Composable Token
In short: A composable token is an NFT that can own other tokens. In the model defined by the ERC-998 standard, a proposed extension of ERC-721, an NFT gains the…
A composable token is an NFT that can own other tokens. In the model defined by the ERC-998 standard, a proposed extension of ERC-721, an NFT gains the ability to own other NFTs (ERC-721) and fungible tokens (ERC-20), so one token can act as a container for a whole bundle of assets.
Why it matters
Ordinary NFTs are tracked one by one, so moving a set of related items means sending many separate transfers and hoping nothing is left behind. Composable tokens create parent-child relationships instead: when the parent token changes hands, everything it owns moves with it in a single transfer. The proposal describes top-down tokens that keep track of their children and bottom-up tokens that attach themselves to a parent. Support for ERC-998 is much less common than for ERC-721 and ERC-20, so some wallets and marketplaces may not show the child assets at all.
Example
In a blockchain game, a character is an NFT. The character owns a sword NFT, a shield NFT, and a balance of the game's ERC-20 gold token. When the player sells the character, the buyer receives the sword, the shield, and the gold in the same transaction, and the seller does not have to transfer each item separately.