SFT: A New Paradigm and Innovation Opportunities for Blockchain Assets

Recently, the popularity of Move smart inscriptions has sparked people's attention towards semi-fungible tokens (SFT). As a combination of NFTs and FTs, SFT not only possesses greater innovation space and combinability but also has "container" features and cash flow programming capabilities. This new asset class shows great potential in fields such as finance and gaming.

Unique Advantages of SFT

SFT originates from the ERC-3525 standard of Ethereum and officially became a new token standard of Ethereum in September 2022. It combines the characteristics of NFTs and FTs, allowing for splitting and combining while maintaining uniqueness. The "container" capability of SFT is fully reflected in Move inscriptions, where each inscription locks an equivalent amount of SUI, which can be retrieved at any time, while burning will cause a deflationary effect.

Current Status of SFT Ecosystem Development

Currently, SFT technology has made progress in multiple fields:

1. Real-life applications: Projects in cooperation with the central banks of three countries are underway.
2. DeFi: Solv has made breakthroughs in on-chain fund operations, with an issuance scale exceeding 100 million USD.
3. GameFi: Multiple projects utilize SFT to achieve innovative gameplay, such as AI-driven NPC interactions and cross-game point sharing.
4. DePIN and SocialFi: Multiple projects are exploring the application of SFT.
5. Modern Cryptography: The combination of SFT and cryptography has created new possibilities.

Potential Innovative Applications of SFT

1. Fully Automatic Dividend Agreement

SFT can program cash flow to achieve automated profit distribution. This model allows project parties to sell part of future cash flow revenue in advance for financing, sharing risks with users. Smart contracts can automatically execute dividends without manual intervention.

2. Web3 Fans/Creators Economy

SFT provides a more flexible asset structure for the SocialFi track. It can issue multiple types of "NFT" within a single contract, facilitating cross-creator collaboration and fan benefit distribution. In addition, the automatic dividend feature of SFT can allocate benefits based on fan contribution levels.

3. Innovative DAO Governance Model

Based on the fair issuance of inscriptions and automatic dividend distribution mechanism, SFT may give rise to a new type of DAO governance structure. For example, by issuing smart inscriptions to raise funds to establish a DAO, the initial profit distribution can be determined based on the funding contributions of early members, and mechanisms can be designed to incentivize future contributors.

4. Asset Nested Portfolio

The "container" feature of SFT allows for multi-layer asset nesting, such as ETH contained within SFT, other SFTs, or even SFTs that contain SFTs. This flexibility provides a broad space for asset management and financial product design.

In the current market environment, the innovative potential of the SFT sector cannot be ignored. It brings new possibilities for Blockchain asset management and is expected to play an important role in the upcoming bull market. However, investors should remain cautious and conduct thorough research and risk assessment.