TokenSmart NFT Humpday Report #7: NIFTEX, or the Rise of the Shards 💎

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Welcome to the 7th issue of the NFT Humpday Report, a weekly column providing embedded analysis on the NFT economy’s biggest topics du jour. Brought to you by WIP meetup collaborators and nft42 community hub TokenSmart.

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NIFTEX, a marketplace for trading fractionalized NFTs, just announced its $500,000 seed round, which fielded investments from cryptoeconomy mainstays like 1kx, CoinFund, Digital Currency Group, and MetaCartel Ventures. The raise comes on the heels of NIFTEX quickly gaining traction since launching back in the summer. 

Source: NIFTEX

How it works: Singapore-based NIFTEX lets users easily “shard” their 1-of-1 NFTs into fractions, i.e. ERC-20 tokens. The trading of these shards is underpinned by Uniswap liquidity pools, for which NIFTEX provides a friendly front-end UI. 

Advantages:  While some NFTs can be quite illiquid, fractionalization through NIFTEX allows owners to more readily access liquidity for these assets. Conversely, liquidity providers can earn by making markets in NIFTEX’s Uniswap pools. Fractional NFTs also open up the ownership playing field for collectors of all sizes and paves the way to shards being used as decentralized governance instruments in the future. 

The backdrop: Chris Furlong, a co-founder of Mint Mobile and an investor with Ethereum-based “limited liability autonomous organization” The LAO, wrote a great overview on NFT distribution models this week. Furlong was addressing the “common complaint” that it can be difficult for some collectors to collect hot NFTs. NIFTEX is directly addressing this issue by making it easy for users to collectively own highly-sought NFTs. Citing the project, Furlong noted:

“On the collector side, community approaches can help increase access if you are willing to share in ownership. Sharding (where a piece is broken into fractional shares) can allow you to purchase a slice of an NFT on platforms like [NIFTEX].”

In the lead: With over 4,000 ETH in all-time volume to date, NIFTEX is a first-mover project when it comes to fractionalizing NFTs. It’s the team to beat in that arena right now, and they continue to gain further ground fast when it comes to winning over new users. This early success puts NIFTEX in a great position to bring lots of newcomers to the NFT economy going forward since the project’s inherently focused on widening access to NFTs. 

Assets we’ve seen: NIFTEX has seen a range of NFT assets sharded on its exchange to date, including but not limited to …

• Rare CryptoKitties

• Rare CryptoPunks

• Rare Axie Infinity pets

• JOYWORLD DONK

• A VR parcel index, MetaONEz

• A digital art index, Nifty ONEz

• And more!

What they’re saying:

• On the challenge of making NFT trading easier, company co-founder and CEO Joel Hubert told CoinDesk: “I see from crypto people regarding NFTs [with] the same type of skepticism I see from people outside of crypto looking at bitcoin. Trading NFTs is hard, especially compared to a cryptocurrency that is fungible.”

• CoinFund founder and CEO Jake Brukhman said: “We can think of NFTs as liquid property rights for digital content, and in the future this tokenization extends to nonfungible financial assets as well as real-world physical goods. NIFTEX is one of the first companies to explore the financialization of the NFT space through fractionalization, liquidity, indices, and beyond. We are very excited to support their efforts.”

• 1kx founding partner Lasse Clausen said: “We believe that NIFTEX and the fractionalization of NFTs will likely unlock an entire area of whitespace for experimentation and composability of NFTs with DeFi and the rest of Web 3.”

What comes next: NIFTEX is currently in the process of developing an optimized and further decentralized V2 system, which is slated to be released in early 2021. As such, the new $500k in funding will help the team deliver on its immediate roadmap plans. 

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Thanks for reading the 7th NFT Humpday Report! Check back this time next week for more excellent NFT ecosystem coverage! Cheers🌠