<p dir="ltr">NFTs, or non-fungible tokens, are known as a revolutionary change in decentralized and transparent asset ownership. One of the most distinguishing characteristics of NFTs is their secured exclusive ownership. An NFT cannot be copied or falsified, and it is a one-of-a-kind token. This exclusivity, however, significantly limits what NFT holders may do with their holdings. As a result, space entrepreneurs have pushed the frontiers of what's possible for NFTs, including chances for fractional ownership. So, what exactly are fractional NFTs and how do they work? Read more in this article at <a href="https://www.builder.news/" alt="Builder.news" title="Builder.news" target="_blank" rel="" class="">Builder.news</a>.</p><h2>Explain about fractional NFTs</h2><h3>What are fractional NFTs?</h3><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed34de841809f9a8e6023f659fee92.jpg" alt="Fractional NFTs" title="Fractional NFTs" width="600" height="324" class="lykafe0"></p><p dir="ltr">A fractional NFT (F-NFT) is essentially a full NFT that has been divided into smaller fractions, allowing several people to claim ownership of the same NFT. The NFT is fractionalized&nbsp; through the use of a smart contract that creates a certain number of tokens that are tied to the indivisible original. These fractional tokens provide each holder with a percentage ownership stake in an NFT and may be bought or swapped on secondary marketplaces.</p><p dir="ltr">When an NFT is fractionalized , the original NFT is locked up in a vault and a limited number of fungible tokens representing ownership of that NFT are issued. These fungible tokens may be purchased on fractional NFT platforms such as fractional.art and exchanged on secondary marketplaces such as <a href="https://www.builder.news/crypto-insights/all-about-uniswap" alt="Adequate understanding about Uniswap" title="Adequate understanding about Uniswap" target="_blank" rel="" class="">Uniswap</a>.</p><h3>How does it work?</h3><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed34de84181570a8e6023f659fee92.jpg" alt="how does fractional NFTs work" title="how does fractional NFTs work" width="600" height="360" class="lykafe1"></p><p dir="ltr">At its root, an NFT is just a token that adheres to Ethereum's ERC-721 standard. As mentioned above, before the NFT can be fractionalized , it must first be locked in a smart contract, which is just software recorded on the blockchain that is programmed to run automatically when certain circumstances are satisfied.</p><p dir="ltr">Based on the instructions supplied by the NFT owner, the smart contract subsequently divides the ERC-721 token into various fractions in the form of ERC-20 tokens. The owner specifies the quantity of ERC-20 tokens to be produced, as well as their price, metadata, and other features. Each fraction, or ERC-20 token, represents a portion of the total NFT ownership. The fractions are then placed on the market at a defined price for a given amount of time, or until they are sold out.</p><p dir="ltr">It's worth noting that NFTs and fractional NFTs aren't just for the Ethereum blockchain. Any blockchain network that supports smart contracts and NFTs may allow fractionalization. Smart contracts are supported by alternative networks such as Polygon (MATIC), Cardano (ADA), and Solana (SOL), and may be used to create and transfer NFTs. These networks also offer the advantage of quick transaction times and no gas prices.</p><h3>What’s the difference between F-NFTs and traditional NFTs?</h3><p dir="ltr">Fractional NFTs indicate percentage ownership or fractions of a whole NFT. The distinction between the two is clear: An NFT is a whole, but F-NFTs are merely fractions of the whole. It is crucial to note that the fractionalization process may be reversed, and F-NFTs can be turned back into complete NFTs. The smart contract that fractionalizes an NFT often includes a buyout option that allows an F-NFT investor to purchase all of the fractions and unlock the original NFT.</p><p dir="ltr">An F-NFT holder can activate the buyout option by transferring a particular amount of ERC-20 tokens from a collection back to the smart contract, which will launch a buyback auction for a set length of time. This allows the remaining F-NFT holders to make a decision. If the buyout occurs during that time, the fractions are immediately returned to the smart contract, and the buyer acquires full ownership of the NFT.</p><h3>Where can I buy a Fractional NFT?