Tezos Commons :: Fractionalized NFTs are Coming to Tezos
December 21, 2022A closer look into sliced.art and their upcoming decentralized fractional NFT platform on Tezos
There is no doubt that the past few weeks have been a tough patch for the blockchain space. Despite that, there are still genuine strides being made towards advancing the blockchain space, especially on Tezos.
For Tezos, it’s business as usual. NFTs on Tezos continue to attract attention and we’ve been met with some new developments around fractionalization. Let’s discuss Crunchy’s upcoming decentralized fractional NFT platform on Tezos — sliced.art.
What are Fractionalized NFTs?
To fully understand what fractionalized NFTs are, we must understand what exactly an NFT is. NFTs are non-fungible tokens that exist on a public ledger and guarantee exclusive ownership of an asset. They can represent a wide variety of things such as art, real estate, and other real world assets.
In both cases above, a valuable artwork or a piece of real estate, can be worth a lot. However, for small to medium-tier investors, the liquidity required to own the entire asset may be out of range.
That’s where fractionalization comes in.
As opposed to owning the entire NFT, the whole “pie” gets split into several segments. Each segment represents an ownership percentage of that NFT. This process allows an individual to hold “shares” in the same NFT alongside many others.
Thus, this process enables a few things to happen. First, it allows exposure for small-medium tier investors who may or may not have the capital required to own an entire NFT. By slicing up the pie into smaller segments, they now have the opportunity to gain exposure.
Second, the most overlooked benefit comes in the form of liquidity. By removing barriers of entry to NFT markets through fractionalization, you suddenly have more NFTs available at more affordable prices for a wider audience of collectors. The introduction of many affordable NFTs can be enticing to attracting more liquidity.
These smaller segments of NFTs can be tradable on secondary marketplaces or any NFT platform that wish to support them.
Slicing a Piece of the Pie
Crunchy, the team behind one of the most popular Tezos-based DeFi platforms is developing the first decentralized fractional NFT platform on Tezos. Sliced.art will offer a NFT “slicing” service and marketplace to buy and sell sliced NFTs.
Not only will users of the platform be able to divide up individual NFTs into smaller pieces, they also have the ability to choose what percentage of the NFT they wish to slice.
How does this exactly work? For example, say you have a rare tezzard. You don’t really want to part ways with it but you would like to unlock some liquidity to get another NFT you’ve had your eye on for awhile. With this new service, you could slice your tezzard into several thousand segments and list only a thousandth for sale at a fixed price for examples sake. You still obtain majority ownership of that tezzard, but have unlocked some liquidity by splitting it up.
Even more interesting, the platform will feature a unique “buyout system”. Essentially, after one has bought or sold a sliced NFT they will have the option to set a reserve price. The reserve price will represent the price to acquire the whole underlying NFT.
This system also introduces a governance like aspect to the ownership of these sliced NFTs. Holders of sliced NFTs can have a say in the buyout price that is directly proportional to the number of slices they own. So, the more ownership you hold over the underlying NFT, the more weight your vote will count on its buyout price.
Image source: Sliced.art
The marketplace will feature a clean UI and it will be integrated with OBJKT.com, one of the most popular NFT marketplaces on Tezos for secondary trading.
I for one, find this really neat. The concept itself makes a lot of sense in terms of reducing barriers of entry for NFT markets and the added liquidity associated with the underlying NFT is certainly a plus.
This is a unique service that has yet to be seen on the Tezos network. Some of the more larger examples of fractionalized NFTs we’ve seen have been the Doge NFT, Dissected Meebit #10761, and the Ape and Lady punk to name a few.
This platform essentially extends a NFT slicing service to virtually all Tezos-based NFTs. Which in itself, is a pretty big deal.
Looking Forward
NFTs are creating new and exciting ways for collectors to gain exposure to real world assets such as art, real estate, and much more. As Tezos continues to evolve and grow, so are the ways in which collectors can make a home on Tezos for NFTs. We’re very excited for the upcoming release of Crunchy’s decentralized fractional NFT platform and look forward to seeing collectors try it out!
Fractionalized NFTs are Coming to Tezos was originally published in Tezos Commons on Medium, where people are continuing the conversation by highlighting and responding to this story.
