Posts tagged "fragmenting NFTs"

Understanding NFT Fragmentation

By now, it should be obvious that certain NFTs have price tags that are just out of reach. Breaking record after record, the world of NFT has skyrocketed, and many of the most famous NFTs have brought in tens of millions of dollars

However, fragmentation is a new trend increasing the liquidity and investor accessibility of high-value NFTs.

Fragmentation is simply dividing up an NFT into tiny bits (ERC-20 tokens) so consumers may acquire little sections of a pricey NFT.

NFT fragmentation may be seen most simply as similar to stock in a corporation. You own a small portion of that corporation when you purchase a share.

Similarly, fragmenting an NFT may be divided into millions of small pieces or shards, and users can purchase their portion of the NFT at a lesser price.

The interesting thing is that non-fungible token shards are fungible, meaning they may be swapped or replaced for an identical item.

Returning to the example of shares in a firm, although there’s no similar company out there that Microsoft can be switched with, your shares in Microsoft are the same as the shares Bill Gates holds—although you almost definitely have fewer of them.

While corporations and NFTs are not fungible, shares in firms and NFT fractions are fungible.

The notorious Doge meme was acquired as an NFT for $4 million earlier this year. Its owner fractionalized the NFT into billions of pieces, enabling consumers to purchase their stake in Doge for less than $1.

Even a piece of Art by Picasso, Fillette au beret, has been fractionalized as an NFT, with 4,000 fortunate buyers acquiring a part in the artwork.