyone sees their potential. The same for fungible tokens, which are beginning to penetrate society through DeFi services or fan tokens ( social tokens ).
The truth is that both assets have their advantages and disadvantages. In this article we are going to explain a combination of these two types of tokens , semi-fungible tokens , or SFTs ; since they represent an innovation for technology with multiple use cases .
What are Semi-Fungible Tokens (SFT)?
While most non-fungible tokens are based on the ERC-721 standard , semi-fungible tokens are based on the ERC-1155 standard .
Technically a semi-fungible token (SFT) standard allows a single smart contract to represent multiple fungible and non-fungible tokens at the same time .
- In-Game Assets: SFTs are primarily used in web3 gaming assets such as TCG on the Polygon network, Skyweaver; or virtual pets on the Solana blockchain: Genopets.
- Tickets and vouchers: Another vertical that uses SFTs as digital assets is ticketing services. With vouchers or tickets, we have tokens with the same value and utility, which when used to access an event, lose that value, to become digital collectibles.
The semi-fungible tokens were created in 2017 by developers of the gaming blockchain: Enjin , The Sandbox , and the company Horizon .
What is NiftySwap?
Niftyswap is an AMM protocolfor the SFT collectibles market , which runs on all EVM networks, i.e. Ethereum -compatible.
While Uniswap is a DEX for trading fungible tokens (ERC-20 tokens) , Niftyswap is a protocol dedicated to trading semi-fungible tokens (ERC-1155 tokens) . The idea behind these Automated Market Makers is to provide peer-to-peer access to liquidity for assets hosted on a blockchain (or several).
The Niftyswap protocol is a product developed by the Horizon company that works with its custodial wallet: the Sequence Wallet .
How does NiftySwap work?
Niftyswap uses a registry contract that implements a separate swap contract for each ERC-20 token contract.
Each of these exchange contracts has independent reserves of an ERC-20 coin and its associated ERC-1155 token identifier . This allows for swaps between the coin and ERC-1155 tokens based on relative supplies .
“Prices are set automatically using the constant output x*y = K market-making mechanism, which keeps general reserves in relative equilibrium. Reserves are pooled among a network of liquidity providers that supply tokens to the system in exchange for a pro rata share of transaction fees.”
You will find the rest of the technical information in the “Specifications” section of Niftyswap .