We see that the Non-Fungible-Token technology, which has gained a lot of popularity recently, has been reshaped with an idea that was put forward in 2018. With fragmented NFTs (F-NFT), which started as an experimental study, it is possible to tokenize NFTized works and sell them to more than one person. “Fractionalized NFTs”, one of the interesting trends of the crypto ecosystem, came to the fore again due to the production of a new series of CryptoPunks avatars. So, can the concept of belonging be redefined with fragmented NFTs?
NFT (Non Fungible Token) is a type of cryptographic token that allows unique assets to be stored on the blockchain. You can click here to access our guide article on NFTs.
Marc Howard wrote one of the first comprehensive papers on fragmented NFTs. The date Howard wrote the article is 2018 and the opening sentence starts off quite interesting.
“We live in a world where the most valuable assets are not in pure physical form.”
Fragmented NFTs vs.
To better understand fragmented NFTs, it is necessary to understand which assets are suitable for sharing and how much. Although the boundaries of the concept of private property became clear with the birth of modern philosophy, property sharing appears as an antithesis when we come to today. With the “Great Reset” put forward by the World Economic Forum (WEF), we can see that the borders of private property will be reshaped globally in the near future. Such a paradigm shift could strengthen the place of F-NFTs in the NFT world.
In the typology chart, we see that the assets are differentiated according to the type of value. An entity can also carry two properties independently.
Now that we’ve touched on the evolution of fragmented values and our typology scheme, we can return to F-NFTs. In order to better explain F-NFTs, I will continue with an example through digital art. E.g; A person who purchases an NFTized version of a digital artwork has sole ownership of that artwork. However, with F-NFTs, more than one person can own the same piece of art just as they own a stock in a company.
In the same vein, the user who buys a parcel on the Decentraland (a blockchain-based virtual game platform) platform has the right to build a building on the parcel or rent the parcel. When it comes to F-NFTs; parcel owners have the right to construct buildings among themselves and to benefit from services.
CryptoPunks and F-NFTs
CryptoPunks are the first known NFTs built by Larva Labs and embedded in the Ethereum blockchain with 10,000 avatars. Avatars are a series of different forms and include pixelated smileys. In addition, CryptoPunks avatars, which are the first NFT series, find their buyers at very high prices. According to CryptoSlam, which tracks NFT transactions, the most expensive NFT collectible sale was a CryptoPunks avatar. This avatar, numbered 7804, sold for $7.7 million.
CryptoPunks and our F-NFT topic have a great deal to do with it. The high pricing of the collection leads to the tokenization of the CryptoPunks series. In short, collections can be tokenized and rented for a short time.
There are many projects working on tokenization of collections and fragmented NFTs. One of them is Ark Gallery, its decentralized autonomous organization (DAO). Ark Gallery allows tokenized NFTs to be leased through smart contracts.
Are fragmented NFTs securities?
The legal status of fragmented NFTs creates a gray area. Therefore, legal authorities are also divided on this issue. The affirmative view argues that under favorable conditions F-NFTs can be categorized as securities. On the other hand, according to SEC authority Hester Peirce, the definition of securities is comprehensive, but fragmented NFTs involve risk.
When we evaluate in general, F-NFTs are already experiencing the current problems experienced by NFTs. IP problems, contract problems and broadcast rights are some of these problems. However, the problems of F-NFTs are more than traditional NFTs and they need to be defined in a legal sense.Share this article