After tearing up the NFT, the community vigorously debates NFD

“NFT Fragmentation: The general trend or liquidity overdraft?”

The day before yesterday, this picture screened the encryption community:

After tearing up the NFT, the community vigorously debates NFD

On the 23rd, path.eth@Cryptopathic created Feisty Doge’s NFT token NFD, which is a fragmented NFT based on the Dogecoin profile picture.

NFD divided the ownership of a photo of Shiba Inu (Dogecoin headshot prototype) formerly known as Kabosu, totaling 100 billion copies. On the day of issuance, NFD rose to a maximum of 0.0009 US dollars, and the transaction volume in the past 24 hours exceeded 140 million US dollars.

On the day of release, this picture became the most expensive NFT with a valuation.

If the fragments of the NFT are displayed visually, then an NFD held by the investor is approximately like this:

After tearing up the NFT, the community vigorously debates NFD

Then came the leverage effect of the event. Some cryptocurrency derivatives platforms soon provided operational tools for borrowing, lending, and shorting NFD, and investors can establish short positions through Uniswap V3 and Sushiswap .

Soon, the crypto community focused its attention on the rapidly increasing liquidity after NFT fragmentation. Dog pictures NFD has become a long-lost opportunity for NFT “fragmentation”.

However, the market has polarized views on the “fragmentation” of NFTs. Is it a blessing or a curse?

The NFT version of “single order” phenomenon has “started a prairie fire”?

How did the fragmentation of NFT evolve and suddenly become popular because of this dog photo?

The early iconic case of NFT fragmentation is the painting “Everydays: The First 5000 Days”. This painting is also the holder of the most expensive NFT before NFD broke the record .

At the end of 2020, the NFT fund called Metapurse acquired 20 works in “Everydays: The First 5000 Days” and issued a total of 10 million ERC20 tokens B20 (Beeple 20 Collection) on Ethereum. On sale in two phases. Through these tokens, the NFT assets held by the fund are divided.

59% of the total B20 tokens are owned by Metapurse, and the remaining 41% is reserved for artists, partners and investors. Under such a distribution, B20 is accused of being highly centralized and has drawbacks.

But in any case, the ownership of the work has been “fragmented” and redistributed.

In this way, “partial ownership” tokens provide a solution to the liquidity problem of NFTs, allowing users to split a complete NFT into several ERC20-standard fragmented tokens. These tokens are traded through the secondary market, reducing the NFT’s cost. The difficulty of circulation also reduces the investment threshold for investors to participate in NFT and other collectibles.

In the first half of 2021, “fragmented” NFTs are slowly infiltrating the crypto community.

Under the NFT boom, a large number of popular NFT collections often cost hundreds or thousands of ETH , and the price remains high, which raises the threshold for newcomers to participate in crypto investment.

For a long time, the fragmentation of NFT has been regarded as the best way to solve the liquidity of NFT. Industry platforms such as NFTX, NIFTEX, FractionalArt, Unicly, etc., have been providing investors with easy-to-handle methods for “shredding” NFTs. tool.

In the NFT fragmentation platform NFTX, you can see many well-known NFT projects that have been “fragmented”. Among them, CryptoPUNK accounts for a large proportion.

After tearing up the NFT, the community vigorously debates NFD

(Image source: NFTX)

There are currently more than 123 CryptoPUNKs on the platform. These CryptoPUNK holders have chosen to fragment their avatars and convert each CryptoPUNK into ERC-20 token “PUNK”. Investors can purchase these avatars with PUNK as the unified pricing unit.

After tearing up the NFT, the community vigorously debates NFD

(Image source: NFTX)

The encryption community also actively explores the split of NFTs, and a new type of “NFT DAOS” community has emerged, which provides NFT management services in a niche range with the community as a unit.

Take the earlier Jenny Metaverse DAO as an example. The community consists of NFT collectors, artists, creators, projects, funds, and influential people. The ERC20 token uJenny was issued on the Unicly platform, which represents the organization Partial ownership of all NFTs purchased.

In addition, uJenny tokens have been given some new functions, such as participating in mining on the Unicly platform.

In splitting the CryptoPunk avatar, “Circle Culture” seems to have found a suitable soil. On the overseas community application platform Discord, some group owners acted as the leader, and initiated avatar “crowdfunding” through the Dao organization.

