CurioDAO physically-backed NFTs & Fractional NFTs Explained — Part I
Blockchain technology has been in use for a few years now and has already revolutionized many areas of our lives. It is no longer news that several industries are also embracing blockchain. Especially since the adoption of new regulations came into force, blockchain-based tokens that represent rights or objects can be issued legally.
In this article, we will focus on tokenization at Curio and how it will change markets.
What is an NFT?
NFTs, or non-fungible tokens (ERC-721 or ERC-1155), have been gaining in popularity lately as a new way to own digital assets. NFTs are unique, digital assets that can’t be duplicated or interchanged. They’re stored on a blockchain and can represent anything from artwork to in-game items. Traditional NFTs can’t be divided up, so each NFT is indivisible and can only be owned by one person. This is where F-NFTs come in.
What is a Fractional NFT?
Fractional NFTs, or F-NFTs (ERC-20), are NFTs that have been divided into smaller pieces, allowing different people to own a piece of the same NFT. The NFT is fractionalized using a smart contract that generates a set number of tokens linked to the original NFT. These fractional tokens give each holder a percentage of ownership of an NFT, and can be traded or exchanged on secondary markets.
What’s the Difference Between F-NFTs and Traditional NFTs?
F-NFTs offer a few advantages over traditional NFTs. First, they’re more accessible since they can be bought in smaller increments. This makes them more affordable and available to a wider range of people. Second, they’re more liquid because they can be traded on secondary markets. And finally, they offer more opportunities for collaboration since multiple people can own a piece of the same NFT.
Why are Fractional NFTs needed?
One of the key advantages of fractional NFTs (F-NFTs) is that they help to democratize the NFT market. By breaking down an NFT into smaller units, F-NFTs make it more accessible to a wider range of investors, including those who might not be able to afford a whole NFT. F-NFTs also help with price discovery, as they create more liquidity in the market. This can lead to a more efficient market, as buyers and sellers are able to find each other more easily. Finally, F-NFTs can help to reduce risk by allowing investors to spread their investments across a number of different NFTs.
What is the innovation proposed by CurioDAO and Curio Capital AG
Users can choose a fraction standard for the vault to determine how owners will be able to view and handle their fractions.
Option 1) Single NFT — Users can create via Rollapp.store, indivisible, non-fungible fractions that can be sold directly on Fractional and marketplaces such as Opensea. In wallets, each fraction will display as an image of the vault’s contents, alongside any other one. Assets can be Physical, IP, or Digital Assets.
Option 2) Multiple NFTs — Representing co-ownership of the physical asset. Same as above.
Option 3) Fractional Base Tokens — Users can create fungible, divisible fractions recognized within a whitelisted register.
Option 3.1) Fractional Wrapped Tokens (ERC-20): Users can wrap tokens within a sub-register to create further fungible, divisible fractions that can be sold on AMM pools like Uniswap and Balancer. In wallets, each fraction will display as a token symbol and its numeric amount, alongside any other ERC-20 tokens. A sub-register can provide additional technical features such as drag along and tag along rights, multi-chain compatibility, or represent a database of a custodian.
Are real-world assets NFT, redeemable?
Once you redeem your NFT for the physical item, we ship it out from our warehouse within 48 hours.
As NFTs and Fractional NFTs represent ownership, the underlying asset can be redeemed, while Fractional Based Tokens and Fractional Wrapped Tokens represent simply an economic benefit from the proceeds when selling the asset.
If you’re interested in buying or selling NFTs, you should keep an eye out for F-NFTs as they become more popular. They offer a number of benefits over traditional NFTs and may be more accessible and liquid as a result.