A new way to Fractionalize your NFTs
Nftfy releases the Auction method in the Fractionalization process to allow users to place their bids over the reserve price
Since the inception of the Nftfy protocol, we have always had the idea of implementing an Exit Mechanism that would assure all the fraction holder’s rights and the proper functioning of the protocol.
One of the clauses in this mechanism was the Exit Price, which is the maximum amount that someone needs to pay to redeem the entire NFT. The Exit Price was defined by the user during the Fractionalization process and it must be a fixed value to avoid any problems between the Fraction holders.
In that way, the Exit Price was initially implemented to work as this maximum value is needed to redeem the NFT. However, following the market demands, we designed another way to set this price for the NFT. Now, the user has the possibility to determine a Reserve Price as the minimum value needed to buy the entire piece, and once this Reserve Price is met, it will start an auction with a duration determined by the user, allowing anyone to bid on top of that price.
To fractionalize using this new method, you need to select the option “Highest Bid”, just like in the picture. There will be a Community Fee charged over the number of Fractions generated. These Fractions collected will be stored in a vault to be used as rewards in the $NFTFY staking program, which will be announced soon. In that way, if you want to generate 10,000 Fractions of your NFT, considering the minimum fee, 100 Fractions would be destined to the Nftfy’s vault.
At the end of this process, you must set the Reserve Price for the NFT, which will be the minimum value someone needs to pay to start the Auction.
Once you click on “Fractionalize”, your NFT will be staked in our Smart Contract and you will receive the number of Fractions you chose, discounting the amount defined in the Community Fee. In the example above, the user has defined10,000 Fractions and a 1% fee, receiving a total of 9,900 Fractions.
After that, the NFT will be displayed in our marketplace and you can start selling Fractions of it by creating Sell Orders, just like explained in the article “How to easily trade Fractions on Nftfy”. Anyone will be able to either buy the Fractions you put on sale or create new Buy Orders aiming for a better price.
If someone wants to buy the entire NFT, this person just needs to click on the “Place a Bid” button and the following modal will appear:
In the case presented in the picture, the Reserve Price is 2 ETH and the user has 20% of the NFT Fractions. Therefore, this person needs to pay 1.6 ETH to get the Auction started.
Now, with the countdown running, anyone can place a bid on top of that Reserve Price. The user just needs to click on “Place a bid” and their bid will be validated and placed as shown in the picture below:
Once the countdown ends, if you were the winner of the Auction, you will be able to Redeem the NFT for yourself. If you haven’t participated in the Auction, but had purchased some Fractions before, now you will be able to claim your ETH in the Portfolio section, proportionally to the number of Fractions you have.
This new method in the Fractionalization process will allow NFT owners a better price discovery for their NFTs, as the market will define the final price of the NFT. Moreover, the community will be able to take a chance to place their bids in lower valuations, allowing everyone to participate in the fantastic world of NFTs.
Stay tuned for more news on Nftfy. Join our groups and follow us on our social media for more information.
