Can a Non-Fungible Token (NFT) Be Fractionalized, and What Standard Governs This?
Yes, an NFT can be fractionalized, which means dividing the ownership of a single, unique asset into multiple fungible shares. This is typically governed by a standard like ERC-1155 or by wrapping the ERC-721 token in a smart contract that issues new ERC-20 tokens representing ownership shares.
Fractionalization increases liquidity and makes high-value NFTs accessible to a broader range of investors. It essentially converts a unique asset into a set of tradable fungible tokens.
Glossar
Fractionalized Nft
Token ⎊ A Fractionalized NFT is a single non-fungible asset that has been cryptographically split into multiple, fungible ERC-20 Tokens, representing proportional ownership claims over the original asset.
Erc-20 Tokens
Standard ⎊ ERC-20 tokens represent a technical standard implemented via smart contracts on the Ethereum blockchain, defining a common set of rules for fungible digital assets.
Fungible
Asset ⎊ The core characteristic defining fungibility, particularly within cryptocurrency, options, and derivatives, centers on interchangeability.
Non-Fungible
Characteristic ⎊ Non-fungible describes an asset whose individual units are unique and cannot be mutually substituted, meaning each unit possesses distinct properties, history, and value.
NFT
Provenance ⎊ Non-Fungible Tokens, within cryptocurrency markets, represent a unique cryptographic token linked to a specific digital or physical asset, establishing verifiable ownership and authenticity.