No doubt, the ardent need to drastically reduce the cost implications of some expensive tokens has led to the introduction of fractionalized NFTs. It is an undeniable fact that some NFTs are highly expensive in today’s market and their expensiveness has overtly hindered the participation of more retail investors in the space. Now, with the possibilities of fractionalized NFTs, new or existing investors can dabble into popular and expensive NFT collections without having to cough out huge funds. Without further ado, this article seeks to orientate everyone who intends to dabble into the space via fractionalized NFTs and the potential benefits awaiting them.
Recall that Non-fungible tokens (NFT) emerge as virtual assets, usually purchased via blockchain technology. NFTs also manifest as real-world items, art songs, sports cards, video games, fashion items, and real estate. These creative arts consequently become minted as tokens that can be traded, purchased, and sold. With this, creators grossly relay their respective works of art into the NFT digital market. Each of the tokens possesses a distinctive code which makes their trading easy.
As earlier hinted, some popular NFT collections, otherwise known as Blue chips are quite expensive and may only be accessible and affordable to wealthy investors. For instance, Cryptopunks usually trade for millions of dollars per collection, a price tag unfortunately unaffordable to small investors. However, with the presence of fractionalization, even small investors secure the opportunity to acquire such tokens without any hindrances.
How to fractionalize NFTs?
In simple terms, fractionalized NFTs usually manifest by dividing a wholesome NFT collection into fractional pieces. With this, concerned investors become shareholders or possess ownership of the same NFT. The fact that nonfungible tokens appear distinctive does not change the fact that they can be divided into pieces to save costs. The possibilities of splitting an NFT collection into thousand or million of tokens usually manifest by locking them in the smart contracts of decentralized projects.
Fractionalizing an NFT collection appears easy as long as the token intended for such processes remained locked in smart contracts. Afterward, the owner of the collection instructs the smart contract to fractionalize the token into multiple pieces. Similarly, the owner determines the quantity, value, and other necessary details for the contract to process. The respective fractions of the token then belong to the shareholders or investors in the collection. With the presence of fractional NFT platforms, like Liquid marketplace, the divided tokens can be put out for sale at a fixed amount.
Benefits incurred in dabbling into the trend
Potential investors must know that dabbling into the space of fractionalized NFTs remains an affordable and indeed credible alternative. It avails them with varieties of benefits, including ownership of a blue-chip (expensive NFTs). For instance, the 50 cryptopunks collections divided into 250 pieces (Unipunks) now enjoy a trading volume of $41,182.54.
More so, the shareholders enjoy exclusive voting and governance power and unquestionable access to the platform locking the NFT. In most cases, investors enjoy the opportunity to indulge in staking with a fraction of their tokens and consequently take rewards. This thus serves as another avenue for shareholders of the collection to also earn passively.
Platforms offering fractionalized NFT services
To acquire fractionalized NFTs, intending investors must subscribe to decentralized platforms, like fractional.art, NFTX, Unic.ly, Otis, etc. These platforms overtly allow subscribers to create and purchase fractionalized NFTs without stress. As for Unic.ly, subscribers only need to link their respective wallets with the platform to bid for a fractionalized NFT. Also, Unic.ly allows original NFT owners to fractionalize their NFT collections. The platform provides an avenue to trade the tokens at an unfailing liquidity.
Fractional.art, on the other hand usually allows holders to fractionalize their tokens but lacks staking features. Unlike Unic.ly, this platform does not provide an avenue for investors to bid for fractionalized tokens. As for NFTX, users usually pool NFT collections possessing the same value. Users create and trade their favourite collections such as cryptopunks, and Avasters with the aid of NFTX.
Otis as another platform also provides users with an avenue to invest in NFT collectibles and arts. With this platform, subscribers tend to receive interests determined by fractionalized assets. However, there are many other fractionalized NFT platforms with distinctive features and specifications. This thus serves avail intending subscribers with the opportunity to make choices based on their individual demands.