(3) NFTs

Disclaimer: here

When tokens are wrapped in inscriptions, they are in their non-fungible form (NFTs). NFTs on the Bones Protocol are "Hybrid NFTs" (often called semi-fungible), which combine fungible and non-fungible tokens into a single implementation. Every NFT is represented by a certain amount of fungible tokens, and vice-versa.

Creating an NFT

Creating an NFT requires wrapping at least the required amount of tokens into an Inscription and a certain protocol message. Meaning the UTXO needs to hold a sufficient amount of the respective token together with a delegation inscription.

Once locked in an NFT, the tokens lose their fungible properties until the NFT is destroyed, aka unwrapped. This means that tokens locked into an NFT:

• cannot be swapped

• cannot be transferred

But the NFT holding those tokens:

• can be traded on order-book style marketplaces

• can be transferred like an Inscription (including the wrapped tokens)

This concept is called Hybrid NFT. Meaning when a user has at least one base unit amount of tokens and decides to wrap those with a specific inscription, they will receive an NFT.

Example: You hold 10,000 $WENL tokens and the WENL community launches a collection called ‘WenLaunch Punks’. To get one NFT of the collection, you must wrap 10,000 $WENL with the inscription connected with the collection. Depending on the configuration of the collection, you can unwrap your $WENL anytime or after a time lock. Unwrapping will destroy your NFT.

The potential advantages of hybrid NFTs are manifold, but the most exciting one is enhanced liquidity. Why enhanced liquidity? Because, compared to NFTs, fungible tokens are a lot easier to trade and list on (centralized) exchanges.

Transferring an NFT

Transferring NFTs works just like transferring Inscriptions because NFT and Inscription share the same shibe.