Fraction Token Novice Tutorial

Announcements Fraction Token Novice Tutorial

2023-03-02 01:51:00 UTC 6637 Read

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### Background of Fraction Token
  As is well known, the current market prices for high-quality or popular NFTs are generally expensive, making it difficult for ordinary investors to afford them. To address this market demand, Gate.io has launched a fractional token product that slices blue-chip NFTs, increasing their liquidity and effectively reducing the investment threshold for users. This enables users to hold blue-chip NFTs and meet their demand for them.
### What is fraction token?
  The fraction token is an innovative token product offered by Gate.io, designed to improve the liquidity of top NFT works by slicing them into smaller portions. The platform purchases the top NFT works and pledges them to issue fraction tokens at a fixed ratio of 1:10,000. This means that each NFT work corresponds to 10,000 fraction tokens, and each fraction token represents 1/10,000 ownership of the original NFT work. By purchasing fraction tokens, users can now afford to hold a portion of the top NFTs, which were previously unaffordable for most investors.
  Gate.io has also made it easy for users to exchange ERC20 tokens to fraction NFT with the help of the NFT AMM tool. The exchange ratio is fixed at 100:1, meaning that every 100 ERC20 tokens correspond to 1 Fraction NFT. Each Fraction NFT represents 1/100 ownership of the original NFT work, with a total of 100 Fraction NFTs collected. To redeem the original NFT works, users can contact official customer service.
### What is the advantage of fraction token?
  Fraction tokens offer several advantages to investors, including:
1. Lower entry barriers: By slicing expensive NFT works into multiple fragments, Gate.io allows more users to participate in the transaction at a lower cost.
1. Convenient trading: Transactions can be made using Gate.io account balance, without the need to access an on-chain wallet, providing a more streamlined trading experience.
1. Enhanced security: Gate.io utilizes both centralized and decentralized measures to ensure the security of user assets, providing investors with peace of mind.

### What is the underlying asset?
  The asset of a fraction token is usually a fixed NFT collection.
  For example, the fraction token project IBAYC, where "BAYC" refers to the well-known blue-chip project Bored Ape Yacht Club.
### What is the total amount of fraction token?
  Each fraction token project has a different total amount of tokens, which depends on the number of original NFT assets of the project.
  The total amount of tokens is calculated as follows: original number of NFTs * issuance ratio (ratio is fixed at 1:10,000).
  For example, if Gate.io holds 5 Azuki works, the total amount of the corresponding fraction token project IAZUKI tokens is 5**10,000, with a total of 50,000 pieces.
### What are the factors that affect the price of fraction tokens?
  The price of fraction tokens is mainly influenced by two factors: the NFT market price and the token supply.
1. The NFT market price directly affects the value of the underlying NFT assets of the fraction token. When the NFT market price rises, the value of the underlying NFT assets increases, resulting in an increase in the price of the fraction token. Conversely, when the NFT market price falls, the value of the underlying NFT asset decreases, resulting in a decrease in the price of the fraction token.
1.  The token supply directly affects the scarcity of fraction tokens. When users redeem the original NFTs, the token supply decreases, which increases the scarcity and drives the price of fraction tokens up. On the other hand, an increase in the number of underlying NFTs leads to an increase in the token supply, which reduces the scarcity and results in a lower price of fraction tokens.

### How to buy fraction tokens?
  You can visit the Gate.io spot trading section to buy fragmentation tokens. There are 6 kinds of fraction token projects currently on the line: IPUNKS, IBAYC, IAZUKI, ITRUMP, IMAYC, IDOODLES, etc.
### How much is the transaction fee of fraction token？
  The fraction token belongs to the spot trading plate, and its transaction fee is consistent with the current account spot transaction rate.
  Spot trading rate query: https://www.gate.io/en/fee
### How to redeem the original NFT asset of fraction token?
  There are 3 steps to redeem the original NFT asset:
1. Buy tokens: Buy fraction tokens from the spot market;
1. Swap fraction NFTs: Every 100 fraction tokens can be exchanged for one fraction NFT;
1. Redeem original NFTs: You can redeem one original NFT for every 100 fraction NFTs.

### What is the function of fraction NFT？
  Fraction NFT serves 2 purposes:
1. Redeem the essentials of the original NFT. Each Fraction NFT corresponds to 1/100 ownership of an original NFT work. After collecting 100 Fraction NFTs, the original NFT work can be directly redeemed.
1. Earn extra revenue. Gate NFT has launched a new AMM market maker mechanism, which can create a liquidity pool and earn transaction fee income through the fraction tokens and fraction NFTs in hand.

### How to expand the revenue of fraction token products?
  Different from traditional NFT transactions, fraction token products provide richer ways to earn revenue.
1. Trade spread
  Whether it is fraction token, fraction NFT, original NFT asset, you can buy low and sell high to earn the spread profit.
1. NFT AMM
  The Gate NFT product is equipped with the new AMM market maker mechanism, which allows you to create a liquidity pool with fraction tokens and NFT fragments in hand to earn a fee income.

###  How to collaborate with Gate.io on fraction token projects?
  If you are interested in the fraction token project, please contact us now!
  Official email: nft@mail.gate.io

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