Why Fractionalized NFTs?
Fractionalized NFTs are changing the narrative for Non-fungible Tokens (NFTs). The NFT space was met with so much fanfare that artists and investors joined the space in their influx to get a piece of the NFT pie. NFT marketplaces also sprung up across various blockchains to provide an array of opportunities and benefits for artists who wanted to tokenize and sell their artworks or other digital contents. Art enthusiasts and collectors can also own digital versions of their favorite artworks.
Before the emergence of fractionalized non-fungible tokens, there was always one barrier that NFT enthusiasts faced. For artists, it was a problem of liquidity. While for retail investors and small-scale NFT collectors, it was the issue of affordability. Hence, fractionalized NFTs are the remedy to that long-standing barrier.
Fractionalized NFTs are changing the traditional approach to digital art or collectibles where only a single person can own a collectible. Although at a staggering cost. In clear terms, fractionalized NFTs permit multiple ownership of a single NFT. Meaning, a creator can distribute revenue to third parties such as charity organizations. This is also known as fractionalized ownership. Though, it may be difficult to define the limit of the rights of the multiple owners.
A majority of NFT sales are conducted through auctions. This points to the problem of liquidity. Christie’s and Sotheby’s, two different notable auction houses, recently handled high-profile NFT sales through auctions. A Fractionalized NFT gets rid of this bottleneck and replaces it with a viable solution — which is democratizing access to the NFT ecosystem. With a fractionalized NFT, digital collectibles and artworks that were originally designed to be scarce and expensive are now affordable. An NFT that is fractionalized is locked into an audited smart contract that divides it into multiple parts representing fungible tokens. Thus, an NFT can be owned by multiple buyers just like shares in a public company. Although splitting the NFT into parts does not make it less non-fungible. The concept of Fractionalized NFTs can be applied across digital art, fantasy sports (Sorare), and collectibles.
Benefits of Fractionalized NFTs
- Multiple traders can fractionally own a piece of digital art, or any other digital or visible object minted as an NFT. This would provide more liquidity to the NFT ecosystem.
- Artists and NFT creators can easily trade off their content without having to look for a single buyer who buys up the whole content.
- Investors can acquire only a fraction of costly artworks represented in NFTs. With fractional NFTs, retail investors would be afforded the opportunity to get value on their NFT investments.
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