In recent few times, NFTs or the Non Fungible tokens have become popular for their main feature that offers exclusive ownership. You might have seen various news articles showing how sky-rocketing the valuation could be of such tokens. With such ongoing trends, innovators have left no boundaries for the innovation, and have invented Fractionalized Non Fungible tokens. This is going to be the new realm of NFTs as it offers ownership differently. Users now instead of spending billions of dollars for one NFT, can buy a fraction of it. Fractional nft Ownership is a new trend that most of the products are now following for different use cases. But before we get into use cases lets, talk a bit about Fractionalized NFTs.
What is Fractional NFT Ownership?
Fractional NFT Ownership or fractionalized NFTs are the new upcoming trend in the crypto and blockchain space that aims to allow NFT holders to split their NFTs into a fraction and sell it to the people. This will make it easy for the buyers to own their favorite NFTs that they can’t afford due to huge prices.
Although an NFT is nonfungible, which means that it cannot be exchanged for any other assets, the fractional nft has pushed the limits and has made it quite possible to fractionalize the ownership of any NFT. For example, let’s say there is a famous BAYC NFT that you own, now instead of completely selling it, you can use some protocols, that can help you to divide your BAYC NFT and you can sell it in fractions.
But How does the fractional NFT Ownership work?
Fractional nft Ownership is achieved with the help of Smart contracts like ERC20 And ERC721 smart contracts. In blockchain space, ERC20 tokens are used to create a Fungible token like Shiba Inu whereas ERC721 are use used to build Non Fungible tokens or NFTs. A fungible token allows us to represent any real-world asset like gold, silver, or even fiat currencies, whereas an NFT is used to represent a piece of music, artwork, or even an asset.
Using such basics, it becomes quite easy to allow fractionalized Nft ownership. For every NFT, it is possible to deploy an ERC20 token contract that can represent a Whole NFT. For example, 1 BAYC NFT can be represented by 1 million ApeCoin, and every one-millionth part would now be of cost 1 Apecoin. Hence if any buyer wants to own 1/10th of your BYAC needs to have 100k ApeCoin. Because this 100k would represent the buyer’s part which it owns.
This is the most fundamental approach that helps developers and application creators to build fractional NFT ownership.
Do we Need Fractionalized NFT Ownership?
This is one of the most common questions that various people ask and the answer to this question is following. Most of us have seen that Non Fungible tokens have been the center of attraction and quite demanding in web3 space. As per the statistics one of the NFT Collections, Beeple has made sales of $69 million. With fractionalized ownership of NFTs, even though the prices increase, still people would be able to own some part of the nft at lower prices. Also if any NFT owner tries to sell its NFT, then their ownership would always remain valid.
Secondly, there are many times when the NFT holders do not want to sell their whole NFT. During such events, the NFT holder can fractionalize the NFT and try to sell some part of it for quick liquidity. Also at most of the NFTmarketplaces, liquidity is now a big concern that can be easily solved by Fractionalization of the NFT tokens. Apart from Liquidity and ownership, there are quite a few industries where Fractionalized art NFTs or utility NFT tokens can play a major role. Some of the use cases of fractionalized NFTs, we will discuss in the upcoming section.
Use cases of Fractional nft ownership
Fractional NFTs in Real Estate
NFTs have been progressing a lot in various industries and Real estate is one of them. Most real estate companies are finding opportunities to convert the real estate property to an NFT and sell it. With Fractionalized NFTs, people who don’t want to buy full real estate property can invest in parts where every fraction of NFT represents the part of the property. With such sky-rocketing prices of the properties, this would be the best way for people who looking to invest in real estate properties.
Fractional NFTs Ownership in Meta Verse
Lately, Metaverse is becoming quite trending and most people are trying to integrate crypto elements with it. With NFTs, people can get ownership of either space, building, or any physical good available in the metaverse. Various companies like Decentraland and Sandbox, have already jumped into this space and offered people a platform to sell or buy goods as NFT in the metaverse.
Coming to Fractional NFTs, a large group of investors can collaborate and invest in any digital asset like virtual land in the metaverse.
Fractional NFTs and Gaming
Gaming is one such space, where we have seen a huge growth of NFT tokens and crypto space. There is now a completely new genre for gaming called play to Earn where people can play games and earn some rewards in the form of NFTs. With the help of Fractional nft Ownership, gamers can collaborate and buy or sell in-game assets by getting a share. Axie Infinity is one of the popular play-to-earn games in the blockchain space which is already integrated fractional ownership nfts in their game. Currently, it is in the testing phase.
From where to buy fractional ownership of NFTs?
If you are looking to buy the fractional ownership nfts, then there are some specific applications that you can try. Some of the applications where you can buy Fractional NFTs are the following.
It is one of the first fractional NFT marketplace launched in 2021. They are the primary methodology for representing NFTs as ERC20 tokens. When any nft owner asks to convert nfts, into fractions, they deploy an ERC20 token and list them for a sale at a certain price reserve.
PartyBid.app was launched by the PartyDAO, this is one of the platforms that allow investors to collaborate and pool their money to buy NFTs through auctions. Further, they have another application that splits down the NFT after successfully it is bought.
It is a Singapore-based company that has recently mentioned a total revenue of USD 2 million. this platform allows NFT owners to sell their NFTs as fractions. After converting NFTs to fractions owners can conduct sales for around 14 days at fixed prices so that it gets into the market for regular trading.
Fractional NFT ownership looks quite promising and has some good use cases. But this is still at the age of infancy which means that there are some inherent risks associated with it while converting it to fractions or vice versa. Hence it is always recommended to do complete research and due diligence before you try them. However, fractional NFTs have opened up new doors in the Blockchain and Crypto Industry with lot many opportunities for investors and Engineers.
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