NFT - beginning of the trailblazing market
The evolution of cryptocurrencies took almost a decade to get the wide reach that it is experiencing now. People started realizing the real potential of the crypto market very slowly. But that's not the case with NFT. NFTs made a huge hit in the market in a very short span. Though the concept of NFT is different from the crypto market, NFT managed to hold a very strong position in the Digital space. The NFT is now not an instance of the crypto market. These magnificent features and characteristics made NFT to be recognized as one of the trusted collectibles.
NFT - What is it? Why is the hype so high?
NFT is nothing but a unique physical or digital asset that is being tokenized with unique standards. These tokenized assets will have unique characteristics and are completely different from each other. These Non Fungible Tokens are inseparable or indivisible. They are built along the blockchain networks to provide efficiency and security.
They do have their own token standard to maintain this fungibility, and people tend to provide an extensive preference to the NFTs for various reasons, which include ownership authenticity, tamper-proof, and privacy protection. Initially, NFT is considered as collectible that only people who collect collectibles liked or preferred. But in a very short time, the NFTs application list went dense. They serve as a support for various purposes for various kinds of people.
The NFTs possess high value in the market, and the growth of the NFTs is still at its peak. The concept of the fractional NFT is to separate the NFTs into various categories or segments where the value of the NFT is too divided. This will result in various benefits for the NFT market, including heavy traffic. The Fractional NFT will be the greatest turning point in the NFT and crypto market, where the separation of NFT into pieces will result in affordability. Since NFT is considered to be one of the best investments, the flow of transactions will be very high.
How Fractionalized NFT Marketplace works ?
The Non Fungible tokens are built with token standards that support and maintain the characteristics of NFTs. If Ethereum is the blockchain, the token standard followed is known as ERC-721 or one similar to this., In the fractional NFT, the NFTs are locked with a smart contract. And then, the smart contract will split the NFT into various pieces as ERC-20 tokens. And Now, since ERC-20 is a fungible token, their own will represent the partial ownership of a particular NFT.
If the Fractional NFT is bought, the buyer will hold the fractional piece of NFT., which is a divided ERC-721 asset. This can be put up for sale in various types. Either they can set a period to sell the token, or they can be on the market till the last one of them is sold. The Fractional NFT marketplace will be the center for trading and staking the Fractional NFT, where it brought in various revolutionary changes in the typical NFT marketplaces.
Need For Fractional NFT
Secondary market liquidity
The NFTs is now an asset that has greater potential and value. So the people who own the NFT marketplaces are more concerned about making auction sales rather than instant sales. This makes the process of liquidity a lengthy route. And this is a serious challenge in the NFT.
NFTs values are now very high. Only the people with huge resources can afford to invest in the NFT space. This brings a biased situation where very small investors can’t afford to buy an NFT. The NFT growth will be promoted to the next level only when everyone has the space to invest.
The Utilization of NFT other than owning them and selling them is very limited. Though NFTs are now everywhere and are used for various purposes, the NFTs can't emerge as the token that offers various utilization in the crypto market or in a digital market.
Fractional NFT Marketplace - a solution to Liquidity
The liquidity problem can be solved when an NFT that possesses ERC-721 is fractionalized and converted into a Fungible ERC-20. Here as mentioned above, the ERC-721 token is locked into a smart contract. And the smart contract will split the ERC-721 tokens into an ERC-20 token. So if a user buys an ERC-20 token from here, then he technically owns a piece of the ERC-721 token. This enables many investors to make an investment in Fractional NFT. Since it is fractionalized and the values are very low, this fractionalized NFT will be bought for instant sale, which will eventually increase the liquidity.
Advantages of Fractionalized NFT Marketplace
The fractionalized NFT marketplace uses the price discovery mechanism to determine the value of the NFT, and This will be the greatest evolution in the NFT marketplace.
This will completely analyze the trades that happened in the past, where every information like the type of the data, highest value, lowest value, and surge rate will be completely analyzed. To produce a mere prediction of the NFT.
This is the most common method, but here the actual change is the mechanism will also provide an estimate for an item based on the bidding people places. Auction is considered to be one of the best methods for selling NFT.
NFT here will be converted into fungible ERC-20 tokens. This enables the owner of the NFT to sell in various open markets. This increases the liquidity and the traffic for the NFT & NFT marketplace,
The Fractionalized NFT is not biased or an asset that only a particular can afford to buy. Once they are fractionalized, it is common for everyone to make a trade with the fractionalized NFT. This also helps in increasing the market growth to the peak. When a Fractional NFT is minted, the commission will be high, and traffic will also be at its peak. And it establishes several ways for monetizing.
Fractional NFT also puts a trading card, where the owner of the NFT will have the option to revoke the Fractionalization process with this Buyout feature. But for that, 100% of the NFT piece owners should take part in this buyout event. The payment method can be anything, and the user can pay the fractional NFT owners completely and revoke them.