Unicly Uses Sushi’s Miso Auction Tools To Deepen Fractional NFT Liquidity – Bitcoin News

As Unicly drives NFT combination, fractionalization and trading, an integration with Sushiswap’s auction platform is intended to promote better pricing conditions for utoken creators and buyers.

Working together to improve the NFT pricing process

Despite the cooling hype surrounding NFTs, there has been no shortage of innovation in this area as non-fungible token projects explore other use cases. In line with the fractionalization that blockchain technology defends in other areas, emerging projects are using similar methodologies in the NFT area.

Fractionation of NFTs effectively means breaking up a single NFT or a collection of NFTs into smaller fractions that can be bought and sold in primary and secondary market transactions. Rather than having users spend huge sums of money on a single NFT, this solution provides investors with a convenient way to showcase the work or collection of works and own a fraction of the property.

Unicly, a permissionless protocol, is designed to help NFT holders combine NFT collections, fractionate collections by minting utokens, and token offerings through its automated market maker platform (a type of decentralized exchange, or Dex ) to facilitate. Currently, the log contains over $ 65 million worth of NFTs from various collections.

One of the challenges the project has encountered is that the owner of the NFT (s) minting utokens has to provide all of the capital in the form of liquidity to market the tokens, which means that they assume all of the risk directly. The decision to adopt the MISO auction method from Sushi is intended to alleviate this pressure on sellers.

Miso, a tool in the sushi swap stack, can be viewed as a launchpad that effectively follows a model similar to an IPO in traditional financial markets or an Initial Dex Offering (IDO) in crypto markets. Aside from giving Unicly users the ability to monetize their stocks by raising the necessary capital to provide liquidity for secondary trading in fractional NFTs, this method can also enable better pricing.

Token illiquidity can be a significant problem. In the absence of sufficient liquidity, the market function can create price pressures that burden final buyers by increasing costs and preventing broader participation in offers or secondary market transactions. With the sushi technology in combination with the Unicly method, fractional NFT sellers and buyers can theoretically benefit practically from the additional liquidity of the solution.

Going forward, the partnership could also benefit Sushi’s upcoming NFT platform called Shoyu. Meanwhile, the compound can encourage double listings of fractional NFTs while improving incentives for liquidity providers and increasing pricing in traditionally thin markets.

Fractionation hurdles remain

While fractionation can help individuals diversify their funds into areas such as the fine arts, which have traditionally been off-limits to retailers and investors, the process is not without its drawbacks. One of the main points that critics have jumped on is the issue of rights.

When a buyer purchases a fraction of an NFT, the question remains what rights do they have as the owner? As this is still a young and relatively undefined area, fractionation can be very opaque given the limited public information available from each token.

These efforts have also raised legal considerations, particularly by the SEC, that could characterize it as a security or investable product, requiring more documentation and further steps related to offerings.

The other question relates to the security and technical soundness of the breakdown of these NFTs and the ability to recombine them later. Unfortunately, problems have arisen in both of these areas in the past, which is why it is particularly important for fractionalization companies to address the issues and explain how their technologies overcome these pitfalls.

Will fractionation of NFTs make you buy your first NFT? Let us know in the comment section below.

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