A Fractional NFT is a smaller chunk of a whole NFT
The concept of fractional NFT enables the owner of an asset to divide his/her asset into multiple fractions and give partial ownership of the same NFT to multiple users.
Think of it like a Person who Owns a Shopping mall – There are 300 shops in that shopping mall. In the traditional way, the owner can create a single NFT for an entire shopping mall.
Now consider a scenario where the owner wants to sell one of the shops to an investor or a different user.
In this case, the owner can not transfer the ownership of the NFT to the investor as that would make investor the owner of an entire shopping mall.
Also, the owner can not create multiple copies of the same NFTs as NFT is unique and cannot be duplicated.
Let’s think about fractional NFTs !!
Fractional NFTs enable the owner to create multiple sub-NFTs meaning each shop can have a separate fractional NFT i.e owner can create 300 Fractional NFTs for his/her shopping mall where each fractional NFT represent an individual shop.
Additional advantage of creating Fractional NFTs is that the owner can add different metadata with each fractional NFT:
Let’s understand this with an example:
All the shops within the shopping mall may have different attributes.
for example:
-> Dimensions (Area)
-> Floor No
-> View
-> Price etc
These different attributes of an individual shop can be saved as metadata for corresponding fraction NFT.
Benefits of Fractional NFTs:
-> Democratization: Fractionalizing an expensive NFT lowers costs and makes it accessible to more people.
-> Price Analysis: It’s very difficult to analyse the correct market value of a virtual asset considering its limited transaction history. Fractionalizing the NFT makes it more affordable and allows more people to trade the asset, making it easier for buyers to find the NFT’s actual value.
-> Accessibility to a bigger audience: Owners of assets can get even greater exposure because they are able to reach a wider audience in a more liquid market
-> The most significant benefit for Fractional NFT holders is that they get to own a percentage of a larger and more expensive whole NFT.
-> Some Fractionalized NFT projects even support staking, letting holders lock up their Fractional NFT on a platform or protocol to receive staking rewards and other benefits.
In a nutshell, Fractional NFTs are definitely to watch out for as it continues to make the NFT world more accessible. So, if you’ve been eyeing a particular NFT collection but didn’t want to commit because of the high price, Fractional NFTs are something you can explore.
ICS has developed a solution which allows users/developers from different domains to create fractional NFTs for their use cases by simply using our APIs.
We are soon launching our new portal H-LAB which allows users to execute all possible blockchain transactions without adding any pre-requisite.
Stay tuned for more updates on HLab !!
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