ERC-998 is an Ethereum standard that extends ERC-721 by introducing composable NFTs, meaning an NFT can own other tokens—both non-fungible (ERC-721) and fungible (ERC-20). This allows for hierarchical ownership structures where a "parent" NFT can contain multiple "child" assets. For example, a gaming character NFT could hold equipment NFTs (like a sword or armor) and in-game currency (ERC-20 tokens), enabling the entire bundle to be transferred or managed as a single unit.
This composability is especially useful in applications like gaming, virtual worlds, or asset bundling, where complex relationships between digital items exist. While it brings powerful functionality and efficiency (like bundling and batch transfers), ERC-998 also introduces added contract complexity and has limited adoption in mainstream NFT platforms. Nonetheless, it offers a modular way to build richer digital ownership experiences by treating NFTs as containers for other assets.
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