Artists and NFT projects are constantly releasing new collections to capitalize on the industry's hype. While some of these collections lack utility and serve only to fuel speculative mania, a few dominant collections control the majority of the NFT market share. Collections like BAYC, Mutant Apes, Otherdeed, and CryptoPunks, curated by Yuga Labs, have a combined market cap of 2.3M ETH, worth over $3B in just a month. With the rising floor prices of these rare premium NFT collections, how can an average NFT enthusiast or collector participate?
Fractionalization provides an avenue for individuals with smaller budgets to enter the market. In this article, we outline five key benefits of buying fractional NFTs.
1. Co-ownership of Rare Premium NFTs and Thriving Community Engagement
Rare premium NFTs offer unique experiences and utility to their holders. However, their high prices often make them inaccessible to most NFT traders. Only a few rare premium NFTs are held by a limited number of individuals compared to the total number of unique wallets holding NFTs. Many NFT enthusiasts miss out on the opportunities presented by rare premium NFTs. Fractionalization addresses this issue by democratizing access to these exclusive assets. Buying a fractional NFT grants ownership and allows holders to join a growing and thriving community. It also opens up the possibility of unlocking similar opportunities or experiences available to whole NFT owners.
2. Fair Market Value Pricing
The value of NFTs is largely influenced by subjective and unquantifiable factors such as cultural and historical relevance, creator's brand value, and community sentiment. Coupled with low trade velocity, it becomes challenging to ascertain the fair or objective value of an NFT. Fractionalization increases the number of market participants by enabling multiple buyers to own fractions of an NFT, thereby increasing trading velocity. Quantix's vAMM facilitates the purchase of NFTs at fair market value, providing a transparent and efficient marketplace.
Transaction data of Punk #4156
The challenge of defining fair value for an NFT is limited to the limited number of market participants. NFT fractionalization increases the number of market participants by enabling multiple buyers to buy an NFT thereby increasing the trading velocity. This is easily achieved through the Quantix vAMM, where buyers can buy NFTs at fair market value.
3. Easy Exit Strategies
The limited liquidity in the NFT market poses challenges when it comes to selling an NFT. Peer-to-peer market arrangements are often inefficient. Fractionalized NFTs, on the other hand, enable buyers to exit their positions quickly. With a larger pool of market players trading the fractionalized NFTs as regular fungible tokens, liquidity is significantly enhanced. For example, the fractionalized version of "The Doge NFT" was bought by 1796 buyers during its auction, and it currently has 9641 unique wallet holders, with a market cap of $18.64M and liquidity of $4.52M.
Market data of the Fractioanalized The Doge NFT
4. Access to Financial Opportunities
The financialization of NFTs opens up exciting opportunities, particularly for premium NFTs. Fractionalized NFTs, being fungible like ERC-20 tokens on Ethereum, enable holders to tap into services such as lending, staking, yield farming, and more. Previously, these opportunities were accessible only to whole NFT owners.
5. Portfolio Diversification
Traders seeking portfolio diversification can explore fractionalized NFTs. Fractional NFTs offer a lower capital risk compared to buying a whole NFT, thanks to the lower cost of acquisition and ease of sale or exit. Moreover, fractionalized NFTs provide extractable value through participation in decentralized finance offerings. Traders can build attractive and diversified portfolios comprising various fractionalized NFTs and even traditional fungible assets like ETH and BTC.
Fractional NFT opportunities with Quantix
Quantix marketplace enables traders to buy and sell premium NFTs wholly and in fractions. The Quantization Phase provides a way for traders to purchase premium NFTs in shares from premium NFT sellers who require additional liquidity. The NFT is transferred to the Free Market (which is powered by the Quantix vAMM) at the end of the Quantization where the forces of supply and demand would exert their influence on the value of the NFT. The Free Market enables anyone to buy and sell NFT fractions instantly.
Quantix free market
Quantix’s core smart contract is a Bonding Curve RFT that owns an NFT, allowing fractional ownership, transparent price discovery, and instant liquid trades of fractions for unique and rare NFTs, without the seller having to add any liquidity
Fractional NFT Opportunities with Quantix
The Quantix marketplace empowers traders to buy and sell premium NFTs both as whole assets and in fractional shares. Check difference between Quantix and Fractionalization platform here
Through the Quantization Phase, traders can purchase fractional shares of premium NFTs from sellers seeking additional liquidity. At the end of the Quantization Phase, the NFT is transferred to the Free Market, which operates on the Quantix vAMM. Here, the forces of supply and demand influence the value of the NFT, allowing anyone to buy and sell NFT fractions instantly.
Quantix's core smart contract utilizes a Bonding Curve RFT, enabling fractional ownership, transparent price discovery, and instant liquidity for unique and rare NFTs. Unlike traditional markets, sellers don't need to add liquidity, making it hassle-free to trade fractional NFTs.
Fractionalization is not only unlocking opportunities for NFT holders and expanding the market, but it also provides additional benefits. By trading fractional NFTs on Quantix, traders have the opportunity to earn QNTX tokens. These tokens reward participants as they engage in fractional NFT trading, further incentivizing participation in the ecosystem.
With Quantix, fractional NFT trading becomes accessible to a broader audience, promoting inclusivity and democratizing the NFT market. Whether you're an NFT enthusiast looking to co-own rare premium NFTs, a trader seeking fair market value pricing, or an investor aiming to diversify your portfolio, Quantix offers a platform to unlock the potential of fractionalized NFTs.
Join the Quantix community today and embrace the exciting world of fractional NFTs!
