SFT stands for "Semi-Fungible Token." To understand what this is, we first need to understand two concepts:
Fungible: Fungibility refers to items that are interchangeable. The classic example is money. One $10 bill is the same as any other $10 bill, so they're interchangeable or "fungible."
Non-Fungible: Non-fungibility refers to unique items that aren't interchangeable. Think of rare collectible cards. Each card has a distinct value and features, so they're not interchangeable or "non-fungible."
Now, where does the "Semi-Fungible" part come in?
Semi-Fungible Token (SFT): An SFT combines the features of both fungible and non-fungible items. This means that within the SFT standard, there are items that are interchangeable (like the $10 bills) and there are items that are distinct (like the collectible cards).
According to the ERC-3525 documentation, the standard allows for both fungible and non-fungible tokens to be represented within a single smart contract. This can be helpful for projects that want to represent both types of assets without deploying multiple contracts.
To put it in a real-world context, imagine a concert ticketing system. General admission tickets are interchangeable (or fungible), but VIP tickets with specific seat numbers are unique (or non-fungible). An SFT could represent both types of tickets in one system.
In summary, an SFT according to the ERC-3525 standard allows for the representation of both fungible and non-fungible tokens in a single contract, giving developers more flexibility in how they create and manage digital assets on the blockchain.