Blockchain & Cryptocurrency Glossary

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Fractionalized NFTs (F-NFTs)

1 min read
Pronunciation
[frak-shuh-nl-eyezd en-eff-teez]
Analogy
Like dividing a painting into numbered shares so a group of collectors can each own a fraction of the artwork.
Definition
Non‑fungible tokens that have been split into fungible fractional shares, allowing multiple users to own a percentage of a single high‑value NFT.
Key Points Intro
Fractionalized NFTs democratize ownership by creating tradable shares of a single NFT.
Key Points

ERC‑20 wrapping: NFT locked in a contract that issues fungible tokens.

Liquidity: Fraction shares can trade on DEXs.

Governance: Shareholders vote on actions like selling the underlying NFT.

Custody: Fractional contract holds original NFT securely.

Example
An expensive CryptoPunk is fractionalized into 10,000 F‑PUNK tokens; holders can trade shares or vote to sell the Punk.
Technical Deep Dive
Fractionalizer contract implements `lockNFT()`, mints `fractionToken` ERC‑20 tokens, and holds NFT in escrow. `redeem()` allows holders of all fractions to burn tokens and withdraw the NFT.
Security Warning
Fractionalization contract bugs can lock the NFT permanently; audits are critical.
Caveat
Collective decisions may lead to disputes; define clear governance rules.
Related Terms
Governance Token
Escrow Contract

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