</h3><p dir="ltr">Several venues for creating and purchasing fractional NFTs have arisen, including:</p><ul><li><p dir="ltr">Otis: Otis is an NFT investing platform that allows users to invest in NFT collectibles and art, manage their NFT portfolio, and engage in real-time trading using the Otis app. Investors may utilize the platform to purchase fractional stakes in cryptocurrency assets.</p></li><li><p dir="ltr">Unicly: Unicly is a tradable asset with assured liquidity for investors who want to convert their NFT collection. The platform allows investors to tokenize NFTs and establish tradable collections of any size.</p></li><li><p dir="ltr">Fractional.art: This is a platform that allows investors to purchase, trade, and manufacture fractions of NFTs. NFT holders can utilize the platform to manufacture NFT fractions or become owners of fractional NFT collections that they would not be able to purchase otherwise.</p></li></ul><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed34de84181a15a8e6023f659fee92.jpg" alt="fractional.art" title="fractional.art" width="600" height="273" class="lykafe2"></p><h2>What are the benefits of fractional NFTs?</h2><p dir="ltr">NFT has been the talk of the town, so we cannot deny that every person who is concerned about blockchain as well as NFT collections wants to own a NFT at least. However, its high price and other problems are discouraging their interest. As a result, Fractional NFTs have significantly solved and created a lot of benefits, including:</p><ul><li><p dir="ltr">Democratization: Because certain NFTs are so expensive, smaller investors may be unable to participate. The fractionalization of a costly NFT reduces ownership costs and makes it more accessible to a wider group of investors. It's also worth noting that as the price of an NFT rises, the value of all of its fractions climbs proportionally. If its value falls abruptly, as is usual in the crypto market, the value of all fractions falls as well.</p></li></ul><ul><li><p dir="ltr">Price discovery: fractional NFTs can give mechanisms for determining how much a certain NFT is worth. Because fractional ERC-20 tokens are sold on the open market, their values can aid in providing a credible appraisal of the price of a tokenized asset.</p></li></ul><ul><li><p dir="ltr">More liquidity: The most distinguishing feature of NFTs is that they are unique tokens that cannot be reproduced or split. Because of this, only a few affluent investors have access to NFTs, particularly lucrative ones. F-NFTs address this liquidity issue because ERC-20 tokens are easily exchanged in secondary marketplaces. Rather than waiting weeks or months for a single NFT to sell, many investors may be more eager to purchase fractions of an NFT instantly at a lower price, alleviating market liquidity difficulties.</p></li></ul><h2>What is stopping the development of fractional NFTs?</h2><p dir="ltr">The security of fractional NFTs is dependent on the quality of the programming that underpins them. However, in some situations, a potential buyer or part-owner of an NFT might initiate a buyout auction by transferring the whole value of all fractional portions to the smart contract.</p><p dir="ltr">If the other fraction holders outbid the person who started the auction, they will be able to maintain their part, albeit at a higher price. If the individual successfully outbids the other fraction holders, their money will be divided among the owners in proportion to their holdings. While they are still compensated for their portion, this may induce you to sell your fraction even if you do not want to.</p><h2>The future of fractional NFTs</h2><p dir="ltr">The fractional NFT space is still in the early stages of exploration, but the world has witnessed that fractional NFTs increase the number of possibilities to buy and engage with artists while also offering liquidity to this emerging industry. It is impossible to say that fractional NFTs will become the best path to make the NFT world more accessible in the future.</p><p dir="ltr">NFT fragmentation is an excellent answer to several NFT-related issues, such as limited liquidity, insufficient ownership, and exorbitant prices. In the future, its advantages will be a significant tool for NFT markets, in particular, and blockchain apps in general to evolve and improve, thus reducing their limitations and giving users the best possible experiences.&nbsp;</p><div class="pr-block-special"><strong>Disclaimer:</strong><br>This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

Fractional NFTs are now the best choice for NFT collectors as they have a lot of advantages. You will completely understand its benefits for NFT space after reading this article! 

Fractional NFTs: A new world for NFT collectors