A new investment option for NFT in the market is a Fractional NFT or Non-fungible token that gives ownership of digital assets. The popularity of NFTs is increasing as it ensures the advantages like decentralization and transparency. But, with the popularity of the NFTs, their prices have also increased, and most investors cannot afford them, which ultimately lead to the emergence of Fractional NFTs.
What is Fractional NFT?
In fractional NFT, many owners own the NFT in the form of millions of fungible tokens. Vaults of decentralized tokens store these tokens.
Asset fractionalization is common in traditional finance as it enables the investors to own expensive assets and share the associated risks and costs. This logic is also applicable to the NFT Factorization.
A fractional NFT is a cluster of fungible tokens linked to a whole (for example, one Bored Ape Yacht Club NFT) or a group of NFTs like in the case of CryptoPunk NFTs. It implies fractional – or proportionally shared ownership of an NFT.
At the time of fractionalization, the original NFT is kept in a vault, and a limited supply of fungible tokens representing ownership over that NFT is issued.
Users can purchase these fungible tokens on fractional NFT platforms like fractional.art and trade on secondary markets like Uniswap.
Why are Fractional NFTs gaining popularity?
Non-Fungible Tokens have Ethereum blockchain ERC-721 protocol. Every NFT has immutable and unique smart contracts. The indivisibility of NFTs is a promising feature for tracing individuals’ intellectual property.
Non-fungible assets experienced meteoric growth in 2021, with many million-dollar sales of NFT projects.
Non-fungible tokens can be found anywhere, from virtual real estate, in-game collectibles, writer’s NFTs, digital art, and the metaverse. But, the unrealistic rise in the price of NFTs has made it beyond reach for average buyers.
To resolve this concern, the concept of fractional NFTs emerged.
Apart from removing entry barriers into the market, fractional NFTs generate liquidity in the market. These tokens create many other affordable tokens in the market for offering a share of renowned NFTs.
Top Fractional NFT Marketplace
- Fractional.art: Fractional.art is a leading NFT marketplace and community for minting the NFTs using the fractional protocol. This decentralized platform is permissionless and governed by smart contracts. This condition means no one controls it but is available to everyone.
PeckShield and Harchi Audit audit Fractional.art helps build trust on this platform. It has vaults for popular NFTs like Etherrock and Cryptopunks. This platform allows the seller to fractionalize NFT’s entire collection. This feature is mentioned as the NFT basket.
This platform prevents unexpected NFT withdrawals as fractionalized NFTs can be withdrawn only in case when buyers purchase 100% tokens, or there is a buyout auction.
Token holders have vote rights on the token’s reserve price after buying. Reserve price is the average of accumulated votes given by token holders.
- LIQNFT: LIQNFT has adopted fractionalized and serialized NFTs on the Solana blockchain. Serialization is not the same as fractionalization. With serialization, you gain full ownership of a limited-edition NFT print.
This concept is similar to purchasing a limited luxury item. For example, the serial number is allocated to some cars, and the manufacturer produces only 50 of those cars. So you can buy 1 of 50 or 15 of 50. Pledging the NFT into a vault with serialization allows you to define parameters such as print supply, ownership price, etc. You must also pay a fee to pledge your NFT in the LIQNFT treasury.
- NFTfy.com: At NFTfy.com, fractionalize the trading F-Nfts in three steps. It allows the issuers to sell their fractions. This feature means that issuers can sell their tokens to any group of people even before fractionalization and vice versa. NFTfy charges 5% of the NFT’s final value for collective sale, which we think is reasonable.
Your NFT is decentralized and secure, stacked into a small contract on the NFTfy platform. Unstacked NFTs can be unstacked by paying the reserve price or owing the full amount of the NFT. You can cancel or change your sale as a seller (NFT owner) before anyone buys your NFT fractions; you can no longer edit the sale once someone buys a fraction. So, ensure you have all the sale parameters and conditions before selling. NFtfy also allows you to fractionalize NFTs on Ethereum, Polygon, BNB, Avalanche, and Fantom blockchains.
- WithOtis: This platform for buying and selling collectibles, NFTs, and art shares. One of the primary benefits of using WithOtis for Fractionalized NFTs is the free mobile app on AppStore and the GooglePlay store.
Otis holds the NFT assets in secure facilities. Aspen American Insurance Company covers these assets with insurance. Fees range from 5% to 15%. When you receive an offer, you will find a breakdown of the fees known as a sourcing fee.
Otis currently has many blue-chip NFTs for fractionalization, including Pokeman Red, Cryptopunk #2142, #543, Grimes NFT collection, and other exciting collections. Maveron, Next View, and other similar ventures are among the major investors. - Unicly: It is created by OxLeia, another trustworthy fractionalized NFT marketplace where you can buy and sell NFT fractions. Unicly works with both ERC-1155 and ERC-721 NFTs. At the moment, you can only buy and sell ETH NFTs.
The buyer can specify the number of uTokens that can be voted on before they can unlock the collection. They can also decide the fractions of the NFT sold as uTokens.
Once the collection is unlocked, you exchange your uTokens for ETH to purchase the NFTs.
Unicly is more than just a marketplace for F-NFTs. They also offer swaps, farms, and various crypto tools. So, if you want to keep up with crypto projects and keep an eye on the F-NFT marketplace, this is your platform.
Final Thoughts: Fractional NFTs are an intriguing solution for increasing the general public’s access to the world of NFTs. The most popular blue-chip NFTs on the market today are prohibitively expensive and out of reach for the average person.
Fractionalized NFTs, on the other hand, can help you become the owner of a specific share of the NFT. Fractionalization opens up the possibility of using NFTs in various novel ways. For example, fractional tokens can be traded on secondary markets for interest, providing the opportunity for increased liquidity.
For more updates, stay tuned.
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