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Jul 07 • 17 mins
Blockchain NFT

What are fractional NFTs and how you can benefit from them 

Introduction

NFT

Fractional NFTs let you buy a share of expensive digital assets like iconic artworks, virtual land, or rare collectibles without needing millions. By splitting an NFT into smaller parts, anyone can invest, trade, and benefit from its potential growth.

In this guide, you’ll learn:

  • What fractional NFTs are and how they work
  • Why they matter to collectors, investors, and platforms
  • Real-world examples and platforms leading the way

Whether you’re new to NFTs or looking to build your own platform, this article will show how fractional ownership is reshaping the digital asset world.

What is a Fractional NFT?

A fractional NFT is exactly what it sounds like — a small, tradable piece of a full NFT.

Normally, NFTs (non-fungible tokens) represent unique digital assets that are owned entirely by one person. But what if that NFT is worth $1 million? Most people can’t afford that. That’s where fractionalization comes in.

Through a smart contract, the original NFT is locked and split into multiple fractions, each represented by its own token — usually based on the ERC-20 standard. These new tokens act like shares of the NFT, allowing multiple people to own a piece of the same asset.

Here’s how it works in simple terms:

  1. The original NFT is sent to a smart contract.
  2. The contract issues new tokens that represent fractions of that NFT.
  3. Anyone can buy, sell, or trade those fractional tokens on supported marketplaces.

It’s similar to buying shares in a company, except here, you’re investing in a rare digital artwork, a collectible, or even virtual real estate.

How Does NFT Fractionalization Work?

Ethereum

Fractionalizing an NFT involves locking the original asset in a smart contract and creating fungible tokens that represent ownership shares.

Here’s a step-by-step breakdown of how it works:

Optional Buyout or Redemption
Some platforms offer a buyout mechanism: if one user wants to own the full NFT again, they can offer to buy all fractions at a given price. If enough token holders agree, the smart contract releases the NFT to the buyer, and everyone is paid out based on their share.

The NFT is Locked
A high-value NFT (like a digital painting or in-game asset) is transferred to a smart contract. This contract holds the NFT securely and ensures it can’t be transferred or altered during the fractionalization process.

Fractional Tokens Are Created
The smart contract issues a fixed number of new tokens — usually ERC-20 tokens — that represent ownership fractions of the locked NFT. For example, if 1,000 tokens are created, each token represents 0.1% ownership.

Ownership Is Distributed
These fractional tokens can be sold or distributed to multiple investors through a launchpad, auction, or direct sale. Token holders now share partial ownership of the original NFT.

Trading on Secondary Markets
Once distributed, the tokens can be listed and traded on decentralized exchanges (DEXs) or specialized NFT marketplaces. This gives holders the flexibility to buy more shares, sell at any time, or hold as an investment.

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This process is powered entirely by smart contracts, ensuring transparency, security, and automation — no middlemen needed. Fractionalization opens up new ways to invest in NFTs with lower risk and higher liquidity.

What’s the Difference Between Fractional NFTs and Traditional NFTs?

The core difference is simple:
Traditional NFTs represent 100% ownership of a unique digital asset.
Fractional NFTs allow shared ownership by splitting that NFT into smaller, tradable pieces.

Let’s break it down further:

FeatureTraditional NFTsFractional NFTs
OwnershipSingle ownerMultiple owners
LiquidityOften illiquid (hard to sell)Higher liquidity via secondary markets
AccessibilityExpensive, limited to wealthy buyersAffordable for smaller investors
Use CaseArt, collectibles, gaming assetsSame, but with shared access
Token TypeERC-721 or ERC-1155Usually ERC-20 (fungible)
Trading ModelOne-off salesOpen trading of ownership shares

Example:

A traditional NFT of a rare Beeple artwork might sell for $1 million to a single collector.
The same NFT can be fractionalized into 10,000 tokens, each priced at $100, allowing thousands of people to invest, trade, and co-own the asset.

Fractional NFTs bring the democratization of ownership. They lower the barrier to entry and make it possible for everyday users to invest in high-value digital assets that were once reserved for whales and institutions.

