Fractional | AMA with Andy8052

Transcript

welcome to another ask me anything today we have andy 8052 from fractional fractional is a place a new project just came out where you can actually fractionalize an nft or you can buy a fraction of an nft this is a really cool nft money primitive i suppose david because i know you're in the market for a crypto puck right you're still in the market for one yeah i submitted my bid yesterday but it took me a while to like get over the hump of allowing that ether to be removed from my wallet as people know i'm an ether and so parting with a whole crypto punk's worth of ether was a was a tough decision but it hasn't been accepted yet though so so maybe i use this you can still change your mind it's still

changing also if you do change your mind instead of buying an entire crypto punk with fractional you can actually buy a percentage of a crypto punk that's the idea maybe you want five percent maybe you want ten percent you don't need to own the entire thing so this is super cool money primitive guys we are going to get into it um as always with these ask me any things we are live streaming on youtube so if you have a question throw it into the youtube chat we will try to get to your question we have a ton of questions lined up ourselves for andy uh before we begin david we should just mention because it's coming up next week the smart con summit this is the uh chain link smart contract summit it is going to be august 5th through the 7th we're going to be

hanging out at least on the 5th we've got a panel that day eip1559 we're going to talk about hopefully it will have just shipped like either the day before or or that morning we're gonna be talking about that we've got some ethe bulls uh on the on the panel list um that that i think you guys will recognize but there's gonna be 200 leading projects there across d5 nft projects three days of keynotes workshops and panels talk about automated market makers layer twos mev everything this is uh an awesome way to get educated on d5 if you haven't yet best thing it's free go sign up for that we have a link in the show notes uh educate yourself guys we are going to be right back with andy from fractional but

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crypto punk with the beanie if you've seen him on twitter he just announced his new platform that's fractional it's a platform to fractionalize nfts across many owners andy great to have you man how you doing how you doing i'm doing well thanks for having me it's uh exciting to be here after watching very many of these online dude it's it's really exciting that uh that like you built this and and you shipped it i know the nft community is super exciting uh excited about it nfts are not in a bear market despite what people may have told you a month ago or two months ago this is this is boom time man we just had uh mila kunis nft uh sell out last night like it reminded me of the old days when

uh cryptokitties brought down the ethereum network gas prices were spiking so high so nft bull runs is a good time to ship your product um tell me andy answer this question first if you would why would someone want to fractionalize an nft uh tell us why and maybe maybe define what it means to fractionalize an nft for folks as well yeah for sure um and definitely nfts are no way in a bear market it's pretty insane it's been a pretty fun couple months um but yeah so as far as wanting to fractionalize an nft and kind of what that means fractionalizing iot is taking

well currently an erc 721 token and putting it into a smart contract and generating an erc20 token which works basically just like the other d5 token you would see on ethereum or anything like that uh at that point the tokens all just kind of are they're gonna sit in your wallet like in metamask or or in your like your zapper and you can trade them on unisop or sushi swap or anywhere else you would so desire and really the one main difference is that you know there's uh there's a scenario where you could have a buyout where the underlying nft is purchased and then you would have a chance to redeem those uh fractions of your nft for ethereum to what kind of once the nft has been

pulled back out into the real world um as far as why someone would want to fractionalize something you know i think there's a lot of reasons uh one maybe if you're a creator and you exclusively make one-of-one artwork and you want to have uh you want to try to reach a wider audience maybe you're like you're someone like x-copy where any one of your one-of-ones now is going to be hundreds of thousands of dollars but you want to try to have a way to reward all of your early adopters you could fractionalize a piece of work and give everyone five percent of the of the nft fractions for example if you are maybe a collector and you bought some crypto punks that are now worth an irresponsible amount of your portfolio but you don't want to sell all

of them you still love your crypto punks uh maybe you have a an ape that's worth four million dollars now and you want to fractionalize it and sell 50 and that way you still kind of own that ape and you're you're still connected that ape but you can maybe be a little more responsible with your money uh i don't know who would want to do that but i'm sure there's someone out there who would want to be responsible and lastly i think a really like basic example is i have a lot of friends who have bought crypto punks together or bought other nfts together and they're just sitting in one person's wallet or they're sitting in a multi-sig and this is just a really easy way to kind of create a trustless scenario where you all can can hold something together wait you mean your friends uh bought something

together they went in on purchasing a crypto punk like they pulled their ass like their money and bought a crypto bunk yeah so i i've done that uh as well before um but i also have friends who like five different guys who all own one fifth of a crypto punk really cool so andy is this specifically meant for like one nft at a time or could you also do like bundles of nfts and put multiple erc 721 tokens into the same contract and then fractionalize that is is that also what you're going after or is that a different product that maybe you're not as focused on yeah so uh i would say yes and no it kind of depends uh there are some really

