Fractionalized NFTs…An Emerging Gold Mine for the NFT Industry
A developing area where the influence of NFTs is being felt is the Fractionalization of NFTs. This process offers a good number of retail investors the opportunity to own a fraction and make money from the sale of high-priced NFTs.
The F-NFTs can represent fractions of real-world assets that can be stored and traded as tokens on the blockchain.
This article seeks to explain F-NFTs, what it seeks to solve, and why it is unique and highly sort after, rounding off with the objectives of IX Swap in trading Fractionalized NFTs on its platform.
Understanding Non-Fungible Tokens (NFTs)
First, let’s understand the concept of NFTs and their use case.
The idea behind NFTs is simply taking items such as a piece of art, pictures, games, music, videos, or collectibles and representing them on the blockchain either on Ethereum, Binance Smart Chain, (BSC), or on Solana blockchain using certain NFT standards such as ERC — 721, or ERC — 1155. BSC has similar NFT standards, BSC — 721 and BSC — 1155, but the major difference is that Ethereum requires high gas fees while BSC requires less.
After minting, these items are turned into digital assets (NFTs) and are unique, uninterchangeable, distinguishable, and represent true ownership of an asset on the blockchain. Also, NFT technology is used to generate Proof of Authenticity and Ownership on the blockchain.
Owners of a particular NFT have full right over that NFT and enjoy exclusive features of the NFT. Its non-fungibility is of immense benefit to its creation and is partly why it is valued and bought at an exorbitant price (though the value of NFTs is determined by market supply and demand and also based on shared belief.
The Demand for high-valued NFTs
NFTs sell for huge sums — in auction — which is the reason for the attention that it is getting at the moment. The crypto world was agog with the sale of “Everyday: The First 5000 Days NFT by digital artist, Mike Winkelmann for a staggering $69.3 million, purchased by Metakovan through auction sale at Christie’s.
The sale got so many crypto enthusiasts talking about the cost and the value placed on the piece of art and the future of NFTs.
Aside from the above sale, NFT projects such as Crypto Punk, Crypto Kitties, and BAYC are making the headlines for the high costs of their NFTs. In a recent publication by Binance Academy, titled, “The 10 Most Expensive NFTs Ever sold.” The article carefully outlined the most expensive NFTs; as expected Mike’s, “Everyday: The First 5000 Days” topped the list while CryptoPunk’s NFTs dominated with six unique NFTs. The first Crypto Punk’s NFT on the list was sold at $23.7 million and the last for $7.57 million. This reveals that the NFT market is a multi-million dollar industry and holds great prospects for the future of cryptocurrency and blockchain development.
NFTs have raised a staggering sum of $174 million just between 2014 and 2017 according to official sources and saw a boom in 2021.
Furthermore, the industry has seen increasing interest from both retail and whale investors. The high cost of acquiring or owning high-priced NFTs scares ordinary investors thereby leaving only a handful of investors, — mostly very rich investors — to participate in the purchase of these expensive NFTs and thereby locking up highly needed liquidity for the NFT market and other Cryptocurrency transactions.
F-NFT: A New Dawn in the NFT Marketplace
The idea of fractional ownership implies that anyone can own a fraction of a digital asset of high value that’s a retail investor can own a fraction of these expensive NFTs or any other highly-priced asset for a minimal cost, such as Beeple’s art collection/NFTs, Crypto Punk’s NFTs or the recent tokenized Ferrari currently trading on IX Swap STO Platform and Capital DEX.
So, what are F-NFTs and what does it seek to achieve?
Fractionalized NFTs are ERC — 20 tokens that have been divided into smaller fractions and can be purchased or co-owned by several persons. In other words, they are simply a whole NFT divided into smaller pieces, allowing different people to claim partial ownership of the same NFT.
This would enable individuals particularly ordinary investors to own a small portion of the overall NFT and earn from the sale of that NFT, thereby increasing liquidity in the market.
Fractionalization brings more liquidity to the illiquid market of NFTs because retail investors can conveniently offer to buy a portion of the whole very expensive NFT.
The Objectives of IX Swap
The concept of Fractionalized NFTs though still at its juvenile stage is gaining much attention from crypto enthusiasts and Decentralized Exchanges such as IX Swap.
IX Swap is focused on bringing about the realization of trading of F-NFTs on its platform and providing the possibility for several co-owners to possess a tokenized item thereby solving the liquidity problem currently faced in the NFT industry.
In an interview, Aaron Ong, Co-founder of IX Swap explains that,
“currently lack of market prices and volumes in the NFT Market is making it hard to determine NFT valuations. Also, significant capital outlay is required to obtain exposure to high-priced NFTs,” adding that, “IX Swap wants to fix these and other problems by introducing Fractionalized NFTs on our platform.”
Moreover, anyone who desires to own a share of F-NFTs can buy and sell them on a secondary market that’s on a Decentralized Exchange, like IX Swap.
Who is IX Swap?
IX Swap is the first DeFi project found to ensure the steady supply of liquidity to security token and tokenized stock markets, striving to bridge the gap between DeFi and CeFi.
IX Swap uses blockchain technology to build liquidity and infrastructure solutions for the security token ecosystem, providing global trading and access to this untapped asset class.
Furthermore, IX Swap’s focus is to enable the fractional ownership of real-world assets or high-priced NFTs by retail investors, thereby providing liquidity to tackle the challenge of little or no liquidity for the trading of these assets, allowing anyone and anywhere to participate in the allocation of market-making capital and share the benefits of being a liquidity provider.
The concept of F-NFTs is expanding the frontiers of blockchain technology and broadening the scope of the study and use case of the NFT technology.
With the coming onboard of IX Swap, costly NFTs can be within the reach of ordinary investors and accordingly, provide the much-needed liquidity to the market.