A Deep Dive into the Application Significance Behind the Hype of Graph-to-Coin Conversion
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A Deep Dive into the Application Significance Behind the Hype of Graph-to-Coin Conversion
It feels like we're on the verge of discovering the inscription → smart inscription → DeFi moment for SFTs.
Navigating Web3 tides with focused insightsAuthor: jolestar
During the holiday, I spent several days tinkering with the protocol to convert Movescription to Coin, while continuously reflecting on the application significance behind the current wave of NFT-to-FT conversion trends.
From a purely financial perspective, the goal of converting NFTs into FTs is to allow the same asset to bridge two different liquidity markets, satisfying distinct trading needs. The entire crypto space currently faces a conflict between two types of trading demands: Builders and Holders, who can hold assets long-term, patiently await use cases, and do not require strong liquidity; versus Traders, who engage in high-frequency short-term trades, chase trends, and rely heavily on high liquidity. If an asset only attracts the former group but lacks the latter, it becomes difficult to sustain a tradable market or grow an ecosystem. Conversely, if only the latter exists without the former, the project likely fizzles out quickly. The token-NFT conversion protocol attempts to find a new model balancing these opposing forces.
However, once we bind the NFT-to-FT conversion to a specific application scenario, its underlying logical dilemma emerges. What exactly does the FT-to-NFT conversion represent in practical terms? Take a typical text-based NFT such as a domain name: when users convert FTs into NFTs, they receive a "random" domain. Does this mean that the FT represents some kind of expected value for randomly minting NFTs? Moreover, true randomness is hard to achieve on-chain—often, users can predict outcomes during conversion. Even assuming this works, it still amounts to nothing more than a random NFT minting strategy via FTs. Over time, users will extract scarce NFTs from the pool, causing the overall expected value of the remaining pool to decline.
Yet, if we replace NFTs with SFTs (Semi-Fungible Tokens), the logic suddenly makes sense. SFTs, being semi-fungible, naturally possess dual characteristics of both FTs and NFTs—a duality that seamlessly connects to different liquidity markets. The assets they represent often don't need absolute uniqueness like NFTs. Examples include stored-value membership cards, bundles of in-game resources (like wood or minerals), bonds with face values and expiration dates, or shares conferring governance rights. When expressed as SFTs, these assets carry utility; when converted into FTs, users effectively trade away their utility for liquidity. Since their need for uniqueness is low, re-minting a new SFT upon conversion is acceptable—for instance, converting FTs back into credit on a membership card. This way, different asset forms and markets naturally segment user types, enabling targeted operations.
One key distinction of Movescription from other SFTs lies in its use of Move's composability to enable nested assets. Beyond allowing users to reclaim minting fees when burning tokens—providing a safety net—what other possibilities does this nesting unlock? This remains an ongoing discussion within the community. During implementation of the conversion protocol, we discovered that Movescription naturally serves as a representation of liquidity provider (LP) assets in swaps. Users can directly deposit Movescription into a swap pool as LP tokens, without needing additional liquidity backing—thus ensuring a base level of liquidity.
It feels like we're approaching the DeFi moment for inscriptions → smart inscriptions → SFTs.
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