Try dNFTspot: THE INNOVATION OF FRACTIONALIZED NFTS AND NFT LIQUIDITY.

2 min readJul 27, 2021

WHAT ARE FRACTIONALIZED NFTs?

If a NFT is Fractionalized, it will first be locked in a smart contract. The smart contract then shares the BEP721 code into several fractions as an BEP20 token. Each part represents part of the possession of the NFT.

Shareholders will own a portion of the NFT, equal to the value of their BEP20 tokens divided by the total number of those tokens generated when the NFT is locked in the smart contract. Fractional NFTs offers a variety of importance compared to traditional NFTs.

Better Price Discovery.
More NFT Liquidity.
Democratizes Ownership.

BETTER PRICE DISCOVERY: Price discovery mechanisms determine how much an NFT should cost. Fractionalization consists of taking an NFT, dividing it into fungible ERC-20 tokens, and selling those tokens on the open market using DEFI technologies.

This process generates a price estimate for each ERC20 token. We can then use these price estimates to assess the price of the NFT Asset.

MORE NFT LIQUIDITY: Fractionalized NFT uses a completely revolutionary mechanism to monetize digital assets and goods which includes the possibility for creators to create a work in an efficient market context, bringing liquidity to this work in an automatic way. Obviously, this implies that any application that uses NFT as collateral can rely on on-chain pricing to control risk. For example, a loan protocol can define a liquidation margin based on an automated pricing strategy.

DEMOCRATIZES OWNERSHIP: Most of the time, the price in the NFT market discourages small investors from participating, only some investors can buy the more expensive NFTs. Dividing expensive NFTs into small pieces reduces the cost of ownership, making expensive NFTs accessible to more investors.

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