One of the more exciting aspects of blockchain-based assets is the ability to fractionalize ownership into an infinitely divisible number of units. This past week, we saw the crypto gaming sector energized by a DEX called Niftex and the notion of fractional NFT shares, called shards.
NFT fractions – a recap 🧩
The NIFTEX thesis is that #fungibility can upgrade NFT markets, and fractional ownership is the method.
— NIFTEX 🧩 (@NIFTEXdotcom) June 19, 2020
Niftex works directly with NFT holders to structure launches of fractions, or ERc20 tokens representing a claim on the underlying asset. While we’ve seen high profile NFT collectors like WhaleShark tease this premise with his WHALE personal token, Niftex shards are unique to specific assets, giving them a real-time valuation and governance rights to shardholders.
The exchange was brought on our radar this past week through the fractionalization of Mysitc Axies, the rarest items in crypto’s hottest PvP game – Axie Infinity. For those who have yet to hear of Axie Infinity, check out our interview with the game’s cofounder here. Highlighted by the launch of a 1 of 3 AGAMOGENESIS Axie called Almace, the NFT owners fractionalized 10,000 shards at a base rate of 0.004 ETH. Half of those shares were offered in the launch followed by the creation of a Uniswap pool to trade them in a permissionless fashion.
Last year, @sillytuna and I jointly bought Almace – 1 of only 3 unique AGAMOGENESIS type @AxieInfinity NFTs. This is one of the rarest Axies in the entire game and we believe one of the most desirable NFTs to own in the game. pic.twitter.com/i6v9qkjIcT
— Gabby Dizon (@gabusch) July 10, 2020
The launch exploded within the Axie community, with the fully dilute value of Almace peaking at over $100,000 or more than 7x the initial offering price. When other holders saw the explosive growth of Almace ($ALMX) in tandem with Venom ($VNM) – the second Axie to fractionalized after Mystic Baloon ($MBA), many other highly exclusive Axies like Starbugs ($BUGS) and Hauteclere ($HAUT) were soon to follow.
The key thing to keep in mind here is that while Mystic Axies have always had a strong secondary market, there were never permissionless AMM’s to exchange fractional ownership of them on until now. But, the fun doesn’t stop there!
Coin Artist Personal NFT Syndicate
Coin Artist, the mind behind crypto puzzles and Colored Coins, unveiled a framework for a new type of personal-token syndicate called “Coin’s E-Den”. Unlike other personal tokens, Coin Artist is fractionalizing a malleable NFT – giving her community the capacity to upgrade and use the metadata across a wide variety of games and ecosystems. Given her role as CEO of Blockade Games – the studio behind Neon District – we expect to see COIN grant shardholders exclusive memorabilia and social status in the Final-Fantasy like crypto RPG set to enjoy a major overhaul this year.
“We now have the tools to bridge the gap between traditional game companies, influencers, and respective communities.” Coin Artist told DeFi Rate “There is untapped potential for the influencers and communities to better monetize the work they already do. Creating independent economic systems and capturing this value will funnel into a more lucrative game economy.”
— YT🗝 (@coin_artist) July 12, 2020
As if that wasn’t cool enough, Neon District’s most popular NFT – BAUS – is also quietly scheming to join the conversation in the coming weeks. As one of the highest-selling NFT’s of all time at 141 ETH, BAUS represents ownership of Neon District’s final season zero boss. The owner of the asset has told DeFi Rate he would want the launch to be community-friendly, giving the shards special usage that makes them have intrinsic value.
👀 just doing some reading… https://t.co/NEikLYlrzz
— NIFTEX 🧩 (@NIFTEXdotcom) July 12, 2020
If one thing is for sure, the notion of creating divisible ownership is a premise tapping every corner of the NFT metaverse, from SuperRare art to Cryptopunks and much much more.
What’s the Big Deal?
Underpinning all these experiments is a new form of distributed governance, unlike anything which has been seen in the world of gaming and finance to date. The ability for anyone to own a small fraction of their favorite character, boss, hero, or villain is one which fans have long searched for, and with exchanges like Niftex, the story if slowly but surely coming true.
While it’s evident there will need to be plenty of infrastructure for these shards to be used to their full potential, we at DeFi Rate are excited to watch this experiment pan out and will be sure to keep an eye on other developments highlighting the cross-over between gaming and DeFi.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.