The Booming NFT market and the fractional protocol
Welcome to non-fungible tokens (NFTs) world, which are being regarded by many as the new frontier of revenue generation, specifically with regard to the arts. An NFT is a digital asset that depicts real-world objects like art, music, in-game items and videos etc. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. Furthermore, each sale of this art is recorded on the blockchain, creating a digital provenance that is unalterable by anyone. There’s a lot of celebrities who bought NFT this year:
The celebrities with NFTs:
Stephen Curry and BAYC #7990
Stephen Curry has just recently shelled out 55 ETH (~$180,000 USD) for a Bored Ape Yacht Club NFT. Curry’s Bored Ape #7990 NFT sees a blue-fur ape wearing a brown tweed suit with green zombie eyes. Viewed 3,200 times, there is currently a bid for Curry’s (username SC30) Bored Ape at 39.61 ETH (~$125,700) significantly lower than what he bought it for.
Jay-Z (Shawn Carter) and Crypto Punk #6095
American rapper, songwriter and producer bought his 1st CryptoPunk in April 2021 for over $120,000 worth of Ethereum. Shawn Carter uses this punk as his profile picture on Twitter, bringing more mainstream attention to non-fungible tokens and CryptoPunks in particular. Billionaire rapper JAY-Z often refers to investing in art, generating wealth and financial freedom in his lyrics, and CryptoPunks are yet another example of how JAY-Z invests his money.
Steve Aoki and Crypto Punk #6473
Electronic Dance Music artist Steve Aoki bought CryptoPunk #6473 in the summer of 2021 for 65 ETH, and this is far from his only NFT investment. Steve Aoki sells his own non-fungible tokens that coincide with his EDM music, and some of these NFTs grant owners access to his concerts. Aoki also owns several Bored Ape Yacht Club (BAYC) NFTs, estimated to be worth more than $250,000.
Hayden Adams and Crypto Punk #6055
Hayden Adams, founder of Uniswap Exchange, owns Punk #6055. Adams created the leading decentralized exchange on Ethereum’s blockchain which now has over $2 billion of liquidity locked into its smart contracts. What’s more, Uniswap does more daily transactions that Bitcoin, and it’s only a couple years old.
High price of the top NFTs and the fractional
The Punks and the Ape are attractive, but because of the celebrities’ buying, now they are trading for significant higher amounts of money (in both fiat and digital currencies). It is hard for the normal users to collect, that’s why we need the fractional protocol.
The objective of fractionalization is taking shape to allow smaller and retail investors to pool resources to purchase fractional interests of an NFT. Moreover, there is great interest in the opportunity to buy fractional interests of large NFT collections. For example, if we could fractionalize a masterpiece worth $1billion. Since the artwork is expensive, only a small number of major investors could bid for it. If a smart contract fractionalizes the said NFT, then each fraction would then represent a fungible and every owner would buy, sell or auction their share on an NFT.
What is a Fractional NFT?
When an NFT is fractionalized, it is first locked in a smart contract. As we disclosed a week ago, Crafting finance will support the ERC-721 and ERC-1155 NFT tokens. Crafting finance smart contract then splits the ERC-721 token into multiple fractions in the form of ERC-20 tokens. Each fraction represents partial or a small ownership of the original NFT and we can call them stakeholders. Shareholders will possess a fraction of the NFT, equal to the value of their ERC-20 tokens divided by the total number of those tokens produced when the NFT was locked in the smart contract. Fractions can be sold just like the typical ERC-20 assets with good liquidity on Uniswap and other exchanges. Fractional NFTs offer a variety of benefits compared to traditional NFTs.
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