NFTs or non-fungible tokens are unique one-of-one digital assets that allow for verifiable ownership via the blockchain. Become an NFT expert here!
NFTexplained.info is a team of long term crypto investors who are well versed within the NFT space; we have the goal of providing the best information possible.
In this article we will cover how to effectively navigate Fractional.art!
Fractional.art is an up and coming NFT marketplace. It allows for the buying and selling of NFT fractions via audited smart contracts. Fractions of an NFT come in the form of ERC-20 tokens; these ERC-20 tokens are stored within a digital wallet and represent ownership.
The marketplace also enables additional features such as baskets or vaults, voting on the reserve price, and setting a curator fee which our team will discuss later in the article.
If you are interested in learning more about smart contracts, NFTexplained.info has a resource which we will link to here.
After you purchase a fraction of an NFT, the ERC-20 tokens will be located in your digital wallet – such as MetaMask. MetaMask is the most commonly used digital wallet and NFTexplained.info has a complete guide to setting it up; that can be found here.
For someone buying a fraction of a CryptoPunk, he or she will exchange ETH for the ERC-20 token representing that particular CryptoPunk.
For example, if there are 10,000 ERC-20 tokens known as $HOODIE, which make up 100% of the hooded CryptoPunk, and you purchase 1,000 $HOODIE you own 10% of that particular Punk.
If you would like to learn more about fractional NFTs, such as why someone would want to own a fraction, the benefits that fractionalization brings to the NFT space, as well as some of the downsides, that article is linked here!
Next NFTexplained.info will briefly cover the essentials of Fractional.art, including the safety of the site, before moving on to show you how to effectively use the marketplace. This includes how to purchase a fraction of an NFT as well as how to sell fractions of an NFT!
Is Fractional.art Safe?
Fractional.art is believed to be reliable as it depends upon blockchain technology and smart contracts which allows for transparent transactions. Although the marketplace is relatively new, it is backed by world-class investors such as Robot Ventures, Paradigm, Mechanism Capital, and more.
Robot Ventures is notorious for supporting a multitude of upcoming and successful web three projects.
Paradigm is another investment firm that is widely respected within the realm of web three.
Paradigm was co-founded by Fred Ehrsam who previously co-funded Coinbase (the largest publicly traded crypto company in the US).
Fractional.art also verifies NFTs. This ensures purchasers are not buying faulty NFTs that are not from the intended collection.
As shown by the screenshot, this particular vault or basket consists of two NFTs both of which are verified to be from the official collection.
The basket consist of Bored Ape #2195 and Kennel Club #2195. Kennel club is a sub-collection to Bored Ape Yacht Club as members who had a Bored Ape had the opportunity to mint a Kennel Club.
Verified NFTs have a green check located on the top right. These NFTs are sure to be from the intended collection. E.g a Bored Ape that is verified is sure to be a part of the collection from the official Yuga Labs.
Next, NFTexplained.info will cover some aspects of using Fractional.art
How To Purchase A Fraction Of An NFT on Fractional.art
NFTexplained.info will provide a step by step walkthrough for purchasing a fraction of an NFT; we recommend opening up another tab and following along!
- The first step is to Connect a digital wallet which is found on the top right of the screen.
- The second step is to click “Explore” on the top of the screen to find a live auction (preferably of verified NFTs).
- Thirdly, enter the amount of ETH you are willing to spend in order to receive the ERC-20 tokens that represent ownership of the NFT or vault (multiple NFTs).
- Before completing the fourth step, which is to click “Review my Order”, you should set slippage (percentage price difference you are okay with from the initial request) and see the estimate of how much you will pay in gas for the transaction.
- Finally, click confirm trade which will trigger a MetaMask pop up. The pop up is simply a security mechanism asking you to confirm the transaction once again.
- After the transaction confirmation comes up and some time has passed, click on your wallet address located on the top right to see your purchase.
- If you don’t see the ERC-20 tokens in your MetaMask account, open up Etherscan and enter your wallet address. Then under tokens, select the ERC-20 token representing the fraction of the NFT you own.
- From Etherscan, copy the contact address of the new token and go to MetaMask.
- In MetaMask, click “Import token”, then “Custom token”, and paste the address of the new ERC-20 tokens representing fractional ownership.
- Finally click the import token button and the ERC-20 token representing fractional ownership will show up under assets in your MetaMask account.
Congratulations on being an owner of an NFT art piece or collection that was most likely only attainable by whales until fractionalization came to the NFT space!
This is how people are now able to become an owner of a particular Bored Ape or CryptoPunk that was previously unattainable.
Now that you are a part owner, you are able to set the reserve price which is essentially your vote for the price at which a buyout auction can be triggered.
The more ERC-20 tokens you own, the more your vote for the reserve price counts as voting is proportional (a weighted average).
It is important to note that setting a reserve price does incur a gas fee since all transactions require gas on the Ethereum network.
NFTexplained.info will conclude the article by walking you through how to sell fractions of an NFT you own.
How To Sell Fractions Of An NFT – Fractional.art
- In order to fractionalize NFTs for sale, the first step is connecting a digital wallet like MetaMask.
- After a wallet is connected, click “Fractionalize” on the top of the screen.
- You then have the option to choose between two fractionalization methods. The methods are ERC-20 tokens (fungible tokens) and ERC-1155 (non-fungible fractions). For this tutorial we will illustrate the process using ERC-20.
- Select the NFT you would like to fractionalize.
- Enter the name.
- Enter the supply (how many fractions you want).
- Enter the symbol (for ERC-20 tokens).
- Enter the reserve price.
- Finally enter the annual management fee.
The annual management fee is the inflation percentage you set per year.
For example, if you had a total supply of 500 tokens and you owned 250, with the annual management fee set at 10% there will be an inflation of 25 tokens per year which will go to you.
The total supply will rise to 525 tokens after year one, with the additional 25 tokens going to you. Now, you own 275 tokens.
Fractionalization within the NFT space is relatively new and it is likely that material changes will come alongside wider adoption.