Intriguing, profitable, strange – these are the main words associated with fractionalized NFTs these days. While some are still trying to grasp the concept, the most valuable NFT collections have already embraced it.
In fact, this is the only way we can all access most-wanted assets like CryptoPunks for a price as low as $10. Thanks to innovative platforms and owners willing to share such NFTs with others, you can invest in a Punk anytime too!
Does it sound too good to be true? Then keep reading and prepare your digital wallet, because we’ll reveal exactly how fractional investing works, and how you can join this new trading method.
The concept of fractionalized NFTs has exploded in popularity this year, as they allow multiple collectors to own the same asset. Credits: CryptoPunks
What is fractional investing?
If the term ” fractional investing” seems overwhelming, I get it. In fact, most people have never even come across this concept – let alone using it to gain profit!
However, if you have the slightest interest in NFTs at all, this strategy will be a game-changer. So what is fractional investing?
In essence, this method allows multiple people to gain ownership over the same asset. Of course, this also means the cost of the asset is split between its owners.
Here’s a real-life example: renting an apartment with your best friend. It’s a single asset, but because you both pay for it, you get to enjoy it equally.
Many businessmen apply the same method for their yachts: instead of buying a yacht entirely on their own, they split the cost (and its use) with others. This way, everybody can enjoy a yacht experience by co-owning the asset.
In short, fractional investing is all around us. In fact, some of the most profitable digital markets are based on this principle too, including; Stock trading (buying shares from a company) and Cryptocurrency (You can get 1% of a Bitcoin).
Now, you can also own fractionalized NFTs from some of the most-wanted collections.
But why would you do that?
Fractionalizing an NFT involves dividing the asset into multiple fractions, represented by fractional ownership tokens. Credits: Fractional.Art
Why buy fractions of NFTs: Understanding NFT fractional ownership
Look at the image above. That’s a CryptoPunk – one of the most valuable NFT collections to date.
On the right, we see that digital treasure split into a bunch of pieces, each with a different owner. Naturally, the first question that comes to mind is this:
Why would someone fractionalize their high-value NFT?
Well, let’s say you’re the lucky owner of a CryptoPunk. You’ve bought it for just 1 ETH a few years ago, and now it might be worth over 99.5 ETH (which is the current price floor for a punk).
You could sell the NFT right now and make some profit. Or, you could wait another few months, and be lucky enough to sell it for 300 ETH (who knows?).
Or you could fractionalize the NFTs and get the best of both worlds:
- Selling part of your NFT to test its value on the market;
- Maintaining ownership over the digital asset.
Sounds convenient so far, but what if you’re on the other side of the deal?
Three of the most valuable NFT collections to date – Cool Cats, BAYC, and CryptoPunks – have already fractionalized tens of NFTs. Credits: Fractional.Art
Why would someone partially buy an NFT?
Let’s return to our CryptoPunks example. This time, you only own a fraction of an extremely valuable NFT. What are the perks?
First of all, you can vote to set the reserve price for the NFT. The reserve price is the price someone must pay to start an auction for the entire NFT.
If the digital asset gets purchased, the resulting ETH from the sale will be divided to all fraction owners, which means profit!
Secondly, you can also resell your fraction whenever you want. This can be done via so-called liquidity pools. In essence, a liquidity pool is a smart contract that supports the exchange between two tokens (think BTC – ETH). Right now, the top platforms for liquidity pools are UniSwap and SushiSwap.
Now we know why fractionalizing NFTs is beneficial for both parties. Of course, the next step is to find out how you can split an NFT, or buy your first fraction!
To do so, we’ll reveal the mechanics behind Fractional.Art – the most innovative NFT fraction trading platform.
Fractional.Art is a platform that facilitates fractionalized NFT trading in a safe, efficient manner. Credits: Fractional.Art
Fractional.Art : Start buying fractions of NFTs
In short, Fractional.Art is a platform designed to help NFT holders fractionalize their assets. The mechanics behind Fractional.Art are both simple and effective:
1. You mint an NFT Vault, which is exactly what it sounds like: a digital vault that keeps your NFT locked (until a third party buys the entire asset).
2. You decide how many fractions your NFT should have. Each fraction represents a % of the digital asset. Some Crypto Punk owners fractionalized their NFTs into 1 billion fractions – and this answers the very title of this post. That’s how you can invest in a CryptoPunk with only $10!
3. The Vault returns 100% of the fractions in the form of fractional ownership tokens. These are ERC20 tokens – the most common Ethereum standard. For example, the ERC20 token for a fractionalized CryptoPunk is called HEAD. Meanwhile, the corresponding token for a Dodge meme NFT fraction is DOG.
This visual representation shows how fractionalizing NFTs works. Credits: Fractional.Art
Let’s take another simple example: a CryptoPunk owner divides the NFT into 100 PUNK tokens via Fractional.Art. You connect your wallet (Metamask) to the platform and buy 1 PUNK token for 1 ETH.
As a result, you now own 1% of the NFT. Don’t worry, you don’t have to do the math by yourself; once you enter a specific amount of ETH, the Fractional.Art calculator automatically tells you how many tokens you’ll get:
The Fractional.Art platform is automatically calculating how many tokens you can get. Credits: Fractional.Art
If a third party buys the entire NFT for 200 ETH, you can exchange your PUNK token back and receive 2 ETH. Sometimes, you might not want to wait until somebody auctions off the NFT; that’s fine! You can just resell your fractions through the liquidity pools mentioned above anytime.
Fractionalized NFT features, explained
Thanks to its clean design and multitude of data, the Fractional.Art website delivers all the information you need for fractionalized NFTs. You can see the exact number of fractions each NFT has, the implied valuation, and the supply available.
What’s more, the most popular digital assets are verified by the admin team itself, so you can rest assured that you get the real deal! However, do note that not every piece on the platform is officially verified – and the team actually advises everybody to watch out for potentially fake NFTs too.
Overall, though, Fractional.Art is a great way to start investing in fractionalized NFTs. Regardless if you’re an experienced trader or a newbie, this platform will help you get some of the most prized NFTs on the market within seconds.
