Eagle-eyed followers within our community will have noticed us talk about fractionalised collectibles in our Q3 progress update report. What are fractionalised collectibles, and is there cause for excitement? This medium article will address the need-to-knows relating to the vision behind fractionalisation, which we believe will disrupt the NFT space in the not-too-distant future. Let’s dig into it.
So what makes Fractionalisation so disruptive? As we have previously discussed, the Altr marketplace enables collectible enthusiasts to enjoy a frictionless purchasing experience in various luxury categories, all on the blockchain and paid in cryptocurrency. You may have seen similar concepts on the market but let us assure you that there is a key differentiating factor with the Altr platform — the Oracles.
While most blockchain Oracles transmit trusted real-world data across blockchain nodes, the Oracles on Altr help verify the legitimacy of luxury collectibles, where each Oracle on Altr platform must be voted in by the DAO and are required to hold a minimum LCD token amount. Each oracle must maintain an exceptional reputation in the luxury space and have a historical record of operating in good standing (learn more here). This guarantees that the items traded on the platform are authentically of the highest quality, and the rarest kind. ICYMI, have a look at our latest twitter threads to get an idea of the types of collectibles you can expect to see on the Altr marketplace.
But how does this connect with Fractionalisation, I hear you ask?
Well, what if you are an aspiring collector who dreams of owning a classic timepiece, something extraordinarily unique like perhaps a Patek Philippe Reference 2499 or a Rolex Cosmograph Daytona “Paul Newman Oyster Sotto”? You want it, but you can’t get your hands on one because of its rarity or simply because you are still aspiring to be a collector. Or what if you look at luxury collectibles as an individual seeking to diversify across asset classes as a hedge against market volatility? Did you know that investment firms represent about a third of luxury collectible purchases, a trend that is increasing due to the recent surge in inflation?
Fractionalisation democratizes access to high-end and rare luxury collectibles for the collector, aspiring collector, crypto bro, and maybe even the average joe, who may not want the hassle of dealing with the physical asset and the logistics that go hand in hand with that, while still benefiting from “fractional” ownership of an asset class that continues to expand, and perform strongly in times of relative uncertainty. All of this will be possible with asset-backed NFTs and smart contracts, which our developers have been working tirelessly to deliver for the launch in December.
Fractionalisation democratizes access to high-end and rare luxury collectibles for the collectors.
Let’s get creative and paint a picture — Think of an item that transports you to a different time, maybe even back to your childhood. Something that epitomized, maybe at that time, the pinnacle of quality, class, or luxury. For instance, in our last twitter thread, we highlighted the sports car of the century, the Mercedez-Benz 300 SL. Another example is that you cannot be a kid from the 80s or 90s without having owned a Ferrari F40 toy car. Everyone knows it, and everyone loves it, but not everyone can own it…
Enter the Fractionalisation functionality on Altr. Imagine owning an asset-backed NFT, that gives you the right of ownership over a Ferrari F40. Now imagine instead of one NFT, there are thouands of NFTs that represent fractional ownership of that same F40, enabling access and ownership to that coveted “treasure” beyond one exclusive individual. While this is beneficial for the investors/collectors, it is also beneficial for vendors as it injects a wave of new liquidity into a traditionally non-liquid market.
The vision of Altr is to deliver a seamless customer experience when accessing luxury collectibles.
Want to buy a classic timepiece or a unique luxury car? No problem; our Oracles will supply the highest quality luxury items to the platform, carefully vetted and supported with authentication.
Don’t want delivery of the physical item? Sure; our Oracles can store the collectibles in their caveaus and take care of all logistics while you benefit from its ownership through the NFT.
Don’t want to splurge on an entire luxury item quite yet? Don’t worry; we’ve got you covered. Buy a fraction and stack fractions to build your percentage ownership if you want to.
What if I bought a fractional NFT but want to own the entire item?
We are building functionality whereby if an investor/collector has an absolute majority of the fractions in circulation (51%), they can become exclusive owners of the item by buying out remaining fraction holders. This will grant them access to the whole NFT, representing full ownership of the item, stored in a vault. Altr would ensure a fair fraction price, computed through a deterministic formula that considers both on-chain and real-world market movements. Fraction holders would have the ability to burn their “liquidated” fractions and recoup their share in USDT.
Talk tech to me…
By following recognized Ethereum standards (ERCs), the Altr protocol provides the possibility to trade and share fractions on virtually any NFTmarketplace. DAOs and third-party protocols are encouraged to build on the Altr system to let the community use physical-item-backed NFTs and fractions exactly as they please. The Fractionalisation process is built on ERC1155 smart contracts and ERC721 NFTs.
If you want to learn more about the tech, jump into our discord, and we’ll happily answer any questions. We may even release a tech-focused article, so make sure you let us know if this is of interest, and we will happily oblige.
What does the future hold?
The function of NFTs extends far beyond what they became trendy for. The next wave of NFT hype will be Asset-backed, and while Fractionalisation offers disruption in and of itself, it doesn’t stop there. As long as the assets can be credibly priced in the “real world” (ahem..Oracles), they can be collateralized. Think about the potential applications and where we are going in this space 👀.
By the way, implementing the Fractionalisation functionality is no joke and was actually the primary driver behind the Altr marketplace’s delayed launch. While we will not bore you with the details, the core team spent significant time and effort in collaboration with MME Legal to ensure that all functionalities on the marketplace will be supported by a robust legal framework, which is critical given the nature of the luxury items and world-class Oracles we will be working with. The Fractionalisation functionality proved to be the most complex component to navigate from a legal point of view, but we have been able to attain the necessary comfort that the dApp is being built in line with the current regulations.
If you found this article useful and want to learn more, give us a follow on our socials: https://linktr.ee/Lucidao
Look out for the launch of the Altr Instagram page which will be announced soon and as well some giveaways which we will announce exclusively in our discord.
Brace yourself for disruption 🚀