Dead Rejects Fractionalization
Strive: NFTs x DeFi
NFTs are a new era of asset ownership that is decentralized and transparent. One of the key features of NFTs is their guaranteed and exclusive ownership. Unlike traditional digital assets that are easily duplicated, an NFT represents a unique and immutable claim over any asset. However, this exclusivity also limits what the NFT holders can do with their assets. This has led innovators in the space to push the boundaries of NFTs.
In a world where digital assets are becoming more and more popular, there is a need for new ways to manage and store them. That’s where fractionalized NFTs come in. These unique tokens can be divided into tiny fractions, making them perfect for storing and managing digital assets.
The NFT and Defi apps exist in silos, causing more than $20B of total value to sit idle in users' wallets. Strive’s platform aims to fully intertwine NFTs with Defi to give users the best of both worlds.
What are fractionalized NFTs?
Fractionalized NFTs, or fNFTs, is a new type of digital asset that is made up of tiny fractions of an original NFT. This enables a number of people to claim ownership of the same NFT. The NFT is fractionalized using a smart contract that generates a set number of tokens linked to the indivisible original. These fractional tokens give each holder a certain percentage of ownership of NFT and can be traded or exchanged on our secondary market (exchange).
While NFTs have greatly increased in popularity, some NFT collections have become highly valuable. While not every NFT collection has acquired the infamy of Beeple’s art or Bored Ape Yacht Club, the ones that are worth collecting can still be quite pricey, for instance, Degods. It also doesn’t help that NFTs are one-of-a-kind tokens, which means acquiring them on crypto markets can be difficult, due to a lack of liquidity.
With such challenges, fractionalization becomes a potential solution. Breaking down an NFT into smaller pieces democratizes this new market allowing interested parties with limited funds to affordably invest.
How does NFT fractionalization work?
The process of NFT fractionalization involves a smart contract breaking an NFT into a number of fungible tokens. The value of these tokens is defined by the current floor price of the NFT and the supply of the tokens created. The amount of tokens an NFT can be split into is essentially limitless.
Fractionalization is a product by Strive (creator of Dead Rejects) that enables users to fractionalize an NFT and trade fractions of that NFT on a market powered by Raydium and Serum. These fractional tokens will also be tradable on Strive’s own exchange.
Fraction owners can also vote on the buyout of an NFT and buyout price of the fractionalized asset. Fraction owners can also provide liquidity to the market, earning yield from trading fees.
Fractionalization — or the transformation of a non-fungible asset into fungible assets is a major piece of infrastructure to enable the intersection of NFTs and DeFi. For owners of popular or expensive assets, fractionalization enables the ability to (1) Get liquidity and (2) retain access to upside while reducing exposure to the downside. For fraction collectors, fractional ownership may be the only affordable exposure to blue-chip NFTs. Top collections may also be interested in fractionalizing an NFT to expand a community from 10,000 to 100,000.
Benefits associated with fractionalization
Fractional ownership has created a revolution and opened up new doors in the NFT space. Some key benefits include:
Price Discovery: The fractionalization of NFTs will give collectors and buyers the ability to purchase a portion or fractions of an original token, which is likely to lead to improved price discovery.
Increased liquidity: Fractionalizing allows for greater liquidity and flexibility in the ownership which leads to better pricing mechanisms, efficient market operation and greater efficiencies for all market participants.
Democratizing investment: The fractionalization of assets will make it easier for small and medium investors from participating in NFT auctions. Since NFT assets are mainly high-priced and high-valued items only a few investors can afford to buy those assets. Fractionalized NFTs have opened up more opportunities for small and medium investors in the NFT market.
Curator fees: The original NFT owner who divides the NFT into fractionalized NFT are likely to receive a curator fee annually.
Benefits for Dead Rejects and D3D token holders
Dead Rejects Holders and D3D token holders will enjoy a host of holder privileges on Strive’s platform.