great products like nftx and nfc 20 that are focusing on kind of this like you know you can pool multiple nfts that are all like kind and kind of create like this floor index of nfts we're not really going after after that specific use case but we do support multiple fractionalizing multiple nfts at the same time and a really cool example of that is there's the art blocks curated set on fractional which is one of each of the first 31 art blocks curated uh drops and so that like is a really awesome basket of 31 nfts that has a meaning and a reason why you would want to own a piece of all of them as opposed to

just one individual one so yes but we also like to have kind of a little more meaning behind the baskets as opposed to just a bunch of random stuff all put together andy would you say ryan you're muted andrew would you say that this is um a financialization application of nfts or and like as in it's less about the nft world and more about adding finance upon a layer of nfts or is this also uh unlocking cool new things specifically in the nft realm uh you know i think it's it's kind of a bit of both and it really depends on the the person who's using the platform in a way that that's pretty pretty cool i think where

um there are some people who after we launched yesterday just said i'm really excited that i now own five percent of an x copy or two percent of an x copy and so for that person it's not a it's not a financialization thing it's just that they couldn't afford to own a full x copy and now they now they feel like they're a collector and that's special to them uh but it does you know breaking down a a non-fungible token into a fungible asset does obviously unlock a lot of really powerful things that have already been made and battle tested in defy which don't totally work with nfts and so for example i'm very excited about the idea of being able to use like a lending protocol with the fractionalized nft um for a lot of really small nfts that are

fractionalized it might not make sense it might you know we probably are going to need some new products and new primitives to be built as far as how those would work but if you have a an nft that's say like the people uh first 5000 days that sold for 69 million dollars that's a large enough nft where if you were to fractionalize that those you could make a good case that you know either makers should support that or ave or compound so there definitely are going to be cool use cases that can be unlocked like that for some of the really high value stuff um and then there's also you know there's so many cool things that are being built and defined so this does allow nfts to be plugged into those relatively seamlessly and you have a quick question just to clarify when you were talking about um

how like this is set up to begin with so if let's say somebody owns um you know 51 of a crypto punk and i own 49 percent um who decides uh whether that crypto punk could be sold i think you mentioned something to the effect of like if i am maybe a minority uh fractional owner of that crypto punk then i if if it is sold then i um get the eth proceeds from that sale is that how it works or like who actually decides how this thing could be sold and if i'm a maybe a minority owner um am i just kind of along for the ride i just get you know immersed i don't have

a choice whether this thing is sold or not how does that work yeah good question um so probably this that whole portion of the platform is probably the most complicated part of what we're doing um and it just kind of comes by the nature of the beast it's a hard mechanism design to to build around just in general okay you fractionalize an nft how do you put it back together and that it's pretty important um the way that our we call it a buy out the way that our buyout system works is we have a reserve price which is if you've ever bid on something on like zora or foundation when an auction hasn't started yet they have their reserve price that once someone deposits that amount of ethereum then an auction will actually start and it'll create like a

24-hour auction our system works relatively similar and so much as we always have a live reserve price where someone can come in and deposit that amount of ethereum to start a buyout the bios are a little bit longer they default to seven days and uh could be anywhere from three to fourteen based on kind of what the initial person who fractionalizes the nft thinks is best so with the live reserve price anyone who holds tokens is able to vote on what they think the reserve price should be and we take a weighted average of everyone's votes at any given time to decide what the reserve price is so if you will say in a situation where you owned 49 and someone else owned 51 the 51 person would have a slightly

larger say in in the reserve price than you would but one other important caveat there is we also have a minimum quorum of 50 so you don't have to set a reserve price and if you are if less than 50 of of the fractional token holders are not setting a reserve price then it's essentially not for sale and you would need 51 to all agree that basically just come to say we agree that it should be sold they don't have to all agree on the exact same reserve price but they have to agree that the piece is for sale okay so in order for the crypto punk to be sold over 50 of the fractional owners effectively

have to um like agree that the thing should be sold and then the remaining you know call it forty nine percent if there's 51 eight months or so this thing the remaining 49 they would be along for the ride but they also get to like vote on the price at which they'd sell it proportional to their fraction of of ownership so they're along for the ride in that like it's a forced sell if you're a minority uh owner i guess um but uh you do have some influence into the price at which you sell is that the case yeah yeah exactly and so say you know say the 60 of token holders all all have agreed say one guy owns 60

and he's like i want to sell this thing for 10 ethereum but then you own 20 and you're like no i think that's way too low i want to sell it for 25 ethereum um the reserve price then at that point would be you know based on the math and your average like your token weights somewhere in between those two desired prices interesting why why do some token tell me the logic between behind why some token holders can dictate the prices that others sell their tokens at isn't that kind of like getting in the way of the free market uh no i think there's a little bit of confusion here so it's not that yeah basically so essentially if you do not set a reserve price

