Fractional Ownership Turns Blue-Chip Properties Into Individual Ecosystems

NFTs hold massive potential for creative entrepreneurs, hobbyists, and collectors alike. But for many blue-chip properties, access is already becoming unfeasible, with projects like BAYC, etc., fetching astronomical prices on the secondary market.

Fractional ownership, also known as shared ownership, is an attractive value proposition for new entrants. It allows individuals to buy into a property at a significantly lower investment cost and opens new markets to a broader audience. 

Fractional ownership occurs through a decentralized protocol that allows NFT owners to issue fractional parts of their assets using tokens. Ownership of the asset becomes divisible and more accessible by dividing it into smaller units via a smart contract. Once these ERC20-based cryptocurrencies have governance over the NFTs, they control and may be used as regular ERC20 currencies.

Users with a small amount of an NFT have the power to vote on the reserve price for that asset. The reserve price is the ETH equivalent that must be bid by a third party to begin an NFT auction. 

All fraction holders will be able to cash in their slices for ETH on a pro-rata basis at the end of a successful auction. Fractions are functioning ERC20 tokens that may be utilized as such at any time.

Why does this matter? Fractional ownership through platforms such as Fractional.art provides buyers with an opportunity to own a share in a Bored Ape.

ZombieToadz, a fractional vault with ownership of multiple CrypToadz - and now a Zombie Bored Ape - is a prime example of fractional ownership in execution. It's early days, and the project has only been live for 3 weeks, but their implementation of the $BRAINZ token, staking, breeding, and 5 DAO purchases is cutting a path for fractional DAOs to follow. With a vault of 140ETH and the valuation of their purchases rising with royalties from the secondary market continuing to fund additional acquisitions, the roadmap for the Ztoadz vault is an experiment that will yield important data about the use case and value proposition of a tribe built around fractionalization.

NFTs and fractional ownership are a match made in heaven; with their arrival, we can unlock a cooperative movement of digital scarcity that can not only match but surpass the value of current properties. This means we can finally truly own something, in its value, and most importantly, in its usage rights as a collective.

I believe fractional ownership is the right step in a long journey to changing the way we work and play in Web3, ultimately improving our financial well-being by allowing us to pool our resources and maximize our returns.

Fractional ownership will support the transferability, divisibility, and liquidity of NFTs, through a bridge that links the best of blockchain technology together with its most promising future use cases. It represents a new way of thinking about the process of acquiring an NFT: it's not just about buying and owning but also sharing a collective pool of NFTs, dividends, and voting rights.

New NFT traders, collectors, and fans can buy into a supportive tribe and community, make prestigious purchases through a DAO, and fractionalize social capital itself.

In addition, fractional owners can share in the usage of a DAO-owned PFP. For ex., staking benefits go into the DAO vault, utility usage is voted on by the DAO - and every member can use the community-owned Ape as an avatar, signaling their membership of a specific subculture and that subculture's buying power.

These are the absolute garage days of fractional ownership DAOs. But the moves that vaults like ZombieToadz are making show us how experimental ownership models can push the boundaries of social norms and consumer expectations.

We can even imagine that fractionalization itself could turn an individual token into its own economy, its own company, and its own ecosystem.

There are so many different concepts in fractional ownership DAOs, including the idea of creating an ecosystem around your NFT token that is built by your community - where users can trade, buy, sell, and are making right now will test the waters, serve as a case study, and guide how future DAOs operate in this structure. We still aren’t clear on the legalities of fractional DAOs, and that melodrama will take years to play out on the political stage.

NFTs have the potential to create whole new economies. As non-fungible tokens are still in their early days, it is crucial to understand what they are right now before predicting what they could become. But fractional ownership is a model to watch.