Benefits of Fractional NFTs

Lower Barrier to Entry

You don’t need thousands (or millions) of dollars to invest in valuable NFTs. Fractionalization allows anyone to own a piece of a top-tier asset with just a small amount of capital, sometimes as little as $10 or $20.

Increased Liquidity

Traditional NFTs can be hard to sell due to their high price and niche market. Fractional NFTs, on the other hand, are easier to trade on secondary markets, offering more liquidity and quicker transactions for investors. 

Efficient Price Discovery

Traditional NFTs can be difficult to price accurately, as their value is often subjective and can vary widely based on factors such as rarity, historical significance, and cultural relevance. Fractionalizing NFTs can help to establish a more transparent and objective pricing mechanism, as investors can buy and sell fractions of the NFT based on market demand and supply.

High liquidity

Fractionalization allows investors to buy and sell fractions of NFTs more easily and at lower transaction costs, as they do not have to find a buyer for the entire asset. This increased liquidity can lead to a more efficient price discovery mechanism, where the price of the fractionalized NFTs is based on market demand and supply.

Democratized Access

Investors from around the world, regardless of net worth, can now participate in owning iconic NFTs, digital art, or in-game assets. This levels the playing field and fosters a more inclusive NFT ecosystem.

Monetization for Creators

NFT owners can generate revenue without selling their entire asset. By fractionalizing and offering shares to the public, they can retain partial ownership while benefiting from the asset’s appreciation and community engagement.

Risks and Considerations of Fractional NFTs

While fractional NFTs offer exciting benefits, they also come with risks that both investors and creators should be aware of. Here’s what to consider before diving in:

Market Volatility

NFT prices can be extremely volatile. Even fractional ownership doesn’t protect you from sudden drops in value caused by market hype, speculation, or loss of interest.

Smart Contract Vulnerabilities

Fractionalization relies on smart contracts to lock the original NFT and issue shares. If the contract contains bugs or vulnerabilities, funds could be lost or the NFT could become inaccessible. Always ensure the platform is audited and trustworthy.

Regulatory Uncertainty

Fractional NFTs may be viewed as securities in some jurisdictions, which could lead to legal complications or future restrictions. Regulation around NFTs and tokenized assets is still evolving and varies from country to country.

Illiquidity in Niche Assets

Although fractionalization increases liquidity, this only works if there’s enough demand. If the underlying NFT isn’t popular or widely recognized, it may be difficult to sell your fractions — even at a loss.

Platform Risk

Most fractional NFTs are created and managed through third-party platforms. If that platform goes offline, gets hacked, or is mismanaged, your investment could be at risk. Always research the platform’s reputation, security, and community trust.

Ownership and Governance Questions

Owning a fraction doesn’t always come with decision-making power. Who decides when to sell the full NFT? How are royalties or proceeds distributed? Not all platforms handle governance the same way — and lack of clarity can lead to disputes.

Key Takeaway:

Fractional NFTs are a promising innovation, but like any investment, they come with risk, complexity, and uncertainty. Do your research, choose reputable platforms, and only invest what you’re prepared to lose.

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Use cases of Fractional NFTs

Metaverse

F-NFTs and gaming

Axie Infinity
Rare Axies, sometimes valued in the tens of thousands, were fractionalized, allowing new players and investors to get involved with minimal capital.

NFT Game Items & Lands
In-game assets across various Web3 games have been split into fractions, enabling shared ownership and community-driven play-to-earn models.

Why it matters:
Fractional NFTs lower the barrier to entry in blockchain games and make rare items more accessible and tradable.

Axie infinity

NBA Top Shot

A blockchain-based platform for officially licensed NBA highlight moments. Some of its most iconic NFTs have sold for over $200,000 — and several of these moments have been fractionalized on platforms like Otis and Nifty Gateway, allowing fans to co-own a piece of basketball history.

Why it matters:
Sports fans can now become part-owners of iconic game moments, combining fandom with digital investment.

F-NFTs and the Metaverse

Decentraland & The Sandbox
Plots of virtual land have been fractionalized so that groups of users can co-own, co-develop, or rent digital real estate.

Why it matters:
Shared ownership is a core pillar of metaverse economies, and fractionalization helps scale that vision.

F-NFTs and Alternative Assets

  • WithOtis
    This platform fractionalized sneakers, streetwear, and pop culture items like sports memorabilia — bridging the gap between traditional collectibles and Web3 investment.

