Unique vs fungible ITEMs
For the EthITEM standard, there are two different ways to handle tokens. The first is for tokens with a limited supply of one, the second for tokens with a limited supply of more than one. Let’s say you want to wrap an NFT with a supply of 1. How can we guarantee that the original NFT will still be accessible and function as a unique token, but not be inflated?
The solution is in the way a unique token is wrapped as an ITEM. Once you wrap it, you’ll be able to redeem its underlying assets entirely. ETHITEM stores information on how many of the generated ITEMs have been burnt to redeem the underlying assets. If someone rewraps the unique token, he will obtain the number of tokens burnt in the first place.
Let's break this down with an example:
Peach has a unique NFT with a supply of 1. > She wraps it, creating 1 ITEM, and adds it to a DEX pool by "selling" it. > Waluigi wants to redeem Peach's NFT. > He buys 51% (0.51) of the NFT’s supply. > He then unwraps it, burning 0.51 tokens and obtaining the original NFT. > Goku buys the original NFT from Waluigi. > If he re-wraps the NFT, Goku will only receive the 0.51 itemized tokens that Waluigi bought from the DEX pool supply.
This approach ensures that even unique NFTs can be wrapped and made fungible while still retaining their uniqueness if redeemed.
The above process happens whenever we are left with only 1 ITEM inside the wrapped collection or it is natively unique (see “Wrapped ITEMs vs Native ITEMs”).
Suppose we have the “FabulousUnicornCard” of a hypothetical card game, and that the supply inside the collection is greater than 1. To redeem the original (aka unwrap it by burning the item), or use it in the case of a native ITEM, you need 1 to do so until all but 1 of the supply is burnt, at which point the above rule of needing only 51% of the ITEM applies.
An analog behavior happens with respect to the “transfer” functionality. When you transfer 0.51 (or more) of a unique ITEM, the receiver will see 1. If you move 0.49 (or less), they’ll see 0.