Fractional Art: NFTs x DeFi is coming
Alright so you can't afford a zombie punk... here's what you can do
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NFT Slate Fam:
As prices rise for pretty much every NFT in $ terms, how will retail get involved? Retail put their last $300 into Doge or Shiba, but when prices for premium NFTs are minimum 1 ETH or right around $3,000 in today’s value, what will they do?
Stuff like Fractional Art may be an option for them and I’ll explain this technology that just came out a couple weeks ago in this email. There are other platforms doing similar things that we will profile in the future!
Enjoy
- NFT Slate Contributor Bluecane
Fractional Art: NFTs x DeFi is Coming
Fractional.art was released to the public in July , the idea was to not only provide liquidity for owners of high value NFTs but to give access to smaller players into legacy crypto projects like Autoglyphs & Cryptopunks. As far as I’ve seen on twitter Andy @andy8052 & Deeze @Deezefi are both heavily involved in the project, & other names I may have missed, thanks for a great project to all involved!
Basic Breakdown
To give an idea of what they are trying to accomplish, here is what the top couple vaults they have look like on their vaults page:
Got some pretty big NFTs on here with some Meebits, Zombie punk, along with an Autoglyph. As far as exposure to top tier NFTs goes, this is a place to go. They also have other NFTs that you can buy fractions of, not only limited to big names! I could go in and fractionalize my CryptoTrunk even though the project is not mainstream yet so not worth lots of ETH.
Basics of the Contract:
Your NFT is locked into a vault and then you as the curator are given a number of fungible tokens as ERC-20 tokens. You can then split these among friends or create a pool that people can buy into. You set a reserve price for the NFT that people can try to buy the NFT (starting an auction, default is a 7 day auction) and set the curator fee to get an annual fee for you putting the NFT into a vault.
As you can see above, there are 2,000 tokens that their altogether value equals the implied value that was set. Looks like not all the tokens have been taken from the pool, but a decent amount have! Fractional.art makes it easy to swap from ETH to the fractional token in the swap section once you click on a vault.
What is awesome about the Fractional.art team is that you can use their contract to fractionalize whatever you want without interacting with their interface. Just use the contract they’ve made and you can do what you want with the fractionalized NFT. If you’re just splitting an NFT among friends, this is an option. Imagine in the future 5 friends going in on a Pudgy Penguin or Mooncat, Fractional.art makes that possible.
“Fractional.art has no control over the vaults that are created nor can fractional.art alter or modify the behavior and capabilities of these smart contracts.” - on Fractional.art’s medium
Here is a step by step guide on how to fractionalize your NFT on Fractional.art’s Medium: https://medium.com/fractional-art/how-to-use-fractional-to-fractionalize-nfts-84da1a465b6d
Multiple Profile Pics?
One interesting thing about Fractional.art is the ability for multiple people to use the NFT they own a part of as their profile pic. I have seen around 4-5 people use the “Party of the Living Dead” punk as their profile pic, and I assume they own a fraction of it. Pretty cool potential there, haven’t seen that done before and will be interesting how this compares to “renting” punks.
How does someone acquire the entire NFT after it’s been fractionalized?
Alright, so this is pretty cool, but how can someone acquire the NFT in full?
If you have enough ETH to equal the reserve price, you can attempt to bid the entire NFT & cause an auction. This reserve price is set initially by the curator but can change at any time with over 51% of the token holders/voters asking for a reserve price change.
Based on the length of the auction (3-14 days, 7 default) an auction will ensue to see who wins the NFT. At the completion of a successful auction, all fraction owners will be able to cash in their fractions for ETH on a pro rata basis.
Fractional art has lots of potential & if you are still interested in reading more, please check out their Medium here: https://medium.com/fractional-art
Next I may be writing about PartyDAO & other DAOs involved with NFTs. If you have any suggestions on what I should write about, respond to this email! I am always looking for new & exciting topics to dive into.
Want to read more:
Dissecting the Fractional Protocol (Deep dive into the code):
https://0xkowloon.substack.com/p/dissecting-the-fractional-protocol
Here is a Dune Analytics of Fractional Art:
https://dune.xyz/ilemi/fractional.art-overview
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