Since 2021, the concept of metaverse has become an important part of our lives. Even Facebook changed its name to . NFTs have pioneered the development and development of the to play an important role in our lives. The market value of the Non-Fungible Token (NFT) sector is *around $18 billion. In this environment where NFT prices are increasing, we started to encounter a new concept … Fractionalized NFT (F-NFT) … * Source by CoinGecko
So what is Fractionalized NFT (F-NFT) … ? What is the intended use … ? Does it have a future…? Together we will try to find the answers to these questions…
If you're ready, let's get started...
A few definition reminders;
Non-Fungible Token (NFT); They are unique, unique digital assets that are produced in limited numbers.
Metaverse; The concept of Metaverse, which consists of the combination of the words "meta" and "universe", is known as "virtual universe" or "other universe". The concept, which was first mentioned in Neal Stephenson's cyberpunk novel "Snow Crash" in 1992, described a digital space in the novel that people access using virtual reality glasses and a fiber optic network. The world of crypto money has taken this concept to another dimension and given it a new meaning.
ERC721; It is the established standard for creating immutable tokens on Ethereum's blockchain, and the ERC20 standard is used to create exchangeable tokens. A convertible coin can be created to represent exchangeable items such as gold, money or any other commodity in the physical world. On the other hand, an unchangeable coin can be used to represent any rare item such as a collectible playing card, a trophy or a house.
What is Fractionalized NFT ... ?
It is simply the act of dividing the ownership of an NFT into smaller fractions. This makes it possible for several people to have a single NFT. Considering that an NFT, unlike a cryptocurrency, is a non-tradable token, meaning that it cannot be exchanged for any other similar asset, Fractionalized NFT push the limits by making it possible to split the ownership of an NFT. For example, if you have an original painting of the famous Mona Lisa, it is not possible to replace that painting with another type of painting, nor is it possible to divide that painting into smaller pieces. However, with Fractionalized NFT several individuals may have a piece of the same rare item. Let's see how this could happen...
How Can You F-NFT … ?
Given that a tradable token is flexible in such a way that it can be exchanged for another of its kind without losing value, a smart contract can be used to create ERC20 tokens tied to an indivisible ERC721 NFT. This way, anyone who owns any of the ERC20 tokens produced can get a percentage of the rare and valuable NFT.
This is how partial ownership of an NFT can be established and the smart contract can secure the data that distinguishes the Fractionalized NFT from other NFTs. This idea can also be applied to any blockchain network that supports smart contracts and NFTs, such that the NFT is locked in a smart contract on the blockchain and ownership of the NFT is represented by multiple exchangeable tokens, the supply of which is managed by the smart contract.
Are Fractionalized NFT (F-NFT) necessary ... ?
Fractionalized NFT democratize ownership of NFTs. As NFTs continue to grow in popularity, the cost of owning a single NFT is getting more and more expensive. For example, not all NFTs can pull off the market excitement and activity of Beeple's collection of 5,000 NFT artworks, which sold for $69 million. In partial NFTs, democratized ownership is a possibility that market activity around this NFT will remain relatively high as more people can participate at lower prices, even if the NFTs offer price rises. Even if one of the owners of this NFT decides to sell it, this move will not affect the overall value held by other stakeholders.
Fractionalized NFT also bring a great deal of liquidity to the NFT market. While NFTs are hot right now, their unchangeability will eventually lead to a lack of liquidity in most of the currently emerging NFT markets. With partial NFTs, liquidity can be sustained in such a way that smaller investors can participate as opposed to having only a few deep-pocketed collectors participate. Replaceable tokens generated by the smart contract to represent ownership in NFT can be traded on other secondary platforms to add more liquidity.
What are the Platforms on which Fractionalized NFT can be traded … ?
Source By
Users can lock an NFT collection via Unicly to issue exchangeable share tokens called uTokens. uToken basically represents ownership of the NFT collection. uToken has administrative rights over the collection, such as deciding which NFTs can be included in the collection.
Source By Fractional.art
Fractional Art; You can trade and mine fractions of NFTs. Partial ownership of the world's most wanted NFTs. Fractional reduces entry costs, increases reach, and enables new communities.
Risks in Partial Ownership of F-NFT ... ?
Fractionalized NFT are helping to increase engagement and participation in the burgeoning NFT field; however, fractionalized NFTs raise several legal issues.
These include publicity rights, intellectual property (Intellectual Property) matters, and contractual matters. Financial regulators may consider convertible tokens that break an NFT apart as securities.
My Last Words; Fractions have various applications in both the physical and virtual world. Bringing liquidity, price discovery and democratization to the NFT market opens up many new opportunities. An NFT can represent a mortgage on a home and more than one person can take ownership of the property in fractions. Alternatively, this approach can be used for digital art, online games, fantasy sports and more. You can crowdfund and co-own an asset by converting a virtual gaming product into an Fractionalized NFT. The possibilities for investment strategies with Fractionalized NFT are endless.
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