How Does SPL-404 Change the Way for NFT Development on Solana?

Key Takeaways:

• Discover what the current Solana-native NFT space looks like with the network gaining momentum in recent times.
• Explore the irresistible changes brought by the SPL-404 standard for aspiring NFT development projects on Solana.
• Check out the top businesses leveraging this novel Solana-based token standard and how you can use it for good.

Despite the wider cryptocurrency market’s upheaval in terms of regulatory approvals, user adoption, and price surge, the NFT space has largely remained dormant in the last year or so. While this scenario looks concerning, the fact that many notable developments are underground makes it bearable. Scenes in the Solana ecosystem do reflect the same after it experienced a surge in DEX volumes and meme coin projects. However, NFT development on Solana could experience a new dawn with SPL-404, a novel token standard that aspires to do something that has never been attempted on the network before. This blog focuses deeply on the SPL-404 standard and how it can boost NFT development prospects on the Solana network.

Reviewing the Current Solana NFT Market

The NFT market in Solana, just like in numerous other blockchains, has become a shadow of itself as the initial hype bubble subsides into ominous silence. However, with the influx of many novel ideas, the market for Solana-based NFTs seems to improve in small steps, serving as a glimmer of hope in the otherwise bearish season.

• According to CryptoSlam, the last 30 days for the Solana NFT market have been less favorable, with a sales volume of $93.68 million. Although this is a respectable amount of money, it is nearly half less than what the market garnered in the previous month.
• The Solana-native dashboard SolanaFloor reveals closer details. The Solana NFT market experienced trades worth 119,991 SOL (nearly $20.3 million) in the last seven days, which was 10% less than the previous seven days. Also, the portal offers specific insights that convey that the number of sellers is higher than that of buyers, indicating a not-so-savvy situation for the market.
• A look at the top Solana-based NFT collections in the last 30 days revealed a different perspective, as some projects performed well and others did not. DogeZuki Collection, Solana Monkey Business, y00ts, and Famous Fox Federation performed well, while Mad Lads, Tensorians, and Froganas did not. 

What is the SPL-404 Token Standard?

The SPL-404 token standard was developed after the release of the Token22 extension from Solana’s developers. It lets people create hybrid tokens with both fungible and non-fungible traits that can be exchanged with each other. Remember hearing this concept elsewhere? Yes, they are essentially semi-fungible tokens (SFTs) that were touted to be revolutionary a while ago, although the concept did not really take off.

• Within a few days of launch, there have been a handful of projects that used the SPL-404 standard. Mutantmon, Mall Street, Fluffys, and Gogonauts have attained impressive returns based on the standard. Each of them comes with a unique way of handling fungibility and non-fungibility, resulting in a thriving ecosystem.
• With this standard, representing traditional artworks and fungible value with a single token set becomes possible. Doing so boosts the prospects for various NFT projects that often struggle to perform past the initial hype. This could also save the NFT market from encountering unsavory conditions frequently.
• By developing NFTs using the SPL-404 standard, use cases can be revolutionized by letting virtual collectibles appeal as financially viable assets in the DeFi space. This can also spark people’s interest in NFTs again, as SPL-404 assets can be converted into fungible tokens if required.

Unique Advantages of NFT Development Using SPL-404

NFT development using SPL-404 provides the community with several benefits that can be a boon for both businesses and individuals. The standard’s nature of offering both fungible and non-fungible properties makes it immensely appealing to people who prefer playing safe in the Web3 space when it comes to investments.

• Heightened Liquidity Opportunity: With SPL-404 tokens readily available for liquidation through conversion from non-fungible to fungible entities, liquidity for NFTs is no longer an issue. This opens the possibility for NFT sellers to sell their assets quickly to multiple people as opposed to the conventional way of waiting for the ideal buyer.

• Lowered Barriers to Entry: From an investor’s perspective, NFT development on Solana using SPL-404 decreases their barriers to entering the crypto space. With fungible tokens available at a fraction of the price of the NFT while essentially representing it, more people will be willing to invest in the asset.

• Appeal to Diverse Communities: As SPL-404-based assets can represent both fungible tokens and NFTs, they can appeal to diverse communities in the Solana ecosystem. These can include those interested in NFT collectibles, creative digital arts, crypto investment, and DeFi trading. Businesses are, therefore, free to appeal to some or all of these communities based on their requirements to make their ventures successful.

• Scope for Rarity-based Assets: With the SPL-404 token standard, assets thriving on rarity could outperform similar assets native to other standards. The standard presents a unique solution where someone can re-roll their fungible tokens to enhance the NFT’s rarity. Such propositions for dynamic and interactive NFT ownership, even after minting, could open up new levels of decentralized control, with which the NFT community will fall in love.

• Widened Potential Use Cases: Use cases for SPL-404 tokens are far and wide, given their hybrid nature. From NFT gaming and PFP collections to staking rewards and tradable assets, the choices can be diverse, giving room for experimentation. It also eases the pace of building communities, as tokenized ownership with tangible utility can boost loyalty among participants.

How Do SPL-404 Token Assets Work?

If you look deeper into the claims of those encouraging NFT development on Solana’s SPL-404 protocol, you will see that the standard has an elaborate working scheme that effortlessly combines NFTs and fungible tokens. In this section, we will look at how fungibility and non-fungibility can interchangeably exist in the form of SPL-404 tokens.

• Let us assume the SPL-404 token we create initially exists as an NFT. Alongside this, we also need to develop fungible tokens that represent the NFT in a defined proportion. 
• The NFT can be exchanged to acquire a predefined number of fungible tokens. These tokens can be used for staking purposes to reward investors with more tokens or can be exchanged on platforms that support SPL-based fungible tokens. In the latter case, the token holder will be charged a small percentage as transaction tax.
• The NFT itself, on the other hand, can be held in a wallet for the long run for possible price appreciation, utility, and rewards or sold on a marketplace that supports SPL-based non-fungible tokens. 
• Alongside all these, if someone has the SPL tokens and needs to swap them for an NFT, they will be charged some percentage as fees and will be assigned a random NFT based on the standard.
• Fees collected for both exchanging tokens into other cryptocurrencies and swapping into an NFT can be used by the project for several purposes. Some of them include project treasury collection and token-burning mechanisms, both of which are necessary to keep the business running and relevant in the long term.

Conclusion

Therefore, we have explored the fundamentals of the SPL-404 standard in detail. With the rise of this standard, NFT development on Solana is expected to shoot up to prominence in a short timeframe. As more projects understand and opt for this hybrid token standard on Solana, an exclusive market will eventually form and could even lead the NFT space in the times to come. If you are interested in launching a novel business based on Solana-based tokens, tapping into SPL-404’s extravagance could be a perfect start. With our expertise in NFT development, you can easily craft tokens for your new project and make it break the barriers in style. Contact one of us now to discuss your vision!