Composable Token

“Composable tokens”, a name given to tokens that have the ERC-998 standard, enable users to use their assets under single ownership by composing or arranging them in different hierarchies for trading.

What is a Non-Fungible Composable Token?

A non-fungible composable token, let’s say ERC-998, is able to represent more than one digital asset, can be a group of ERC-20 or a collection of unique ERC-721 tokens. Or, a combination of both. Also, a non-fungible composable token allows non-fungible tokens to own or be owned by ERC-721 and ERC-20 tokens.

In other words, a non-fungible composable token can be thought of as a portfolio of digital assets. ERC-998 tokens work as an umbrella asset that allows several components to connect. In this way, users are able to create trees of connected ERC-721 tokens and can sell or buy them in a single transfer.

Try to understand the logic of the composable tokens with an example. Let’s say you have 5 ERC-721 tokens which each represent one unique digital coin and you want to sell them. Normally, you need to sell them one by one. However, the composability function allows you to transfer ownership of all 5 ERC-721 tokens into one single parent token. When you finished it, the owner of the parent token has the all other tokens, and you will be able to sell the entire tokens at once.

Building Composable Tokens

There are two approaches to building composable tokens:

Here are two ways to build composable tokens: Top-down and bottom-up composable.

• In top-down, the composable token has the info about its child tokens. ERC-721 tokens can be transferred into a top-down composable token. You can fill it in ERC-721 tokens as much as you want.
• On the bottom-up, the opposite is valid. Child tokens have the info about the parent tokens. Bottom-up composable can attach themselves as child tokens to other ERC-721 tokens.