F-NFTs: Fractional NFTs and It's Potential
2021 was arguably been a good year for NFTs with more than $10 Billion in sales and they say that the crypto art driven NFTs may overtake the traditional arts and antique markets this year.
We have been hearing alot about NFTs lately but now we have a new innovation to NFT market and that's the fractional NFTs which provides a fractional ownership of an NFT allowing more than one owner of a tokenized asset.
Fractional NFTs
NFT fractionalization is simply the act of dividing the ownership of an NFT into smaller fractions. This makes it possible for several people to own a single NFT. Source
Fractional NFTs allow the investors to have some part or share in an expensive tokenized item.
NFTs can be split up in smaller units through a process called fractionalization. F-NFTs could be find out on platforms like Fractional, Nftfy.
The process involves a smart contract artificially “splitting” an ERC-72 asset into a set number of interchangeable (fungible) ERC-20 tokens. Source
Like when we buy a company shares which represents ownership in fractions, ERC-20 tokens allows an NFT to be owned by different owners.
What this do is that the cost for a single NFT is divided amogst different owners. Like an NFT that costs around USD 50000, can be divided amongst 50 owners which will cost them 1000 USD each.
These fractional NFTs provides more liquidity to the market of NFTs and is you can say more democratize as the high value NFTs can now be owned by different owners instead of an individual or an organization being the sole owner of it just because they can afford to buy.
One real example is of the Doge NFT which was sold for around 4 Million USD and then the owner of NFT offered the fractionalized ownership of it in the form of $DOG tokens which could be bought for as little as 1 USD. And this story shows the potential of F-NFTs in the art space.
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