Fractional asset ownership is not a novel notion. The notion has been effectively applied in a range of industries, from real estate to fashion, and for a variety of physical assets, including stock, designer products, and high-end assets like as yachts and private planes.
It is a common approach for individuals to collectively and reasonably acquire property in the real estate market. Owners who purchase fractional ownership of property receive a deed reflecting their portion. Fractionalized NFTs operate in a similar manner.
Some NFTs have sold for astronomical sums, such as Beeple’s Everydays. The First 5000 Days, which sold for $69.3 million. Human One, which sold for $28.9 million, and Cryptopunk #7523, which sold for $11.75 million, to name a few. Given that many NFTs are sold for enormous sums of money, keeping them out of reach for the average person. Is a big entrance hurdle for everyone to participate and own a prominent NFT. this has brought the notion of fractionalizing NFTs to the forefront.
NFTs are democratized when they are broken down into smaller pieces, making them more accessible to individuals with less financial means.
The goal of NFT fractionalization is to provide numerous co-owners access to high-value and distinctive NFT assets. that belong to several persons at the same time. The owner of this NFT asset can produce and distribute a number of tokens that are components of the original NFT to interested parties.
The standard for NFTs is ERC-721; to fractionalize the purchase on Ethereum. The NFT owner divides the ERC-721 token into multiple ERC-20 tokens. As a consequence, each ERC-20 token represents a portion of the NFT of the asset.
The Advantages of Fractionalized NFTs