🧩Fractionalization
So what exactly is fractionalization and what are OTs?
A simple way of looking at NFT fractionalization is to basically to think of it as a consortium to buy an NFT.
When an NFT is fractionalized, the original NFT will be pledged into a vault with LIQNFT and the NFT owner will be able to specify the key economic terms of the OT issuance such as number of tokens to issue, token price and also how much he/she wants to retain (i.e. if the owner wants to keep an exposure in the NFT).
After an NFT has been fractionalized, the OT will then be minted through a primary sale facilitated by LIQNFT for the buyers. Once the OTs are minted, the holders can then freely trade on the LIQNFT marketplace.
Through fractionalization, an NFT is converted into a highly liquid and tradable asset, allowing both the buyers and sellers to benefit from a more efficient marketplace.
Example: say the owner of Solana Money Business (SMB) #1355 wants to lock in some profit on his/her million dollar NFT.
To do this, the owner would pledge SMB #1355 into an LIQNFT Vault and create a supply of [n] OTs at [p] price, let's assume n = 1 million and p = 0.1 SOL. LIQNFT will then mint 1 million OTs for sale, allocate a supply to the original owner based on his/her request (assume 200K here) and the remaining 800K will be sold to the public at 0.1 SOL per OT.
At the end of all this, the owner would have freed up 80,000 SOL worth of capital from SMB #1355 via fractionalization and retained onto 2,000 SOL worth of exposure and most importantly, the community at LIQNFT would now be able to gain exposure to SMB #1355 at an affordable price of 0.1 per SOL.
Last updated