Dead rejects will not pay any fees on the platform, as compared to non-holders who will pay .25% — .5% transaction fees and 10% of profits will also be charged for non-holders.
Additionally 7.5% of profits from the platform will be added into the liquidity pool for D3D tokens and an additional 5% will be used to reward Dead Rejects holders with D3D airdrops.
Fractional NFT Index Fund
Index Fund tokens represent the basket of fractions of assets from a collection or multiple collections and have different technical mechanics to facilitate trading at approximately the floor value for the collections. Index Fund tokens can offer traders liquid and smaller-dollar exposure to the floor value of a collection or multiple collections.
On Strive fractional NFT platform, NFT collectors will be able to create a chain agnostic index fund that tracks and tokenizes the collectors entire collection. For instance, an NFT collector may own a Degod, Dead Reject, Cets on Creck, Okay Bears together. The collector can then combine the floor value of these and create a token that represents partial ownership in each of these through holding the token created by the collector.
This can also be done for NFTs of different chains. For instance if a collector owns a Degod and a BAYC, the same can be done by combining the two into an index fund and creating a token on the platform that represents both.
The creator of the index fund can set governance for utility distribution amongst the token buyers. The creator can also set the voting required by the token holders to initiate a complete buyout.
Furthermore, collection specific index funds can also be created by projects or NFT collectors. For example, Dead rejects holders holding NFTs that are near floor value can add their NFT into a floor index fund on the platform and get instant liquidity for their NFT, while buyers can get ownership in different NFTs of a collection that are near floor value.
Strive’s Fractionalized NFT marketplace will offer the following benefits:
A single source of liquidity for all NFT assets: The Strive fractionalized NFT marketplace will provide a one-stop-shop for all NFT assets.
Improved price discovery: The Strive fractionalized NFT marketplace will offer improved price discovery through a more efficient market operation.
Democratize investment in NFTs: The Strive fractionalized NFT marketplace will enable small and medium investors to participate in the buying of NFTs.
Diversification of Risk: The Strive fractionalized NFT marketplace will allow investors to buy into different NFTs with much less capital investment, allowing for spreading their risk across projects.
The future with fractional NFTs
The future with fractional NFTs is looking bright. It’s a unique way to buy and sell digital assets without having to purchase the whole thing, which can be prohibitively expensive for many people. The constantly changing market is subject to trend-chasing and fluctuation. So, if you’re looking for a more diversified way of investment, fractional NFTs may be the right choice for you.
What’s Next for Strive?
Simply put, NFT derivatives will be a product by Strive that will allow for anyone to be able bet on the future prices of NFTs. It is a way of speculating the price on the future date. Using NFT derivatives on Strive, users can, without buying an NFT, start generating a return if an NFT goes up or down. For example, if you believe that Degods or BAYC will continue to rise in value you can bet it will go up and generate a higher return, even use leverage and vice versa.
The core idea is to provide a platform for retail users and traders, through which they can take long or short positions in NFTs, thereby enabling more robust trading strategies that can maximise profit opportunities for users while hedging risk and exposure.
This will enhance NFT liquidity in the existing NFT marketplaces which often face the liquidity crunch. It will also encourage easy trading of NFT’s on the popular crypto exchanges, thereby opening up new revenue avenues through staking, lending, and borrowing against such NFT derivatives. For instance, you will in the future start seeing a token that represents a Dead Rejects derivative being traded on crypto exchanges that allows investors to predict whether dead rejects will go up or down.
NFT Derivative use cases:
- To predict floor prices of any existing NFT like Bored apes or Degods.
- Shorting an NFT collection in the form of futures contracts, using ERC-20 token or SPL
Is there more? Yes, we’re constantly innovating and building more utilities to intertwine NFTs and Defi:
- NFT collateralization
- NFT based banking
- NFT Insurance and many more endless possibilities.
Stay tuned for more updates on our plans for NFT Derivatives, NFT collateralization and more.