Representatives of these organizations will initiate a CryptoPunk crowdfunding. After the bidding is successful, participants will receive new tokens corresponding to their own capital contributions. With the “split tokens” in the wallet, you can directly participate in the subsequent Dao governance in Discord.

To some extent, the CryptoPunk fragments here are more like a “pass” for an exclusive community.

After tearing up the NFT, the community vigorously debates NFD

(Picture: On the social platform, an investor demonstrated crowdfunding to buy PUNK through DAO)

Through these methods, investors can partly hold the avatar known as the “Lamborghini in the NFT” for a very small fee.

What’s interesting is that in overseas communities, some NFT investors also shared their own investment logic of “fixed investment” PUNK in this way, and believe that this is “within their ability” for them.

In overseas communities, the discussion of NFD has pushed the popularity of fragmented NFT to a high point: the appearance of Shiba Inu pictures with Meme characteristics and NFD, the industry has reignited the “liquidity” and “incremental” brought by NFT fragments. “The expectation.

Affected by NFD, in just a few days, the attention of NFT investors quickly shifted to the CryptoPunk fragment.

The case of NFD provides a case for people who have spent a lot of money to buy a picture: Fragmenting and selling their valuable NFT, on the basis of owning the NFT, there is even the possibility of further profit.

Since the development of NFT fragmentation, the mainstream thinking lies in:

The NFT body is broken into pieces: like a precious painting.

Fragmentation of NFT rights and interests: rights and interests can be pledged rights, work rights, or liquidity dividend rights.

Linking NFT with other methods: such as liquid mining, NFTFi, GameFi, etc. You can see that there is still a lot of room for fragmented NFT to be mined.

It can be seen that there is still a lot of space for fragmented NFTs to be explored.

The views of the community are severely divided

Is NFT fragmentation a general trend or liquidity overdraft?

The fragmentation of NFT has become popular, allowing the market to see more possibilities of NFT in the DeFi era.

Optimistic investors see from the case of NFD that the fragmentation of NFT complements capital liquidity and capital efficiency. In the secondary market, NFD’s trading volume in the last 24 hours is still more than 10 million U.S. dollars.

After tearing up the NFT, the community vigorously debates NFD

(Data source: Coinmarketcap)

In addition, NFT mortgage lending is another long-standing difficulty on the NFT track. If NFT fragments can continue to obtain higher liquidity and serve as collateral, then the mortgage problem will be solved.

For most investors, “Everydays: The First 5000 Days”, which far exceeds 69 million yuan, is difficult to reach. The split tokens of top NFT assets may represent a development trend. Fragmented NFTs are the same as ordinary tokens, and are even easier to understand and accept. After the fragmentation of NFT lowers the threshold of investors’ participation amount, there is the possibility of feeding back the NFT ecosystem, which is an imaginative development direction.

However, there are also more rational investors who think this is a kind of “domestic baby” strategy, which transfers the investment risk to more individual or retail investors. This view believes that the “NFT is a token” model is too magical. In the fragmentation of NFT, there are still huge problems in the integrity of ownership and the effectiveness of the decision-making mechanism, and the value bubble of NFT may be amplified again.

On the other hand, although the number of fragmented NFT projects has increased recently, from the perspective of publicity, operation, promotion, etc., there is little difference from the ordinary project “issuance”. After FT is replaced by NFT, it is even issued. Invisibly avoiding many risks, these risks have undoubtedly been diverted to market investors.

This concern is not without reason. The mainstream view of the industry believes that concepts such as NFTFi and GameFi are one of the main driving factors for this round of the crypto market’s correction. The Bitcoin position “$ 50,000” is precisely the market is regarded as a “threshold”, BTC can break can not be predicted at $ 50,000 position, in this case, can support high NFT product value increases funding Limited, fragmented NFT is likely to become a shortcut for NFT whales to transfer risks and accelerate returns.

In addition, there are also analyses discussing NFT fragments from different perspectives: If the luxury attributes of these high-value NFTs are emphasized, then NFT fragments can be compared to “second-hand luxury goods”, and there is still value in collection, transaction, and circulation, which is not wrong.

What can be seen is that although NFT fragmentation projects have continued to appear before, NFD’s dog Meme pictures have become the easiest way to spread, quickly gaining liquidity in a short period of time. The NFD, which is highly colored by Meme attributes, has further opened the door to NFT fragmented cognition to a certain extent.

NFT fragmentation will continue to have positive or negative impacts on the market. More people are “paying” for these fragments, and the data on the secondary market is still being updated.


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