Fractional NFTs are non-fungible tokens that have been divided into smaller parts, allowing multiple people to own a fraction of the same NFT
Here's a breakdown:
→ What does it mean?
Normally, NFTs (non-fungible tokens) are unique and indivisible — only one person can own them at a time.
But with fractional NFTs, the original NFT is locked into a smart contract and then split into fungible tokens (ERC-20 style) that represent ownership shares. These shares can be bought, sold, or traded like regular tokens.
→ Example:
· Imagine a digital artwork NFT worth $1 million.
· It can be "fractionalized" into 1,000 parts, each worth $1,000.
· Now, 1,000 different people can own a piece of that NFT.
· Each person holds a share and may have voting rights, revenue share, or resale profits, depending on the contract.
→ Use Cases:
· High-value digital art: Lower the entry barrier for collectors/investors.
· Metaverse real estate: Split ownership of virtual land.
· Gaming assets: Share rare in-game items among players or investors.
· DAOs: Communities co-own and govern valuable NFTs.
→ Problems:
· Makes expensive NFTs more accessible.
· Increases liquidity for high-value assets.
· Enables community ownership and collaboration.
→ Concerned :
· Legal and regulatory issues around ownership rights.
· Complex valuation of fractional shares.
· Potential market manipulation in low-liquidity situations.
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