I understand NFTs can be expensive. You want to get into the space but can’t afford it. Don’t worry there’s a solution. What if I told you that the cost of NFTs can be split between users. That’s where fractional NFTs come into play. In this article, we will be exploring this and much more.
What are Fractional NFTs?
Essentially fractional NFTs have shared ownership. When fractionalized, the original NFT is locked and then a smart contract splits the asset into tokens. Each token represents percentage ownership, all of which can be traded on the open market.
What are the benefits?
Fractionalizing assets are nothing new. Traditional markets have been doing this for decades and for good reason. Here are some of the benefits:
The number one benefit of fractionalization is the increase in liquidity it provides. As each share is cheaper more people can buy into the market. In a notoriously illiquid market, this provides a real benefit. Gone are the days when only a few financial elites can buy into popular collections like Bored Ape Yacht Club or Crypto Punks.
Expanding on the previous post as each share is cheaper the barrier to entry is lower. More people are able to get exposure to the collection and join the community. This widens the audience increasing attention and hype for the collection while also bolstering the artist’s reputation.
Greater liquidity leads to lower volatility. Although this will probably provide less reward it significantly lowers the risk. Therefore, fractional NFTs will prove more attractive to the risk-averse.
Where to Buy Fractional NFTs?
Due to the increasing popularity, there are now several marketplaces that support fractional NFTs. So lets dive in:
Fractional.art – This is an extremely successful Ethereum-based platform launched in 2021. Currently, this marketplace supports over 150 vaults from the likes of Crypto Punks to Azuki. Totaling over $6 billion and over 35,000 unique collectors this marketplace has a strong reputation within the industry. Not to mention it has been audited by PeckShield and Harchi Audit. If you want a secure and well-rounded platform this is the place to go.
Unicly – Unicly is a reliable decentralized platform for any investor to trade in fractional NFTs. Like fractional.art this platform is permissionless allowing anyone to access it. It features its own token UNIC which is used to govern the platform. Development decisions are decided by token holders. Unicly also allows users to create and fractionalise their own NFTS.
WithOtis – this is a very popular platform in the industry. Otis allows users to trade fractional NFTs, arts, comics, or even collectibles. Unlike fractional.art and unicly, otis has an app with support for both android and IOS. There is also a portfolio tracker. But how secure is it? rest assured this platform is very secure. All NFTs are stored in high-level facilities and you can even get insurance through Aspen American Insurance Company.
The innovation of fractional NFTs is making it easier for anyone to buy and own NFTs. Ultimately, Fractional NFTs level the playing field. No longer is this asset class reserved for the upper class.
It is providing greater liquidity for the market and consequently more attention. Artists are able to reach a wider audience. Where this growing industry will end up is anyone’s guess. But in my opinion, it provides real value and is here to stay.
Want to learn about generative NFT art. Check out my previous post The Beginners Guide to Generative NFT Art.