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Hey guys... Some concepts are easier to understand than others in the crypto space like owning a wallet and a key! Some others need more attention to details and sometimes there are general assumptions that people know something.

Yesterday I came across Artfi, an art-tech company making valuable art accessible to a wider audience with fractionalization of ownership with NFTs. I'm not sure if they are achieving this with ERC-404 cos there was no specification.

People could purchase portion of a high-value artwork, like those by Picasso or Banksy, instead of needing the full amount. Loads of royalty and industry leaders, including Princess Hend Al Qassemi, Landmark Group shareholder have endorsed it and they have crossed the $100 million valuation since 2022. I have no idea what's their worth is now.

My dilemma is what happens when an individual decides to buy the whole of one particular NFT and the fractional owners sell it to him, does he own the real-life artwork or only an NFT?

What could be the advantages of owning fraction of NFTs like these?

Let me know you POV in the comment section guys... Thanks

1. If a user buys an NFT, he will only own the rights that the NFT gives him. There is no problem with this in the digital world. For example, if you own an NFT DNS name, you can easily dispose of it. But when we talk about linking to real world items, it all depends on the custodian (usually it is centralized and requires KYC) and the regulatory system in the jurisdiction where the real item is located, for example a painting. There is always the possibility that the heirs of the copyright holder may challenge your blockchain transaction in their jurisdiction.
2. I don't see the benefits of fractional ownership other than speculative, if we are talking about first generation fractionalization protocols. But there are a lot of nuances here, refundable NFTs, NFTs via lottery and other solutions have emerged.
3. As for the comparison of fractionalization protocols, I made an overview here https://nft2.envelop.is/digest/nft-digest-39-september-2024

NFT usually offers just the digital ownership of art unless it is specifically mentioned that the ownership of its digital version would guarantee you ownership to the actual real life piece. You are going to check this one because it differs each artwork/platform where it is being sold on to.
Well it allows for cheaper investments in art. If you can’t buy one single piece of art but still want to own at least a part of it then you can do so through NFT. Some may even earn from owning a part of art if the art is displayed and is able to garner profits.

from my understanding, when you own fraction of NFT, doesn't mean NFT get split apart, it's stored in a vault, and then the vault will issue the fractional ownership, when you own all the fragments, you can merge and unlock the vault.

the advantage is that you can profit off something without needing to buy the whole thing, owning an expensive NFT is expensive, but with fractional ownership, you can profit when NFT price shoots up because you also partially owned it at cheaper price since it's just fragment, in a nutshell, opening up opportunity for people with not so big capital.

And then you would be able to sell it off to those who got most of the fragments if the person is searching to get the full - picture -, as a puzzle. That sounds like a fine and interesting concept.

it was a great report! It was really interesting to read about the gaming industry

Fractional ownership is a not-so-new concept! It was available in the real estate market since last couple of years where people can own a fraction of a commercial real estate property. The rent income is then divided amongst the owners equal to their ownership. It seems artfi has introduced the same idea here in crypto market.

But I would ask you to stay very careful about their claims. The digital ownership is never equals to the actual ownership. So their intention smells very fishy. Probably they are trying to market NFT arts in a different way because the actual NFT market has dried down.

NFT market is hugely different compared to back then when there's still big hype surrounding it, the only NFT that actually moves in price are the big NFT that costs few ETH to hundreds of ETH. you aren't making any money trading lesser valued NFT and these NFT marketplace found this as a problem that could reduce trading volume.

that's why I think new protocol is invented where they could split NFT to fractional ownership as you mentioned. making the market more interesting, liquid, and affordable for the little shrimp.

pretty much all the explanation above has been sufficient, but just to add, it removes barrier between small shrimp and whales, I guess this also an effort to keep the NFT market alive as well, preventing liquidity escaping the market due to limited options.

it is indeed an interesting concept and as mentioned by other, fractional ownership is a thing since long ago, but only recently gets implemented to the NFT just because owning a popular NFT deemed to be too expensive which does make sense.

but I wouldn't trust new platform with these protocol, ;D. since the NFT is on their vault, if it's not audited properly, there might be exploit, just imagine holding fractional ownership while the NFT is gone being exploited that'd be dumb, but alas, it seems so far everything has been going fine with fractional ownership.

Partial ownership of NFTs is an interesting concept, which raises several important questions of how it works in practice. In most cases. By issuing NFTs like the one described. Ownership of a physical artwork remains with the custodian or organization that stamps it. The owner of an NFT distribution holds a share of the digital asset that represents ownership or rights to the artwork. But they are not physical objects. Thus, if a person buys all NFT editions of a piece of art, they stand a good chance of getting the control over digital content. However, that does not necessarily translate into physical art- unless conditions of sale clearly state that they are buying the physical objects.

Advantages of having NFTs distributed include accessibility, as they allow people to invest in high-value art with minimal financial effort. It also causes admiration. This is because the value of an artwork or NFT can grow over time. This benefits the owner. Distributed NFTs also provide liquidity as they can be traded on the market. This makes it easier to withdraw from your investment compared to owning traditional art. It can also be used to earn royalties depending on the platform and terms applicable to the NFT.

Finally, this is a new way of separating skills and finances. But it is important for investors to review specific laws carefully. To understand whether their ownership gives them limited rights to their physical assets in digital display.


I agree, fractional ownership is not a new phenomenon; however, its usage in the NFT space does, indeed, put it into the lime light. Especially with things like art pieces. As we have discussed, the entire thing would come pretty handy for the investors and may open different financial opportunities. However, raising right concerns arises with the 'new platform'. Protection of the integrity of that storage place which has NFTs is paramount. Otherwise, there will always exist risks when profit-making is concerned. Also, with that, the NFT glitches would mean losing very precious NFTs and that's what will deter many investors. Anyways, that is something that investors should do. It is in a quest to ensure that the platforms they are using will be strong on matters of security, transparency, and accountability.

On the bright side, these platforms are gaining momentum. But, as we've seen, things It's working well, however, it's still for early adopters. That has to be approached with care and weigh the risks as well as the potential rewards.

Talking about the security, I think as long as there's ongoing effort to keep auditing their contract code to reputable auditor it will be sufficient, so far, I've seen the new project that consistently audited their smart contract never got that much problem with exploit and hacking.
it seems defi has been building strength in the security aspect, keep on patching the exploit and come up with more robust solution, honestly, it kinda puts me at ease considering I also interact with defi quite frequently.
if any, the concern is on social engineering, since many seem to disregard that aspect, NFT fractional ownership, i'm sure, just as safe as the other, since even popular platform also offer this, such as OpenSea.

as for fractional ownership, really hoping thing could also revolutionize ownership in other fields such as real estate ownership through blockchain, the transparency that blockchain offer could be a great advantage.