NFTs have taken the tech world by storm. Now, as the technology continues to progress, we are finally seeing the market adjust. As a result, blue-chip NFTs continue to reign supreme over a majority of lesser know NFT projects; making them unattainable for most people due to their high price tag. That’s where fractionalization platforms like Nibbl.xyz can help.
Nibbl.xyz is an NFT fractionalization platform used to democratize access to sought-after NFTs. They offer guaranteed liquidity on tokens and a price-based buyout rejection game that uses continuous tokens to achieve token distribution.
As if NFTs aren’t confusing enough, fractionalizing an NFT can be even more complicated. Nibbl.xyz aims to make the fractionalization process so simple a caveman could do it (or at least I’d like to think so). Below, we will explore Nibbl.xyz and the benefits of the platform.
What is Nibbl.xyz?
The Nibbl.xyz platform was created to make owning the most sought-after NFTs a reality, even if you can’t afford to buy the entire NFT outright. Instead, Nibbl allows you to buy, sell, and trade fractionalized shares of NFTs.
This allows more people to invest smaller amounts into pricier projects and helps the NFT community grow at large. Additionally, you can trigger a buyout, and the community has the power to cancel the bid through a buyout rejection game. Individual token holders are able to redeem their tokens for ETH at the buyout valuation.
Besides simply logging into Nibbl.xyz and buying shares of NFTs, their token-gated social feature enables you to chat with other buyers, as well. This feature allows you to go beyond just holding tokens, and enables you to become part of a much larger community.
Currently, Nibbl is in its beta phase. That means it is operating on the Rinkeby Test Network and is not live on the Ethereum mainnet, yet. As an incentive for users to test the beta, Nibbl is offering a rare POAP NFT that will have utility in the Nibble ecosystem.
How to use Nibbl.xyz
There are several functions of the Nibbl.xyz platform. Below we will take a look at each one.
Fractionalize your NFTs
As the owner of NFTs, you can use Nibbl to fractionalize your NFT collection. Fractionalizing your NFTs using Nibbl is easy. Below I will walk you through the steps to successfully fractionalize an NFT.
- Go to Nibbl.xyz
To fractionalize your NFT, go to Nibbl.xyz to get started.
- Connect your wallet
Next, connect your Web3 wallet to Nibbl.xyz. To fractionalize your NFT, you need to connect your Web3 wallet to the Nibbl website.
- Select Fractionalize
Tap on the Fractionalize button to begin the fractionalization process. Choose an NFT from your collection to fractionalize. (You can fractionalize a single NFT or a group of NFTs.)
- Fill out the fractionalization details
Fill out all the required info needed to fractionalize your NFT. (Name, symbol, initial token supply & price, initial liquidity, description, and the minimum buyout date.)
- Fractionalize your NFT
When you fractionalize an NFT, you will receive a certain number of fractionalized tokens (defined by you). In order to account for those tokens, Nibbl needs corresponding funds to back them.
You can add the complete sum of required funds (i.e. 20% of valuation), but sometimes this amount can be considerable, especially when fractionalizing high-value NFTs. So you can add lesser funds that need to be in a defined range.
You can also watch this video on YouTube—created by the Nibbl team—which displays exactly how to fractionalize an NFT using Nibbl.xyz.
Sell fractionalized NFTs
Once you have fractionalized your NFT(s), you can sell them to others looking to invest in your NFT. As the curator who fractionalizes the NFT, you receive a portion of each trade as a royalty fee.
Buy fractionalized NFTs
To buy a fractionalized portion of an NFT, connect your Web3 wallet and then select the NFT you want to buy. Then, you get to choose how much ETH you want to pay and you will receive an equivalent amount of the fractionalized token.
Buyout Game
If you want to buy the locked fractional NFT without having to buy all the fractional tokens, then you can use the Buyout Mechanism.
This mechanism allows anyone to attempt to unlock the fractionalized NFT from the smart contract by triggering a buyout and participating in the buyout game.
The Buyout Game allows fractionalization to work smoothly as a two-way process. The game has three stages and three types of players.
- The Whale is the person who triggers the buyout.
- The Fish are the people who want the NFT to remain fractionalized.
