Nftfy DApp
The Decentralized Application That Fractionalizes NFTs
Securitization and Blockchain Technology
In the highly structured financial world, securitization is the process of pooling together specific assets and repackaging them into interest-bearing securities, which are investment vehicles that are bought and sold in financial markets for profit [1]. Securitization is attractive because investors are able to benefit from competitive returns on their equity with reduced risks while creditors or originators benefit because their capital is freed up, promoting higher marketplace liquidity. However, securitization is a highly complex and tedious process that requires compliance and regulated audits from various intermediaries and agencies in order to ascertain an asset’s value. All these take considerable time and resources, making the whole process expensive, time-consuming and inefficient. Not to mention that only financial giants have the capacity to meet these aforementioned challenges, thereby limiting access to securitization for everyone else.
Blockchain technology has the groundbreaking potential to address these securitization issues because of its capacity to streamline the convoluted processes, leading to traceable, transparent and auditable data [2]. This minimizes the risk of fraud or even error, as well as possibly removing intermediaries altogether, lessening inefficiencies and costs of asset valuation. Overall, it has the potential to create a much fairer system but ultimately, the technology offers a wider reach and greater access for all.
NFTs and Decentralized Fractionalization
Non-fungible tokens (NFTs) are digital assets that represent a wide range of unique items, both tangible and intangible [3]. Each NFT contains distinguishing information that makes it unique and easily verifiable thus revolutionizing the gaming, collectibles and art industries. This year especially, there has been a massive surge of interest in the NFT market, with the most expensive NFT selling for 69 million dollars. While this is great news for aspiring artists and creators, the average Joe can’t afford to spend millions on a Beeple artwork, largely limiting much-needed liquidity within the NFT space.
An emerging innovative solution that is currently on the rise is fractionalization, the process of locking an NFT into a smart contract that breaks it into smaller parts, represented by fungible tokens [4]. In doing so, access is given to a wider audience by making it possible for buyers to share ownership of an NFT. Additionally, fractionalizing allows for NFT holders to enjoy some liquidity from their asset without having to sell the entire piece.
The Nftfy DApp
Nftfy is a permissionless Decentralized Application (DApp) that fractionalizes NFTs, generating ERC20-compliant fractions fully backed by the NFTs. It is an Ethereum-based and open source platform that runs autonomously, providing a convenient and speedy way to fractionalize an NFT, allowing anyone to trade fractions of the asset [5]. While centralized securitization requires highly regulated processes involving numerous intermediaries to guarantee accurate asset valuation, Nftfy simplifies this by employing an entirely decentralized and software-guaranteed backing mechanism. It adapts legal contractual elements into self-executing smart contracts, making them inviolable and robust [6]. These smart contracts run on established rules called a Shareholders’ Agreement that protect individual interests.
Designed to solve the main problems inherent in the current NFT ecosystem like low liquidity, considerable investment risks, and monetization of assets, Nftfy offers appealing benefits like promoting instant liquidity and pricing for NFTs, fair price and portfolio variety [7].
A Fraction of Nftfy
Given the inherent utility of NFTs and the vastness of use case possibilities across various industries and businesses, the NFT ecosystem will only continue to advance and develop. Nftfy stands in a unique place that bridges the NFT and DeFi ecosystems together [8]. In doing so, opportunities for new functionalities can be explored across both ecosystems leading to even further real world adoption.
The Nftfy IDO on Poolz will be on May 5 at 12 PM UTC. This will be an opportunity to take hold of a fraction of Nftfy, a fraction of a digitized, democretized and decentralized future.
[1] https://study.com/academy/lesson/securitization-definition-theory-process.html
[2] https://businesslawtoday.org/2019/12/potential-impact-blockchain-technology-securitization/
[3] https://www.coindesk.com/what-are-nfts
[4] https://defirepublic.com/meet-dark-horse-of-defi-fractional-nfts/
[5] https://medium.com/nftfy/the-decentralized-securitization-48b62c12d114
[6] https://medium.com/nftfy/nftfy-introduction-and-use-cases-a40e61304868
[7] https://docs.nftfy.org/getting-started/introduction
[8] https://drive.google.com/file/d/1B4b8jV3QDxGPO-Xg_JAtiKbd2O6y8cV7/view
