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Non-fungible tokens and crypto art have taken the market by storm in 2021, and a range of initiatives are planning to fractionalise NFTs to grant collectors partial ownership rights.
Following a series of innovative sales that are out of sight for most developers, projects that fall up, or fractionalise, non-fungible tokens are gaining traction.
With items like Beeple’s “Everydays: The First 5000 Days” fetching a record-breaking $70 million, not everyone can afford such extravagances. The customer, who goes by the handle “MetaKovan,” bought the piece for an NFT fund.
Owning just a part of a piece of digital art is becoming more attractive to collectors, following the conception of a term called Fractional Non-Fungible Tokens (F-NFTs) in 2018 as a way to provide mutual ownership.
Fractional, a new decentralised project, would allow NFT owners to mint tokenized fractional ownership of their pieces, enabling the buying and sale of percentages of the entire NFT. Furthermore, according to a blog post outlining the project, fractionalizing helps the NFT holder to realise any liquidity from their asset without selling the whole item.
The platform would also encourage users to fractionalise whole collections of NFTs and release them under a single mutual ownership token, enabling those with less experience of the scene to invest in visual art curated by more well-known collectors.The Fractional project collaborates with NFT vaults, which take care of the whole piece and allow the holder to disassemble it as desired. They will then submit the ERC-20 components to mates, sell them off, or use them to provide liquidity.
When an interested party appears, they will give ETH equal to or greater than the asset’s reserve price, thus triggering an auction. Following the end of the sale, the auction winner will earn the NFT, and token holders will be entitled to collect the ETH charged. The protocol made no mention of a project start date.
Another project, DAOfi, has introduced a decentralised exchange for the exchanging of fractionalized NFTs, forked from Uniswap. It is intended to resolve the liquidity question in secondary markets for NFTs, in which NFT owners must wait for others to bid or purchase at an asking price for a single item.
Breaking the non-fungible ERC-721 tokens into fungible ERC-20 tokens allows buyers to own a portion, much like owning a print of an artwork, the post explained.
The fungible tokens will be placed on a bonding curve on DAOfi so that the AMM will always be able to provide liquidity algorithmically for buyers and sellers at any time.
DAOfi launched its first crowd sale on Tuesday, March 16, for Marc Horowitz’s idxm_tile_001 piece which has sold 30% of the 22 tiles at the time of writing.