How Fractionalized NFTs Work And What Are Its Use Cases

From celebrities to famous social media influencers, everyone that you know these days is trying to get into the crypto world, particularly in NFTs, considering that digital artwork is doing a lot of things for those that are capable of paying huge prices.

However, there’s a problem.

Anyone that has been following NFT trends knows that NFTs are known for how expensive they are, and most of the time the prices of popular NFTs are capable of running into millions, which has made them really expensive for an average person.

In order to solve this problem, the emergence of Fractionalized NFTs has been witnessed by those that are following the crypto world.

The whole concept of Fractionalized NFTs is way better than actually acquiring full ownership of numerous insignificant ones at the same price and this concept has been accepted by people across the globe as it helps them earn a part of something that’s a hit in the market.

But before you actually get involved in such things, you need to make sure that you know what it is and how it works out.

What is a Fractionalized NFT?

Fractionalized NFTs is basically the act of dividing the ownership of a Non Fungible Token into smaller fractions, which makes it possible for several people to own a particular Non Fungible Token.

In simple words, Fractionalized NFTs lowers the cost of investing in assets that would be considered as extremely expensive.

Where Can You Purchase Fractionalized NFTs?

A lot of platforms are emerging to enable the fractionalization of non-fungible tokens, which includes Niftex, which was one of the first NFT projects that allowed its users to launch fractionalized non-fungible tokens.

If that’s not what you want, you can also go with DAOfi, which allows the trading of fractionalized non-fungible tokes

Lastly, you can go with Fractional, a platform that allows users to mind fractionalized NFTs.

How Fractionalized NFTs Work?

NFTs (Non-fungible tokens) are just tokens that are following the Ethereum ERC-721 standard, and for the token to become fractionalized, it is required to be secured in a “Smart Contract”.

Once the owner of a NFT gives the command, the smart contract will be responsible for dividing the ERC-721 token into a number of fractions, which is then represented by a different token, known as the ERC-20.

Once that happens, the owner is going to set a reserve price or an exit price, which is the minimum amount of money that will be required to be paid if the NFTs are to be redeemed.

Also, the owners of the fractionalized non-fungible tokens can sell all or just a portion of the fractions that they own.

Use Cases Of Fractional NFTs

Here are some of the many use case scenarios of Fractional NFTs:

Music Industry

NFTs currently have the potential to change the music industry i na huge way, considering that artists can use this technology to:

  • Tokenize their songs
  • Tokenize their albums
  • Sell digital merchandise to create an additional source of income
  • Sell limited digital assets like limited album copies
  • Offer royalties to creators
  • Offer royalties to artists
  • Offer royalties to producers

Nas, who is better known as Nasir bin Olu Dara Jones, hased used 2 cases recently when it comes to merging NFTs and the music he produces.

Recently, he provided royalties and offered additional physical benefits to those that wanted to listen to his singles. The NFTs that he sold offered royalties based on the streaming income of the song to the NFTs owners, and the higher the level of NFTs, the higher the ownership percentages, which meant better benefits such as VIP concert tickets.


Fashion non-fungible tokens can also be used as collectible pieces, which can be used to purchase virtual garments that can be worn while meeting a friend, partying or attending a meeting.

A lot of big fashion brands have been using NFTs recently, and here are some of the most known ones:

Recently, Gucci sold a digital only bag on roblox, which is a metaverse space, for around $4,115 USD.

The second one was done by Dolce & Gabbana, which creatively combined the physical and virtual world recently when it auctioned its 9 piece NFT for around $5.65 million USD. What they sold included 5 physical pieces with NFT versions for the metaverse and 4 digital only pieces.

The Metaverse

The best thing about the new technology is that people can properly integrate trends into it, and one of the best examples for this is the metaverse, which is believed to be the future for NFT spaces.

This technology is considered to be one of the best places to store and appreciate NFT art, could be a hub for gaming, and it can be used by those who love to hangout with other people on the internet.


Digital Artworks by famous artists are extremely pricey and not everyone can purchase them, and this is where fractional non-fungible tokens come in as it allows people to get collective ownership of expensive iconic digital artwork.

Fractional digital artworks can avoid expensive and risky investments, and the best thing about them is that if a single token is sold at a lower price, the price of the other tokens are not affected by the decision of one.

Real Estate

By simply replacing intermediaries with smart contracts, NFTs can be used to facilitate a very direct, straightforward and extremely secure transfer of ownership, which can significantly speed up the entire process of buying properties.

With fractionalized NFTs small and medium investors that have a very small budget are allowed to engage in real estate, considering that they can share ownership of one property instead of single handedly paying for one big land.

This one also has other benefits, which includes bosot to the liquidity in the market, which is one of the hardest to achieve, especially when trading a highly valuable asset.


Fractionalized non-fungible tokens can also be used in games in the future, particularly in play-to-earn games, where you can buy and trade game items, which would include money, swords, avatars, skins, and many more.

With fractionalized non-fungible tokens, players can trade very expensive in-game assets at a very low price, making it more accessible to those that are planning to enjoy the game in the best possible way.

Right now, Axie Infinity, an online game that is based on non-fungible tokens, is experimenting with this process by selling fractionalized ownerships of ultra-rare Axie, which is one of the most popular assets in NFTs.

Risks That Are Involved In Owning Fractionalized NFTs

There are risks that are involved in owning fractionalized non-fungible tokens, particularly with legal issues.

Some of the issues include the rights of publicity, Intellectual Property issues and lastly, contract issues. It also has inefficient security protocols, regulation issues and are known to be more volatile when compared to physical assets.

Is It Good To Invest In Fractionalized NFTs?

NFTs are becoming more and more popular on a daily basis, and the cost associated with owning one is increasing on a daily basis. But with Fractionalized NFTs, the expensive NFTs can become affordable considering that it has ownership democratization, and the results that are offered by Fractionalization are just amazing.

The first benefit that you get is affordability, the second one is if someone who owns a factor of the expensive digital asset decides to sell it at a lower price, the value of the other fractions are not affected, and lastly, if an NFT’s bidding price increases during an auction, it will still attract buyers that are willing to pay lower prices for fractionalized ownerships.


Investing some of your money into the NFT industry is a good way to generate some extra income, but the problem with them is that rare or good digital artwork can cost you a lot of money.

Thanks to the emergence of fractionalized non-fungible tokens, the process of investing into NFTs has been more affordable considering that it offers greater liquidity and it allows investors with limited funds to purchase non-fungible tokens.

And because fractionalized non-fungible tokens exist, some investors are capable of owning large and expensive assets, while others only possess some of the other parts. However you also have to keep in mind that there are problems that are linked with Fractionalized Non-Fungible tokens, which includes rights of publicity, intellectual property issues, and contract issues. Some other notable problems also include insufficient security protocols, regulation issues, and are more volatile when they are compared to physical assets.

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