Fractionalized NFT projects gather steam

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Non-fungible tokens and crypto art took the industry by storm in 2021, and a number of projects aim to fractionate NFT parts to give collectors partial rights.

Projects that disassemble or fractionate non-fungible tokens are gaining interest after a series of groundbreaking sales out of reach for most investors.

With tracks like Beeple’s “Everydays: The First 5000 Days,” grossing a record $ 70 million, not everyone has pockets deep enough to bid on such extravagance. The buyer, known under the handle “MetaKovan”, bought the piece for an NFT fund.

Owning only part of a digital work of art is an approach that is becoming increasingly attractive to collectors after a concept called Fractional Non-Fungible Tokens (F-NFTs) was originally conceived in 2018 to offer shared ownership.

A new decentralized project called Fractional allows NFT owners to coin fractional Fractional ownership of their pieces, making it easier to buy and sell percentages of the total NFT. In addition, according to a blog post detailing the project, fractionation allows the NFT owner to get some liquidity out of their asset without selling the entire piece.

The platform also allows users to fractionate entire collections of NFTs and share them under a common ownership token, so those with less knowledge of the scene can invest in digital art used by more prestigious collectors.

The Fractional Project works with NFT safes which take the entire piece into custody and allow the holder to break it apart at will. You can then send the ERC-20 parts to friends, auction them off, or use them to provide liquidity.

If an interested party shows up, they can send ETH at least the reserve price of the asset that will initiate an auction. After completion, the auction winner receives the NFT and the token holders can claim the paid ETH. The protocol did not specify a time frame for the project start.

Another project called DAOfi has started a decentralized exchange for trading in fractional NFTs, forked by Uniswap. It is designed to solve the secondary market liquidity problem for NFTs where NFT owners have to wait for someone to bid or buy at a price on a single item.

Splitting the non-fungible ERC-721 tokens into fungible ERC-20 tokens allows buyers to own a serving, much like a print of a work of art, the post explained.

The fungible tokens are set on a binding curve on DAOfi, so that the AMM is always able to algorithmically supply buyers and sellers with liquidity.

DAOfi kicked off its first crowd sale on Tuesday March 16 for Marc Horowitz’s piece idxm_tile_001, which at the time of writing has sold 30% of the 22 tiles.