I. NFT Problems and Their Solution
Starting from 2020, Non-Fungible Tokens captured the attention of crypto natives. By 2021, the NFT trading volume increased significantly. In July–September, it reached a peak and then entered a stable period. In early 2022, the NFT trading volume surged, and the whole NFT market came into movement. Countless media outlets published reports on artists and celebrities who issued or bought NFT. The NFT market exploded.
Source: NFTGO
As NFT became globally popular, the floor price of CryptoPunks, BAYC, Azuki, etc. blue-chip NFTs rose continuously. At launch, BAYC was sold for just 0.08 ETH. At the time of writing, their floor price is around 100 ETH. NFT price records were broken one after another. Due to the FOMO, new projects became blue chips in no time. However, the majority of users in the market can’t afford to pay sky-high prices. As a result, NFT holders are unable to find buyers and sell their NFTs. This leads to the deadliest problem for NFT, the lack of liquidity.
Source: OpenSea
Unlike fungible tokens, NFTs are unique and cannot be divided or exchanged freely; therefore, NFTs are illiquid. According to the principle “the rarer, the more expensive,” NFT prices became sky-high. To solve this issue and lower the entry threshold for ordinary users, but at the same time keep NFTs scarce, Confti proposed a comprehensive solution for NFT crowdfunding and division.
II. Confti, the Integrated NFT Crowdfunding, and Division Protocol
Confti is an open protocol (platform) consisting of a series of smart contracts that operate on Ethereum. It builds a one-stop decentralized solution and application for NFT issuance, crowdfunding, division, renting, collateralized lending, and trading so as to cater to the needs of NFT investors.
Source: https://www.confti.club/
Confti has already launched the NFT Party (crowdfunding) and Division (fractionalization) solutions where investors can raise funds to bid at auctions or directly buy scarce and expensive NFTs and divide them into fungible Parts. Simply speaking, groups of like-minded investors can gather together, form a consensus group, and co-finance a purchase/auction of some NFT. After they buy/win an NFT, it is locked in a smart contract, and Parts (tokens) of equivalent total value are minted. Investors get their ERC-20 or ERC-1155 Parts according to the share of funds they provided and have the respective partial ownership rights for the NFT. In other words, they jointly own the NFT, including its dividends, governance voting rights, airdrops, and other benefits. Naturally, if another investor Party buys/wins the NFT and your Party loses, the funds provided for the Party are returned to the funders. See this rundown:
Investors raise funds🡪NFT auction/buyout🡪NFT lock-up, issuance of Parts🡪Distribution of Parts among the investors
Compared to Parties, Division is simpler. The NFT holder (an individual or a group) locks the NFT in a smart contract on Confti, sets the respective parameters (e.g., the name and supply of Parts), and mints Parts as ERC-20 or ERC-1155 tokens. After that, investors can trade Parts on DEX, CEX, and NFT marketplaces. When someone buys Parts, they get partial ownership of the NFT and can share benefits like dividends and the right to govern the price.
The holder locks up the NFT and mints Parts🡪Investors buy Parts
As you can see, no matter if it is Parties of Division, the NFT must be locked in a smart contract. There is no custody by people; the investors’ ownership rights for the NFT are effectively protected; the NFT cannot be misappropriated or put in private possession. Of course, reading this, you still have questions like “how do I find like-minded people?,” “what does partial ownership include?,” “what is the utility of Parts?,” and so on.
Unlike other NFT crowdfunding/fractionalization platforms in the market, Confti solves these questions with a DAO solution. It offers DAO governance tools to help individuals with the same consensus gather together and jointly buy NFTs. Buyers of NFT Parts can implement decentralized governance through communication in the community, proposals, and voting to decide on the NFT reserve price, dividends, development direction, and brand use cases together. Buyers can also access the holder details, trading volume, and activity indices of Parts through on-chain data of the DAO smart contract.
Regarding the innovative development based on the composite model “NFT Division + DAO,” Confti representatives expressed: “Our aim is not just NFT division. We must consider every NFT division project an NFT DAO, promote better development of each NFT DAO on Confti, and expand their consensus and brand power.”
