Composable tokens are a type of ERC-998 token, which is a development of standard non-fungible tokens. The special feature of this composable token is its ability to "own" other tokens, both non-fungible tokens (ERC-721) and fungible tokens (ERC-20). This means that one token can combine or unite many other tokens in it.
What Are Non-Fungible Composable Tokens?
Essentially, ERC-998 tokens function as a versatile platform that allows users to combine or organize various collectibles and digital assets into complex hierarchies.
Unlike traditional non-fungible tokens, ERC-998 tokens can go beyond a single representation. They have the ability to represent multiple digital assets, ranging from families of ERC20 tokens to unique collections of ERC-721 tokens or a mix of both, providing a greater level of flexibility and functionality.
Furthermore, ERC-998 tokens introduce a breakthrough concept where tokens can own or be owned by other ERC-721 and ERC-20 tokens.
The composable feature converts these tokens into a dynamic portfolio or bundle of digital assets. The flexibility of this bundle extends to cover various types of tokens, such as art, games, sports NFTs, regular ERC-20 tokens, crypto derivatives and more.
This composable design opens up a wide range of possibilities, allowing users to create connected structures from ERC-721 tokens and facilitating the efficient purchase or sale of ERC-721 token packages in a single transaction.
How Composable Tokens Work?
To understand the mechanics of composable tokens, it is important to understand the two main approaches to building them:
1. Top-Down Composable
In this approach, the composale token functions as a container that stores information about its derivative tokens.
Any ERC-721 token can be easily moved into a top-down composable token. Think of it as a container for ERC-721 tokens, you can deposit and withdraw tokens at will.
It allows users to combine multiple ERC-721 tokens into a single composable token, simplifying trading or transferring entire bundles as a coherent unit.
2. Bottom-Up Composable
In contrast, bottom-up composable tokens store information about their parent token. This token can be attached as a derivative token to other ERC-721 tokens. D
ith attaching a series of bottom-up composable tokens to an ERC-721 token and transferring them, the new owner gains access to all the individual token composables linked to that token.
This approach forms a dynamic ecosystem where tokens can be interconnected, creating a connected network of ownership.
Potential of Composable Tokens
To illustrate the power of composable tokens, imagine a situation where you own 10 ERC-721 tokens, each representing a unique digital asset.
Traditionally, selling these tokens would require individual transactions. However, with the functionality of composability, you can consolidate ownership of all 10 tokens into one parent token.
This efficient approach allows you to sell your entire collection in one transaction, simplifying the process and maximizing efficiency.
In conclusion, non-fungible composable tokens, as represented by ERC-998, define the landscape of digital asset ownership and trading. By providing a platform for organizing and combining different types of tokens, they are unleashing a wave of innovation in the blockchain space. S
As the blockchain ecosystem continues to evolve, the concept of composable tokens is proof of the industry's commitment to unlocking new possibilities and creating a more connected and efficient digital future.
Also read:
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What Are Ordinal Bitcoin NFTs: Everything You Need to Know
DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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