How do Fractional NFTs Work?

2022-11-21 18:22

A fractional NFT is obtained by splitting a single NFT asset into smaller pieces. Fractionalization allows partial ownership of an NFT. In this way, investors who don’t have the means to buy the total asset can receive a share of it. The process works akin to purchasing shares of blue-chip stocks. That’s why applications of fractional NFTs make sense, especially in the case of high-value assets like real estate, fine art, luxury goods, and all sorts of rare items. 

How to create fractional NFTs? 

We can create fractional NFTs on any blockchain capable of running smart contracts and deploying nonfungible token formats. Ethereum is the most widespread blockchain, so let’s see how the process works on it.  

As a first step, you mint an original single asset as an NFT in an ERC-721 format. It’s possible to use ERC-1155 as well, though it’s less common.  Then, you lock the asset in a smart contract so that nobody can transfer it.  Next, define parameters like the number of total fractions, each fraction’s price, and other information to be included in the metadata.  The code splits the original ERC-721 asset into a predefined number of fractional tokens as ERC-20, which are interchangeable tokens like cryptocurrencies. As a result, each represents an equivalent share of the original NFT.  You can then sell or transfer the newly created ERC-20 tokens to others, enabling partial ownership of the original asset.  Use cases of fractional NFTs

Although it’s a relatively new concept, some web3 platforms, protocols, DAOs, and other NFT-related dapps have already adopted fractional NFTs. 

Fractional.art, for example, enables minting your own NFT as fractional NFTs, as well as buying and selling NFTs from historical collections as fractions. The platform hosts one of the most iconic NFTs of all time: the Doge. This unique digital asset was acquired by PleasrDAO, a well-known collective investment DAO, in 2021 for $4M via an NFT auction. PleasrDAO later fractionalized it into 16,969,696,969 pieces which you can buy on Fractional.art. At the time of writing, the valuation of the whole asset is around $11.8M, and there’re over 10K unique owners. 

Credit: Fractional.art Not just for fine art

Another fractional NFT platform is Otis. In addition to art, it hosts other collectibles, such as sneakers and rare books. Some prominent examples of fractional NFTs hosted on Otis include Chromie Squiggle #2241, an asset from the very first project by the generative art platform Artblocks, the Jordan 1 Metallic Red sneaker, and the first edition, the first printing of Harry Potter and the Philosopher’s Stone. 

Real estate is another domain where the fractionization of assets can be helpful. Vesta Equity, a home equity marketplace, allows homeowners to tokenize their properties and investors to build a portfolio of residential equity, all thanks to the fractional NFTs that run on the Algorand blockchain.

The wine and spirits industry is also among the early adopters. For instance, UniCask fractionalizes premium whisky casks as NFTs. The first UniCask collection issued a 1991 vintage cask of a high-value single-malt Scotch whisky. Another beverage-related platform leveraging fractional NFTs is Crurated which releases curated NFT drops from fractional barrels of fine wine. 

A remedy to the NFT liquidity problem

Another critical function of fractionalizing NFTs is to provide liquidity to an otherwise illiquid market because it’s much easier to sell or buy small units of expensive assets. Consequently, the NFT asset class becomes more accessible, and more participants mean better liquidity. 

Moreover, new ways of mitigating the illiquidity of NFTs via fractional counterparts are emerging. On Unicly, it’s possible to convert NFTs into fractional ERC-20 tokens called uTokens and provide liquidity on the protocol’s DEX by locking them. 

How to retrieve the original NFT?

It’s theoretically possible to reverse the fractionalization process and retrieve the original single NFT. To this end, you can add a “buyout” option to the smart contract that created the individual fractions in the first place. This allows any owner of the fractional NFTs to buy all of the other existing fractions and unlock the original single NFT. 

The post How do Fractional NFTs Work? appeared first on NFT News Today.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

NFT (NFT) на Currencies.ru

$ 0.1282 (+0.51%)
Объем 24H $0
Изменеия 24h: 4.93 %, 7d: 9.39 %
Cегодня L: $0.1282 - H: $0.1282
Капитализация $0 Rank 3750
Доступно / Всего 0 NFT

nft asset fractional don investors way receive

nft asset → Результатов: 126


Фото:

Starbucks Brews New NFT Experience for Customers Pushing the Frontiers of The Asset Class

Starbucks joins Web3 with its pioneer Odyssey project to reward loyal customers. The company hopes to leverage blockchain technology to provide value to its system. The Ethereum blockchain gets yet another big name creation as Odyssey is set to launch on its platform  Starbucks thrills customers with a significant foray into digital assets through the […]

2022-9-15 19:38


How does NFT staking work?

The indivisible nature of NFTs is the biggest shortcoming of this asset class for some investors. Most of the time, it requires making either-or investment decisions. What if you like to HODL your NFTs while still profiting from them? One solution is NFT staking which is a way to earn passive income from your assets.

2022-9-14 06:21


Binance Coin Price Prediction and Analysis for July 28th – BNB to End Year at $274

Binance Coin remains a significant player in crypto as one of the highest-utility cryptocurrencies. As the fifth-largest crypto asset by market cap, BNB provides the best alternative to Ethereum’s high gas fees, perfect for projects requiring a high amount of on-chain interaction such as NFT, Metaverse, DeFi, Web3, and other decentralized applications.

2022-7-29 20:53


Фото:

Matrixport Launches Institutional NFT Custody Services

Singapore-based digital asset manager Matrixport announced in a Sunday press release that it would now be providing institutional custody services for NFTs through its Cactus Custody service. The digital asset manager with over $10 billion in assets under management says that with this service, institutions would be able to store and manage their digital collectibles […]

2022-6-29 16:15


REV3AL – NFT and Digital Asset Authentication Technology Launches on KuCoin June 30th

REV3AL, a new and innovative cryptocurrency project, comes at a critical time in the crypto sector when scams and fraud are on the rise. As a solution to the hindering growth of the digital media market, REV3AL offers digital copyright protection and anti-counterfeiting solutions for artists, creators, and intellectual property owners.

2022-6-29 13:15


The International Summit MetaVentures Bangkok Will Be Held on December 1-3, 2022

MetaVentures – presents its second unique event in Thailand. The exclusivity of the event opens the door to business and investment opportunities targeting a broad international audience. Investments, Blockchain, Metaverse and NFT, Biotech, DeFi, DAO, Digital Art, mining, payment systems, and digital asset regulation are just some of the list of topics that will be […] The post The International Summit MetaVentures Bangkok Will Be Held on December 1-3, 2022 appeared first on NullTX.

2022-6-17 04:50


Ikigai Asset Management привлекла $30 млн для фонда с фокусом на Web 3.0

Управляющая компания в сфере цифровых активов Ikigai Asset Management объявила о формировании фонда в размере $30 млн. Средства направят на финансирование стартапов в сфере метавселенных, гейминга по моделям M2E и P2E, NFT, ДАО и других Web3-инициатив.

2022-5-18 18:32


VeVe App Update: Transfers & KYC

VeVe Digital Collectibles Apr 6 · 3 min read Regulatory compliance is a key step toward the global adoption of the digital asset space, and a top priority at VeVe. The regulatory landscape surrounding NFTs is constantly evolving, and with the growing interest in this space over the past 12 months, NFTs are receiving increasing […] The post VeVe App Update: Transfers & KYC appeared first on NFT News Today.

2022-4-7 01:26