III. Confti Uses the NFT Bottleneck for Innovative Transformation of NFT Finance
Due to uniqueness, NFTs are illiquid and non-interchangeable, which limits their financialization and development scope. To this respect, Confti has combined crowdfunding and division into one protocol. It is committed to solving the insufficient NFT liquidity and the situation when the price is so high that there are no buyers, thus decreasing the NFT purchase threshold. In the meantime, it ensures the safety of users’ assets and provides high-quality UX, including open and transparent data, low fees, the ability to operate within just one platform, and ease of use.
Source: confti.club
Confti’s crowdfunding Parties target two types of users: those who wish to own or are bullish on some NFT but don’t have enough funds to pay the whole price by themselves, and DAOs that invite their members to join a Party and co-finance the NFT purchase. Both of the above user types will be interested to know about the features of Confti Parties:
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no platform fees, no matter if your Party wins or loses;
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multi-platform auctions: Confti supports NFT auctions on Zora and Foundation and is about to support OpenSea;
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on-chain data recording: all operations are processed through smart contracts, all data is reliable and available on the blockchain;
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no need to leave the platform: Confti’s Party smart contracts support all NFT data. You don’t need to switch platforms and can start a Party instantly. After a Party wins, the Confti division contract is called directly, and token fractionalization happens right on Confti.
If you hold an NFT, you can divide it on Confti, mint token Parts, put them up for sale for investors, and thus achieve cash flow. Besides, you can use Confti’s DAO governance tools to develop an NFT DAO, reach consensus, and build together as a community to create a stronger brand effect and a valuable ecosystem where everyone shares their achievements. Before that, let’s dive into the basic features of Confti’s division protocol that uncover its potential at most:
- you can divide one or multiple NFTs at once;
- Part owners govern the NFT reserve price together;
- Part owners share the NFT premium and sale proceeds;
- Part owners manage the value of NFT and Parts together.
(Note: the original NFT holder can choose to keep a certain share of Parts; therefore, they can also become a Part holder.)
3. Confti’s Innovation & Breakthrough
Confti pioneered an all-in-one protocol for crowdfunding and fractionalization and solved the imminent problem of users being forced to switch platforms to access the desired functionality. After your crowdfunding Party succeeds, the division contract is called right away. Neither additional manual operations nor leaving the platform is needed. Meanwhile, on PartyBid and Fractional, you are forced to coordinate your actions to both crowdfund and fractionalize the NFT. On PartyBid, you can only crowdfund and solve the NFT co-financing issue. Next, you have to move to another platform to fractionalize the NFT. Switching platforms is very user-unfriendly and complex. Also, there is a possibility of losing the NFT during the cross-platform transfer.
As mentioned earlier, no matter if your Party succeeds or fails, Confti collects 0 Party fees, while PartyBid charges 2.5%. Confti’s fee for the NFT division is just 1.5%, while Fractional collects 2%, and fees on NFT20 can be as high as 5%.
In 2021, NFTs exploded and developed into an independent market with trends of its own. Fractionalized NFTs also performed greatly. By 2022, the NFT craze cooled down, and the popularity of fractionalized NFTs also started to decrease. You can see it by the TVL and liquidity changes on Fractional and Unicly.
TVL on Fractional & Unicly in 2021–2022
Source: DeFi Llama
Trading volume on Fractional & Unicly in 2021–2022
Source: Dune Analytics, Unicly
These changes in the fractional NFT sentiment are closely tied to the whole cryptocurrency market environment; however, the inherent issues are an important affecting factor, too. On Fractional and Unicly, after NFT fractionalization, value comes from sales, staking, and yield farming. They lack value support and community consensus. After noticing this drawback, Confti designed a comprehensive set of DeFi use cases for Parts, including collateralized lending, liquidity mining, etc., and focused on NFT + DAO development based on three principles that empower NFT parts using the collective force. Specifically, it incentivizes users to join DAO, contribute to it according to their strengths, and get rewards for it. It shows NFT holders that they can use the value of their NFTs through DAOs. See the three principles below:
1. Community Above All: After the NFT division, Parts are distributed in the community. If the Party gets no further exposure, new consensus won’t be reached, and there will be no premium. To increase the community exposure, Confti proposed multiple incentive programs, e.g., for reward vault promoters and NFT contributors. With the help of influencers, NFT projects, celebrities, and public vaults, the feasibility is high, and it is easy to bring new traffic for exposure.