- The Crabs are people who want the buyout to succeed.
Stage 1: As a whale, you deposit money at the current valuation minus the existing liquidity of the fractional tokens. For example, if the token price is 1 ETH, the supply is 100, and liquidity is 10 ETH, the whale deposits 100*1 = 100 ETH – 10 ETH = 90 ETH. After the deposit, a 120-hour timer begins.
Stage 2A: Fish come together to buy more fractionalized tokens to increase the NFT valuation.
Stage 2B: If there is no buying pressure from the fish, the crabs don’t need to do anything. If there is, the crabs can sell their tokens to decrease the valuation. If the buyout is a success, then crabs get more value on their tokens, as they sold them at a higher valuation than the buyout valuation.
Stage 3A: If there is enough buying pressure and the valuation increases more than 15 percent, of the buyout bid before the timer expires, then the buyout is rejected. As a result, the NFT remains fractionalized and the community is able to continue trading their tokens.
Stage 3B: If the valuation does not increase by more than 15 percent, the buyout is a success! Trading in the bonding curve stops and token holders can redeem their tokens. As well, the Whale is now able to unlock the NFT(s) from the contract.
This game is not only useful, but it is a fun way to operate the buyout mechanism.
NOTE: Anyone can fractionalize an NFT. As a result, there might be fake NFTs listed for sale on Nibbl.xyz. Nibbl attempts to expose these fake NFTs by giving them a NOT VERIFIED badge. You should always double-check the blockchain to verify that the fractionalized NFT you’re buying is authentic.
How much does it cost to use Nibbl.xyz?
The only fee you have to pay to use Nibbl.xyz is a gas fee (transaction fee). However, the protocol contains three different types of fees depending on what you’re doing. Admin Fee (to the team), Curator Fee (to the curator of NFTs), and Curve Fee (used to fill the gap in required liquidity and current liquidity).
Unfortunately, gas fees are something that can’t be controlled by a platform, it is simply the fee that’s set by the Ethereum network to complete transactions. As far as the other fees, they are a required step to ensure that Nibbl.xyz is safe and fair for all users.
How secure is Nibbl.xyz?
Nibbl.xyz is safe to use because it locks your NFT into a secure smart contract. Then, the NFT is divided into multiple ERC-20 tokens that are tied to the main NFT. Additionally, the Buyout Mechanism only allows the full release of a complete NFT once the required funds are deposited.
The only risk comes from the possibility of a bug in the fractionalization smart contract. If there is a bug, then the likelihood of the NFT being compromised is much higher.
Furthermore, Nibbl.xyz is implementing a bug bounty (an open invitation to security researchers to discover and disclose potential vulnerabilities in smart contracts and applications, thereby protecting the platform and its users.)
During an interview I had with Arnav—the founder of Nibbl.xyz—he reassured me that the security of Nibbl has been one of the main focuses from day one. He has been in the Web3 space for many years, and he and his team understand what it takes to build a safe protocol. In other words, this isn’t his first rodeo folks.
Key takeaways
At the end of the day, Nibbl.xyz isn’t just an NFT fractionalization platform. Nibbl is a platform curated for NFT collectors, creators, and investors alike. Let’s take a look at some of the key benefits for each kind of individual.
Collectors
- Increase the liquidity of your NFTs
- Fractionalize NFT bundles
- Create your own NFT community
Creators
- Back your social tokens with NFT sales
- Create more efficient creator DAOs
- Reward early buyers with continuous tokens
Investors
- Experience increased community ownership
- Get guaranteed liquidity on tokens
- Add utility to fractions with a token-gated chat
Fractionalizing an NFT can be done for various reasons. One thing is for sure though is that always want to use a platform like Nibbl when dealing with assets. Especially if they are valuable.
Nibbl is backed by industry leaders including Sandeep Nailwal (Polygon Co-Founder), Sebastien Borget (Co-Founder & COO The Sandbox), Stefan George (Co-Founder & CTO Gnosis), and Sachin Tomar (Co-Founder & CTO Biconomy).
To learn more about Nibbl.xyz and to stay up to date on their progress, make sure to hop in Nibbl’s Discord community and say hello. Also, make sure to follow Nibbl on Twitter for continuous updates.