In the previous article "Guide to how to play NFT" (Click to review), we mentioned that for beginners to participate in NFT investment, in addition to directly buying NFT assets, there is another relatively unpopular way, which is to invest in partial ownership tokens of NFT, such as NIFTEX’s Sharded NFT, or Metapurse’s B20 tokens .

Partial ownership tokens are a fragmented solution to the NFT liquidity problem, which allows users to split a complete NFT into several ERC20-standard fragmented tokens, and these tokens can be traded on the secondary market, Reduced the difficulty of NFT circulation.

This "split" of NFT is essentially to host the NFT in a smart contract, and then issue ERC20 standard tokens based on this split, and users can price the split tokens by themselves.

The new price generated by ERC20 shards in each transaction will be fed back to the overall NFT, that is, the price of NFT is constantly updated with the update of the shard price, providing a price discovery function. In addition, every time the split NFT fragments are circulated in the secondary market, part of the proceeds will be distributed to the creators, reserved as royalties, and the authors can claim them from the platform.

On the one hand, the fragmentation of NFT reduces the threshold for investors to participate, allowing more people to enter the NFT ecosystem and promote its development. On the other hand, it enhances the liquidity of NFT artworks, allowing creators to obtain more More income, so this is a very friendly solution for both investors and art creators.

This article will introduce how NFT fragmentation can improve social tokens.

Over the past few months, interest in social tokens has also been reignited due to the rapid development of NFTs. This article is both a reflection on the development of social tokens in the past year, and a reflection on how NFT will shape the future of social tokens.

Currently, the value of social tokens lies in the ability to set access thresholds for certain portals by holding tokens. For example, when you hold a certain amount of a certain social token, you can access some private channels in Discord that gather top figures in the crypto field. This method became popular in the summer of 2020, and people can use a Discord bot called Collab.Land to set token holding thresholds for the community.

I once launched a social token called "JAMM", and I also tried to set the token holdings of JAMM as the threshold for reading my blog articles. For example, to read my weekly blog articles, you need to hold 100 coins, about $50. While issuing social tokens led to better price discovery for my content, I quickly discovered that I was unable to capture any value from the content I wrote, and content dissemination was extremely limited due to barriers to entry. Big restrictions.

All in all, although social tokens set the access threshold for users who hold tokens, they lack the ability to continuously create value. This method has at least the following problems:

• No consensus on value: It is difficult for early-stage token holders to reach a consensus on how much value community development will bring;

• Lack of incentives: Anyone with enough tokens can join the community, but there are no incentives to encourage them to contribute to the community. ;

• NFT Fragmentation

NFT Fragmentation

For a long time, the fragmentation of NFT has been regarded as the best way to solve NFT liquidity.

Some platforms are working in this direction, such as NIFTEX, which can break down NFT into pieces, so that ordinary collectors can also participate in expensive collection investments. Although these platforms have made good progress, most people still have doubts - "Why should I buy a small share of fragmented art?"

This problem arises because some key elements are missing to create demand for NFT fragmentation, such as perpetual royalties.

The concept of NFT's permanent royalties was first proposed by the SuperRare team, and later platforms such as Zora also adopted this idea, introducing the function of setting NFT royalties.

NFT creators will have two choices in the future: independent creation or collective creation.

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asset-centric

The issuance of social tokens must first be centered on "assets", not communities.

Instead of issuing social tokens around a community or an idea, tokens can be issued in lieu of copyrights on works. This will allow community members to have a clearer goal (such as selling NFT at a better price), rather than the so-called "hold on, the team is working" that is vague and can be delayed indefinitely.

In the beginning, you can use these fragmented shares to create a portal access medium like Collab.Land, so that the holders of the shares have a short-term consistent goal. When the NFT is successfully sold, these fragmented share holders will be paid in proportion to the number of tokens they own.

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Whole or Fragmented

With the development and popularization of the above-mentioned model, creators will choose to fragment the royalty income in order to allow more people to own their works. In the future, there may be two types of buyers: "overall NFT" buyers and "fragmented NFT" buyers. "NFT" buyers.

If you are not sure about the future value of this NFT asset, but just want to earn royalties by helping its successful sale, then you can buy "fragmented NFT"; Claim that you own it, then you can buy the "whole NFT".

The most critical difference is that, because of a clearer goal, NFT fragmentation will encourage buyers to make more contributions to the sales of NFT works.