2. Interconnected Benefits: NFT Parts are the only proof of identity for DAO members. Holders can vote on various parameters, such as the NFT or vault reserve price, premium dividends, incentive mechanism, additional issuance of tokens, etc. The results of such proposals affect the actual benefits of each DAO member. If you are half-hearted about governance or do not participate in it, you are harming your own interests.
3. Shared Rewards: Rewards include proceeds from NFT or vault sale and investment income. They are distributed among the DAO members according to their investment share.
As you can see, Confti is more user-friendly and honest. It got rid of cross-platform operations and offers low fees. However, this is not its greatest advantage. The promising NFT + DAO development model is. With NFT DAOs, NFT Parts are developed using collective efforts. Compared to traditional projects where one person or organization deals with promotion, using Confti’s model, it is easier to get support from more users, earn a reputation, and get access to funds and other resources. This is probably the main reason why Confti has been advocating development of NFT Parts in the form of DAO right from the start. This is our biggest difference from other fractionalization platforms like Fractional or Unicly.
IV. Confti’s Potential & Future
Each NFT DAO has a Vault. Assets in it determine the value of divided NFT Parts, which in turn determines the rewards and benefits of each DAO member. It means that to get rewards of bigger value, DAO members need to develop the Vault together. To increase the Vault value, Confti will offer sales of single NFTs, collateralized loans, renting, P2P, etc. NFT derivatives. After these financial tools are launched, DAOs will be able to maximize the NFT utilization, rewards, and exposure. Besides, an NFT DAO can exchange NFTs and Parts with other NFT DAOs or asset holders, which is beneficial for asset turnover and exposure of Vaults, and provides DAO members with new assets and governance rights. As you can see, development of NFTs and Parts inside Vaults in the form of DAOs on Confti increases the Vault value comprehensively and offers more advantages compared to existing fractionalization platforms.
Development of any financial assets is impossible without issuance and trading. NFTs are not an exception. At the moment, OpenSea is the NFT issuance and trading platform with the biggest trading volume and market share in the world. However, it does not support NFT crowdfunding and fractionalization. At the same time, PartyBid and Fractional who proposed such solutions do not support issuance and trading. Users are forced to use multiple platforms, which is time- and resource-consuming and can result in asset loss. This is why Confti will also launch the NFT issuance and trading functionality so as to meet various user demands in a convenient, efficient, and safe way. Actually, the multi-functional integrated NFT solution will be a good attraction factor for celebrities and influencers who will come to Confti and become the core competitive advantage promoting the platform’s future development.
Ethereum is a public chain that has been battle-tested for close to 10 years and proven to be safe. This is the major reason why Confti chose to build on it. However, like everybody in this space, Confti has also considered the transfer and gas fee issues of Ethereum. After Confti reaches stable operation, it will support Polygon and other public chains to increase the transaction throughput, decrease gas fees, and boost ecosystem interactions, NFT use cases, and value. In cross-chain and NFT use cases, Confti is more user-friendly than Fractional, NFTEX, and NFTX, because it puts users’ needs and benefits first.
NFT crowdfunding and fractionalization are still in their early days. Nonetheless, Confti understood the current and future needs of users and swiftly designed an integrated NFT application for crowdfunding, division, and renting that precisely meets the needs of NFT investors. Confti’s product suite, methods, and forward-looking strategy are the key factors for easy user attraction and retention. Hopefully, this will make Confti a strong player in the NFT market. Let’s wait and see!