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A fractional NFT is obtained by splitting a single NFT asset into smaller pieces. Fractionalization allows partial ownership of an NFT. In this way, investors who don\u2019t have the means to buy the total asset can receive a share of it. The process works akin to purchasing shares of blue-chip stocks. That\u2019s why\u00a0applications of fractional NFTs<\/a>\u00a0make sense, especially in the case of high-value assets like real estate, fine art, luxury goods, and all sorts of rare items.\u00a0<\/p>\n We can create fractional NFTs on any blockchain capable of running smart contracts and deploying nonfungible token formats. Ethereum is the most widespread blockchain, so let\u2019s see how the process works on it.\u00a0\u00a0<\/p>\n Although it\u2019s a relatively new concept, some web3 platforms, protocols, DAOs, and other NFT-related dapps have already adopted fractional NFTs.\u00a0<\/p>\n Fractional.art<\/a>, for example, enables minting your own NFT as fractional NFTs, as well as buying and selling NFTs from historical collections as fractions. The platform hosts one of the most iconic NFTs of all time:\u00a0the Doge<\/a>. This unique digital asset was acquired by PleasrDAO,\u00a0a well-known collective investment DAO<\/em>, in 2021 for $4M via an NFT auction. PleasrDAO later fractionalized it into 16,969,696,969 pieces which you can buy on Fractional.art. At the time of writing, the valuation of the whole asset is around $11.8M, and there\u2019re over 10K unique owners.\u00a0<\/p>\n Another fractional NFT platform is\u00a0Otis<\/a>. In addition to art, it hosts other collectibles, such as sneakers and rare books. Some prominent examples of fractional NFTs hosted on Otis include Chromie Squiggle #2241, an asset from the very first project by the generative art platform Artblocks, the Jordan 1 Metallic Red sneaker, and the\u00a0first<\/a>\u00a0edition, the first printing of Harry Potter and the Philosopher\u2019s Stone.\u00a0<\/p>\n Real estate is another domain where the fractionization of assets can be helpful.\u00a0Vesta Equity<\/a>, a home equity marketplace, allows homeowners to tokenize their properties and investors to build a portfolio of residential equity, all thanks to the fractional NFTs that run on the Algorand blockchain.<\/p>\n The\u00a0wine and spirits<\/a>\u00a0industry is also among the early adopters. For instance, UniCask fractionalizes premium\u00a0whisky casks as NFTs<\/a>. The first UniCask collection issued a 1991 vintage cask of a high-value single-malt Scotch whisky. Another beverage-related platform leveraging fractional NFTs is\u00a0Crurated<\/a>\u00a0which releases curated NFT drops from fractional barrels of fine wine.\u00a0<\/p>\n Another critical function of fractionalizing NFTs is to provide liquidity to an otherwise illiquid market because it\u2019s much easier to sell or buy small units of expensive assets. Consequently, the NFT asset class becomes more accessible, and more participants mean better liquidity.\u00a0<\/p>\n Moreover, new ways of mitigating the illiquidity of NFTs via fractional counterparts are emerging. On\u00a0Unicly<\/a>, it\u2019s possible to convert NFTs into fractional ERC-20 tokens called uTokens and provide liquidity on the protocol\u2019s DEX by locking them.\u00a0<\/p>\n It\u2019s theoretically possible to reverse the fractionalization process and retrieve the original single NFT. To this end, you can add a \u201cbuyout\u201d option to the smart contract that created the individual fractions in the first place. This allows any owner of the fractional NFTs to buy all of the other existing fractions and unlock the original single NFT.\u00a0<\/p>\n<\/div>\nHow to create fractional NFTs?\u00a0<\/strong><\/h2>\n
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Use cases of fractional NFTs<\/strong><\/h2>\n
Not just for fine art<\/strong><\/h2>\n
A remedy to the NFT liquidity problem<\/strong><\/h2>\n
How to retrieve the original NFT?<\/strong><\/h2>\n