Why it matters:
Fractional NFTs are expanding beyond digital assets into the physical world, transforming how we think about ownership and investing.

F-NFTs and art

Beeple’s “Everydays: The First 5000 Days”
After selling for $69M at Christie’s, a portion of this iconic artwork was fractionalized, giving smaller investors access to one of the most valuable NFTs ever created.

CryptoPunks
Several high-value punks have been split and sold on platforms like NFTfi and Otis, allowing users to own a share in this legendary collection.

Why it matters:
Fractionalization democratizes access to blue-chip digital art that was once limited to ultra-wealthy collectors.

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Top Fractional NFT Platforms

If you’re looking to buy, trade, or launch fractional NFTs, several platforms are already leading the way. Each offers unique features tailored to different use cases — from digital art to collectibles and real-world assets.

Fractional.art

fractional.art

Fractional.art

Blockchain: Ethereum

Focus: High-value digital art

Features: Tokenizes NFTs into ERC-20 shares; includes a community-driven buyout system.

Why use it: One of the first and most trusted platforms in fractional art ownership

NFTfy

nifty

NFTfy

Blockchain: Binance Smart Chain (BSC)

Focus: NFT fractionalization + DeFi tools

Features: Fractional ownership, governance via NFTFY token, and integration with DeFi protocols.

Why use it: Low gas fees and built-in DAO governance.

WithOtis

withotis

WithOtis

Blockchain: Ethereum

Focus: Alternative assets (sneakers, collectibles, streetwear)

Features: Offers curated drops of real-world assets converted into fractional NFTs.

Why use it: Bridges the physical and digital — ideal for collectors and lifestyle investors.

The Future of Fractional NFTs

Fractional NFTs are still in their early days, but the potential they hold is enormous. As the NFT ecosystem matures, fractionalization is likely to become a standard feature, not just a niche innovation.

Mainstream Adoption

More investors are discovering NFTs, but few can afford the top-tier assets. Fractionalization provides a gateway for broader participation, and we can expect more platforms, wallets, and marketplaces to support this model natively.

Expansion Into Real-World Assets (RWAs)

The concept of fractional ownership isn’t limited to digital art. In the future, real estate, luxury goods, intellectual property, and collectibles (like cars, watches, or wine) could all be tokenized and sold as fractional NFTs, making traditional markets more liquid and accessible.

Financial Products and DeFi Integration

Fractional NFTs could evolve into financial instruments — think NFT-based index funds, ETFs, or even NFT-backed lending protocols. They could be integrated into DeFi ecosystems, used as collateral, or pooled into investment baskets.

Improved Governance Models

Future platforms may offer more advanced governance tools for fractional owners — enabling voting rights, shared revenue decisions, and transparent buyout processes. This will create a more democratic and community-driven ownership experience.

Cross-Chain Compatibility

Currently, most fractional NFTs live on Ethereum. But with growing interest in chains like Polygon, Solana, Flow, and TON, cross-chain solutions will likely emerge — enabling broader interoperability and lower gas fees.

Legal Clarity and Regulation

As regulators catch up with innovation, clearer legal frameworks for fractional NFTs will help build trust and legitimacy, encouraging institutional participation and new forms of compliant ownership models.

Fractional NFTs are transforming how we think about digital ownership. They represent a shift from exclusive access to shared value — and in the coming years, they’ll likely reshape not only the NFT market but entire industries.

If you’re building something in this space — whether it’s a marketplace, investment tool, or NFT-powered product — fractionalization could be the key to unlocking mass adoption.

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Ready to Build Your Own Fractional NFT Platform?

Whether you’re an NFT creator, startup founder, or investor looking to bring innovative digital ownership models to life — we can help.
At ND Labs, we specialize in building secure, scalable platforms for fractional NFTs, marketplaces, and tokenized assets.

Let’s bring your idea to market — faster and smarter.
Contact our team to discuss your project today.

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    About the author

    Dmitry K.

    CEO and Co-founder of ND Labs
    I’m a top professional with many-year experience in software development and IT. Founder and CEO of ND Labs specializing in FinTech industry, blockchain and smart contracts development for Defi and NFT.

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