Fracton Protocol Academy - Fundraising Through Fractionalization

Fracton Protocol ("Fracton") has many product design innovations to balance between being decentralized, having sufficient liquidity, and meeting all kinds of transaction needs. We recommend our users spend some time understanding our product to achieve a smoother user experience.

In the coming week, we will publish more articles to introduce our product functions and their logic.

For the convenience of expression, the narratives below will take BAYC as an example. Other NFT collections such as CryptoPunks, Sandbox, and Otherdeed follow the same mechanism and rules as BAYC.

Why do we need to raise funds?

As we all know, blue-chip NFTs are expensive due to their unique design and scarcity. Therefore, the bar for participating in the blue-chip NFT market is very high for any ordinary user. Therefore, allowing users to participate in the market through crowdfunding will be an effective solution. Fracton, as a fractionalization protocol, acts as an intermediary platform where our users can jointly put together their funds to purchase and own the BAYC.

Fundraising for what?

Since Fracton exists to allow more people to own quality NFTs with limited resources, we are targeting mainstream NFTs with a current focus on the top PFPs and Lands, such as BAYC, CryptoPunks, and Sandbox. These collections tend to attract more attention and have better liquidity. But, most importantly, they are too pricey for ordinary investors.

NFT Vault

Different NFT collections have various vaults in Fracton Protocol, such as the BAYC Vault and the PUNKS Vault. The smart contracts generate a corresponding number of fractions according to the number of BAYC in the vault to ensure each fraction corresponds to a constant share of the BAYC.

Dynamic Pricing

Fracton Protocol differs from other fractionalizaiton protocols as the NFT fractions issued through other protocols are not backed by NFT. On other platforms such as Fractional. Art and NFTX, the NFT holders initiate the offering and pricing of the NFT fractions. Such centralized design results in relatively higher pricing, which restraints users' demands, reduce market efficiency, and eventually leads to a failure to sell all the NFT fractions. If the fractions are not entirely absorbed by the market during the initial offering, it will be difficult to price them later, and no one will be willing to provide liquidity.

The fundraising design of Fracton will take the fractionalization process to the next level, where the pricing of NFT fractions will be dynamically adjusted according to the market conditions, allowing for a fairer valuation of NFT fractions at the initial offering. We believe this mechanism enables users to purchase NFT fractions without worrying about unreasonable pricing, attracting more buying power.

A Brief Fundraising Process

Fracton will first select a quality NFT collection, in this case, BAYC, and then initiate the fundraising campaign. During each round of fundraising, the ETH from minting Blind Box-Peoploe's BAYC flow into the fundraising pool address. If the fundraising is successful, the funds in the address are used to buy the target BAYC, with the remaining returned to the funders. (In v1 of Fracton Protocol, the remaining ETH will be accumulated in the Treasury due to high gas fees, which will be governed by DAO in terms of whether to support the future purchase of BAYCs when the funds are insufficient. In the upcoming v2, we will have our layer2 solution, which will enable us to refund each funder's remaining ETH.

As v1 users are not able to receive the remaining funds, we will compensate for this loss through DAO governance. For users participating in the fundraising through centralized exchanges, the exchanges will cover the gas fee and return the remaining funds. More details about the mechanism of Blind Box Meta-swap will be explained in future articles.

Step-by-step Instructions

Decentralized Issuance - Fracton Official Website

  • Go to Fracton Protocol Home page:
  • Click Fundraising button on the top of the website.
  • Connect to your Web3 wallet(such as MetaMask) and make sure your network is set to Etherscan Mainnet.
  • You can see a list of all the running fundraising for different collections. Click the banner to enter the project that you desire.
  • Then, you are on the Mint Blind Box page
  • Enter the amount you’d like to mint, and the dashboard will present the price information and available balance of blind boxes in the current round.
  • When you are ready, click MINT, and you will get your Blind Boxes.

In addition, Fracton will be partnering with the top CEXs for fundraising campaigns.

Stay tuned for more details.

Next Chapter - Blind Box and People’s BAYC

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