Although nonfungible tokens (NFTs) were one of the most talked-about developments during the Web3 boom, the most recent bear market shown that they are not immune to a decline in the market. Research indicates that NFT sales are mostly influenced by a mix of good fortune, scarcity, and optimism, suggesting that they should be improved to increase their resistance to market fluctuations.

NFTs, in contrast to other blockchain-based assets, face unique difficulties in addition to the widespread problems affecting the Web3 ecosystem as a whole. NFTs suffer major obstacles that affect user experience and adoption, despite their widespread appeal and wide range of applications, including digital identities, gaming, and the arts.

By using a hybrid strategy that combines the greatest features of ERC-20 and ERC-721 with reduced petrol fees, NFTs can become more resilient to market downturns.

▪️Important NFT Issues: Liquidity

Within the NFT market, liquidity is the main obstacle. NFTs are far more difficult to pay out than cryptocurrencies, as demonstrated by the events of the 'crypto winter'. This is so that it becomes more difficult to locate buyers or sellers during a market downturn because each NFT offers distinctive characteristics or utility.

Prices become increasingly erratic, and assets stay unsold for longer periods of time. Because of worries about asset liquidity, the liquidity problems lock in the capital of current users while discouraging involvement from future investors.

▪️Fractionalization

Any crypto user can buy one-thousandth of Bitcoin BTC $69,341

but the same is not true for a Bored Ape Yacht Club NFT, which usually has a floor price of far above 10 Ether ETH $3,389

The lack of fractionalization in NFTs creates a massive barrier for newcomers, especially smaller investors, preventing them from participating in the market.

▪️Transaction costs

The more advanced features NFTs offer, the more complex their transactions become to process. While newly emerging standards can address inherent issues of NFTs, they still suffer from the high gas fees for which the Ethereum Virtual Machine-based networks are infamous.

▪️Composability and Integration

Even in the Web3 ecosystem, NFTs are difficult to add to and integrate into a platform because of their uniqueness. The majority of platforms and protocols lack the necessary tools to manage NFT transactions and storage, which prohibits NFT holders from taking advantage of the most popular features of decentralised finance (DeFi), like yield farming, lending, and borrowing.

▪️Inability to regulate NFTs

While some emerging standards, like ERC-404, attempt to combine elements of ERC-20 and ERC-721, users are not given adequate control over the fractionalized NFTs they own. For instance, if a tokenholder owns a portion of several distinct NFT pieces of art, they are unable to choose which piece to part with while attempting to sell it on a decentralized exchange (DEX)

hybrid method of addressing ERC-20 and ERC-721

ERC-20 and ERC-721, the two most popular token standards, can be used to create a hybrid solution that could solve NFT issues, particularly those related to fractionalization and liquidity. Although several tests have already been conducted on the subject, more work has to be done to address the ever-increasing transaction costs of networks built on the Ethereum Virtual Machine (EVM).

This is where HybridX steps in with HX, an ERC-20 and ERC-721 hybrid coin that is gas-efficient. HybridX's special combination seeks to combine the best features of both standards to provide flexibility and efficiency for trading and managing digital assets within the larger Web3 ecosystem.

Fractionalized, low-cost NFTs

The hybrid HX token model allows for the fractionalization of NFTs to increase market liquidity, enabling users to buy and sell portions of NFT assets. The fractionalized NFTs can potentially become more accessible and appealing as digital asset investments for a wider demographic.

On top of addressing the liquidity and fractionalization issues plaguing the NFT market, the first project on HybridX — XDragon — has selected the Internet Computer Protocol (ICP) as its infrastructure primarily due to its capabilities that enhance the project’s features. ICP’s on-chain Verifiable Random Function (VRF) allows for the truly random generation of NFT artworks upon conversion from fungible tokens, a contrast to the sequential allocation common in most NFT collections. The on-chain VRF ensures that each NFT acquired is a surprise, enriching the user experience with genuine uniqueness.

Additionally, ICP facilitates the on-chain storage of all NFT metadata, a move that eliminates the need for off-chain components and bolsters the security and integrity of the data.

For improved composability, the hybrid token model interfaces with the DeFi and NFT platforms. Holders of NFT can use the HX token to leverage their assets in a variety of DeFi apps.

Additionally, HybridX provides customisable NFT collection administration. The first-in-first-out (FIFO) constraints of current standards do not preclude users from selling or burning assets selectively. This enables token owners to manage their investments strategically.

smooth conversion of fungible tokens to NFT

The creative usage of NFTs has already produced application cases, such as the Web3-powered dice-rolling game Dragon Eyes, that highlight the adaptability and effectiveness of HX.

The XDragon is a switchable NFT to memecoin that is introduced in Dragon Eyes. The game's prize token, the fungible EYES token, allows users to shapeshift in order to mint an Xdragon NFT. Through gamification and pool fee distribution, the game levies a 1% fee that is returned to the NFT holders. The shapeshift charge gives XDragon essential value and utility since it is closely correlated with the token price.

On May 10, there will be a global ICPCC event featuring XDragon. This event will demonstrate how ICP technology can be applied to improve decentralised apps on any blockchain.

With the launch of the HybridX Tools, an intuitive interface for on-demand ERC-20 and ERC-721 token minting and burning, the HX ecosystem intends to grow by reaching several significant Web3 benchmarks. A launchpad powered by NFTs, a DEX for both fungible and nonfungible tokens, unique NFTs for HybridX members, and the CrossPollinate programme for ecosystem project incentives are among the expansions.

HybridX sees a fluid future of digital assets "where the values are seamlessly discovered and exchanged, fostering innovation and accessibility in the evolving Web3 economy" as the blockchain-based internet grows and changes.