I’ve tried to find some info on how to model a blanket with fringes. Using the cloth simulator works well for getting the folds and everything, but I would like to have something like in this image. How to pull that off in the smartest way?
Use the new surface deform modifier in Blender 2.79!
here’s the blend file I used to make this test so you can pore over it. Let me know if you have any questions!
Wow! Thank you for this tip! 
I will check it out!
@atartanian Sorry to revive an old thread but I was wondering if you still had this file to share? The link has gone dead and I’m struggling to do exactly the same thing as the OP. I’ve already given it a shot with the surface deform modifier plus a hair particle system for the tassels, but even with hair dynamics on the tassels dont seem to react at all to the cloth simulation and remain in the same orientation the whole time (for context I’m simulating the blanket being dropped on a sofa to get the desired shape). Any help would be much appreciated! Thanks, Rowan
Hi shredde i know its some years you asked about the fringes i hope you will read me did that help back then? i was looking for the same thing how to do fringes in blender , the file is not there tho , could you help somehow ? 
Hi titosx, I remember I used the surface deform modifier to achieve this, I would share the .blend file with you, but unfortunately I don’t have it anymore 
But I definitely think you should look into using the surface deform modifier for this. Sorry I couldn’t be of much help!