THE FLRDROPS ARC:
A composable NFT (ERC-998) is a non-fungible token that can own or be owned by other non-fungible and fungible tokens.
The ERC-998 token standard is an extension of the ERC-721 standard. It enables ERC721 and ERC-20 tokens to own other ERC-721 tokens and ERC-20 tokens. This allows for the amalgamation of assets into a family tree-like structure of parent and child. It also allows for transferring of the entire tree hierarchy. So if a composable ERC-721 that has ERC-20 tokens/collectibles linked with it is transferred, the ERC-20 tokens/collectibles will also be transferred along with it.
Composable NFTs will prove to be useful wherever combinations are required. Gaming characters or avatars linked with collectibles, or digital art linked with social currencies, or even a mix of those two. The combinations made possible by the ERC-998 token standard broaden the scope for new implementations and use cases, while the flexibility of being able to choose specific combinations of token types keep the contract size minimal.
Specifications: There are 2 methods of creating composable NFTs which are Top-Down and Bottom-Up. 4 combinations can be achieved using ERC-721 and ERC-20 tokens:
Top-Down composable tokens record information about their child tokens. Any ERC-721 token can be transferred into a top-down composable token. Similar to that of a folder, you can store and transfer tokens in and out of it. You can place as many individual tokens within it as you like, then transfer the composable as a whole.
- ERC998/ERC721 Top-Down composables are ERC-721 tokens that can receive, hold and transfer ERC721 tokens.
- ERC998/ERC20 Top-Down composables are ERC-721 tokens that can receive, hold and transfer ERC20 tokens.
Bitizens is a Metaverse of P2E games where participants own crypto citizens, adorn them with collectibles and manage their daily lives to earn Bitizens in-game currency. The top-down approach was chosen because the main tokens are ERC-721 avatars and the collectibles and in-game currency ERC-20 tokens are further additions. You can read more on Bitizens implementation here: https://medium.com/the-notice-board/erc-998-the-new-token-on-the-block-f3f6cbebdffc (Please note FLR Finance has no affiliation with the Bitizens team. It’s simply an example shared for learning purposes)
Bottom-Up composable tokens record information about the parent tokens. Bottom-up composables can attach themselves as child tokens to other ERC-721 tokens. For instance, you can attach a whole bunch of bottom-up composables to an ERC-721 token and transfer the entire composition to someone else. By design, the recipient will now own all of the individual composables that are attached to the ERC-721 token.
- ERC998/ERC721 Bottom-Up composables are ERC-721 tokens that can attach themselves to other ERC721 tokens.
- ERC998/ERC20 Bottom-Up composables are ERC-20 tokens that can attach themselves to ERC721 tokens.
CryptoRome is a blockchain-based strategy game where composable NFTs are utilized within the game. The Bottom-up approach was implemented for cities, towns, and villages. You can see how here: https://medium.com/giglabs/erc-998-and-the-future-of-blockchain-game-assets-9fd1063126cf (Please note FLR Finance has no affiliation with the CryptoRome team. It’s simply an example shared for learning purposes)
Although this ERC Standard has been around for four years, it has yet to see its full potential explored. It’s perfect for avatar/land-based games as mentioned above, but it could also prove to be useful within DeFi with the integration of NFTs as collateral and yield-bearing attachments or tokens.