The concept of fractionalization is familiar to other high-value assets such as luxury cars or vacation homes. It allows an investor to expand their investment in an expensive asset without having to own it outright or bear 100% of the associated risks and costs.
This is a very important step for the NFT community, as the strong demand for it has already been increasingly seen in recent months.
4ARTechnologies recognized the trend and was one of the first service providers to offer the function and possibility of NFT fractionalization.
What are fractionalized NFTs?
Fractionalized NFTs mean that the ownership of an NFT is divided into smaller individual parts / pieces. This way, multiple collectors can own one part. Remember that an NFT cannot be exchanged for another similar asset. It is not like cryptocurrencies where one coin is like another. Imagine you own the famous painting “The Kiss” by Klimt. You can’t trade it for another painting, and it would be impossible to break it into pieces so more people can own it.
Fractional ownership offers multiple people the opportunity to own a piece of the same rare artwork or collectible. NFT art lovers see great potential in the sensation of fractionalized NFTs.
Benefits of Fractionalized NFTs
Fractional NFTs are democratizing ownership of NFTs. NFTs continue to be popular even when some platforms still have problems to solve. Popularity rises and the prices do so as well.
Some benefits from Fractional NFT+ in 4ART App are:
- If the bidding price of NFTs increases, and the market activity around that NFT remains relatively high, more people can participate at lower prices.
- If one of the owners of that NFT decides to sell, their transaction won’t affect the overall value held by other collectors.
Could raise the liquidity of the marketplaces.
- Some experts believe that with the emergence of so many marketplaces, there is indirect pressure on NFTs and their diversity, which could trigger the lack of liquidity on the one hand, and an overload of perception on the other. However, with fractional NFTs, liquidity is maintained while smaller investors can participate.
- It is the opposite of allowing only a few wealthy collectors to participate.
- The fungible tokens created by the smart contract represent ownership of the NFT and can be traded on other platforms; this also increases liquidity.
- Price discovery is a process to set the proper price of an asset. It enables minters to optimize market strategies and NFT holders can foresee pricing and risk characteristics.
- Fractionalized NFTs encourage this process so that all interested parties can benefit from the market.
Download 4ART App: discover fantastic NFT ART
Among the new updates in the 4ART App, fractionalizing NFTs is one of the most popular ones for collectors.
Explore the contemporary artworks of artists changing perceptions and build a breathtaking collection to enjoy anywhere, anytime.
Contemporary art in 4ART App
About the author:
Paulina Lara Franco
SUPERPOWER: beat the blank page’s fear
Paulina is grateful that since high school she has had the chance to express herself in both communication and theater🎭. Her experience in communication has been mainly developing content strategies for education and startups.
The best advice she received was from her great grandmother: “happiness is easy.”