4 min readMay 13, 2022

The Why Of Fractionalized NFT As Securities And The Role Of IX SWAP

Chances are you heard about NFTs for the first time when the artist Beeple auctioned off his digital art piece "Everydays: 5,000 Days " for an eye-popping purchase price of $69 million.
But your exact question should be what it means and why this new technology is important for artists, creators, and businesses.

What are NFTs? And why are they important?

NFTs simply refer to Non-Fungible Tokens.

In the crypto world, if I hold one Ethereum token (ETH), it’s fungible because it’s worth the same as any other ETH token someone else is holding

But, non-fungible item, on the other hand, is unique and can’t be copied or substituted. For instance: The Statue of Liberty, the Mona Lisa, and a ticket for a seat at the Super Bowl are all non-fungible items. That is to say, they’re one-of-a-kind
Non-fungible tokens (NFTs) are typically issued as unique digital tokens, most commonly on the Ethereum blockchain. Although, it is typically not intended for use as a currency or means of payment, it however has value and that value may increase (or decline) as the result of the efforts of other parties. Therefore, in certain cases, NFTs may have characteristics of securities.
Non-fungible tokens are increasingly becoming popular because they have proven to be an excellent digital solution for collectibles. Usually, they reflect various real-world elements, including music, art, movies, and in-game items. These cryptographic tokens cannot be replicated, nor can they be exchanged at equivalency. Yet, you can rely on them for various transactions, mainly when selling digital art and currencies.

The following are the benefits NFTs offer to the cryptocurrency sphere:

Enhanced Inclusiveness
They Fractionalize Asset Ownership
Unrivalled Marketplace Efficiency
Ability To Prove Ownership
Enhanced Authenticity
Security

What Is a Fractional NFT?

A fractional NFT (F-NFT) is simply a whole NFT that has been divided into smaller fractions, allowing different numbers of people to claim ownership of a piece of the same NFT. The NFT is fractionalized using a smart contract that generates a set number of tokens linked to the indivisible original.

Fractionalization is most typically implemented in high-value collectibles, expanding access to these items beyond the mega-wealthy. They are really meant to grow accessibility, democratization and participation in the NFT space. They help to boost liquidity, given more people can participate in the market. It allows smaller investors to pool their resources together to purchase fractional interests of an NFT
From a technical perspective, these Fractional NFTs feature smart contracts that break up the asset’s token for any number of owner.

How Fractionalized NFTs Is Created

A smart contract is being deployed to generate ERC20 tokens linked to an indivisible ERC721 NFT. This way, anyone who holds any of the ERC20 tokens generated can own a percentage of the rare and valuable NFT and it's due to the flexibility of Fungible Tokens and the fact that they can be replaced with each other.

The smart contract is used to secure the data that differentiates the fractional NFT from other NFTs. This idea can also be applied on any blockchain network that supports smart contracts and NFTs such that the NFT is locked in a smart contract on the blockchain and ownership of the NFT is represented by multiple fungible tokens whose supply is governed by the smart contract.

Advantages Of Purchasing Fractionalized NFTs

Allows for portfolio diversification through multiple fractional investments.
DeFi applications to generate an additional yield from holding NFTs
Greater liquidity and trading venues to realize gains from fractionalized NFTs

It’s Uses

Building a larger community with lower floor prices for new NFT investors
Positive price correlation through fractionalization
Larger audience as more investors would have access to a singular NFT
Increased utility for NFT piece through DeFi applications
Retain ownership while freeing up liquidity

Where Can You Buy Fractionalized NFTs? Well, this is where IX SWAP comes in…

Role Of IX SWAP

Firstly, you should know that IX Swap is the FIRST platform to provide liquidity pools and automated market making functions for the security token (STO) & tokenized stock industry (TSO).
IX Swap is the “Uniswap” for security tokens (STO) and tokenized stocks (TSO).
IX Swap’s mission is to use blockchain technology to build liquidity solutions and infrastructure for the security token ecosystem, providing trading and global access to this untapped asset class
It’s DeFi & CeFi Platform provides Security Tokens and Fractionalized NFTs to NFT owner who areinterested in listing their NFT. You can check out this link and reach out to c@ixswap.io