you essentially have set your reserve price to zero that's what the default is and so when you have set your reserve price to zero you are not voting on a live reserve price you said i i'm actively not participating in this everyone who is actively setting a reserve price is creating the current live market for what this nft can be bought at as long as 51 of people are actively voting on that reserve price then it is effectively for sale and if you come in and say hey if you're one of the people who isn't voting and you think people are voting poorly you can then actively start to vote as well and have an active vote and say in what the price should be uh and so then at that point say you had 10 of the tokens

and 51 were voting at any given time then there'd be 61 voting because you've now started to also be a part of the group of people who are token holders and voting so it's it's like essentially an opt-in uh vote of what any nft should be sold at at any given time and you have as much agency as you want in that system to participate and if you don't feel like participating you don't have to but assuming majority wants to that's what's going to win out so where in the process does this uh reserve price and voting actually become relevant so this this is not when after this is some point after where somebody who owns a high value nft

comes to fractional put it in the contracts and then they fractionalize it those fractionalized tokens go out into into the world into into of all throughout ethereum and then once people buy those fractionalized tokens that's when this voting takes place to dictate the reserve price for future buyers who are now interested in the secondary market market of these tokens is that correct yeah so essentially the the reserve price is uh just for anyone who would want to buy the entire nft ah so for example currently uh like taking a very explicit example of like the art blocks curated um

fractionalized bundle based on numbers that i had from like this morning it might be different now the the live like trading valuation of the art blocks curated bundle was about 175 ethereum um the reserve price was 230 ethereum so essentially token holders were saying that you know even though we're hold like the the tokens are currently trading at one particular valuation right we are not comfortable selling the entire bundle of them unless someone were to start an auction at 230. okay and so this is actually how you can give assurances to defy apps like maker or ave or compound to use these tokens as collateral because uh if they were to ever be sold and that was one of my questions is that

like if you can actually forcibly sell these tokens um that is that's scary for a defy app because then the token will sounds like it'll just get revoked from a collateral in maker dao or compound but because you can give assurances that it's going to be sold for a certain amount of value you can actually tell you know ave compounds like well the token is going to get revoked but instead it's going to be ether there as a replacement and ether is the best collateral in d5 yeah and that was actually like a really important part of kind of how we were building this is so say there is a buyout and all of a sudden so you you own some tokens for the the five eyes x copy piece and you have them deposited in uniswap and you're providing

liquidity if there's a buyout and uh now you have some redeemable amount of ethereum it's your tokens don't go anywhere they basically are now just pegged to some kind of ethereum and uh and then at that point you can whenever you're ready pull those out of uniswap and then go to the go to fractional and redeem those tokens and get your ethereum so uh andy you and i are both a part of uh pleaser dow you're a much more active member member than i am but pleaser dao is famous for owning a bunch of high value nfts uh and i would imagine that pleaser dow would be very very interested in leveraging this platform in order to get further and further liquidity on their on their nfts so this

seems to be like um as perfect product for specifically high value nfts with a lot of prestige to them to see how how liquid can we actually make these things and i think that's actually going to be the big experiment coming out of fractional is a question of like how liquid can we actually make like the edward snowden nft or the people-pleaser nft um so that's actually kind of a question to you like i know this is entirely speculation fractional is just a couple a couple days old um but how liquid do you think these things can get yeah you know who knows i think one of the one of the fun challenges with this is trying to figure out what the best way for people for there to be secondary

market trades of these things like right now we're super actively not participating in that um you if you if you fractionalize something and you want people to be able to trade it you can go to uni swap and make a liquidity pool it's been pretty surprising so far uh i guess i've never really had used uniswap v3 with um some of the like a significantly lower value asset so for example i think the the five eyes fully delivered valuation is maybe like 450 000 or something like that which naturally if you wanted to try to trade any like serious amount of value there to buy into that you'd expect really bad

slippage but people were providing liquidity on unisoft v3 and it really wasn't very bad i was really impressed it was i think there was almost like 300 000 of volume in the first day of buying these uh these nft fractions which is really cool uh ryan you are muted did you say 300 000 of value of volume yeah of volume not volume yeah buying crazy trading five eyes yeah so what's super interesting here is i'm kind of like racking my brain i mean like there's there's some things um that i feel like um you know are natural to share right like i'll you know i'll share my bike uh i'll you know i have a pizza i'll share a

slice of pizza with you right and like there are other things where like in life you kind of want your own you know like i'm not sharing my underwear with anyone you know like that's mine right like but like art is sort of interesting because um you haven't previously in the physical world been able to share it right if you think about like a um you know a banksy piece of art it's not like you can take that piece of art and like chop it into pieces and like give it to all your friends it's not like you can like get a thousand people and go in on a piece of art and each own some percentage of what you're you know where you're trying

to best because these are like physical things like you know i don't want just a slice of a painting i want the whole painting in my house i can't fractionalize it but with nfts you can fractionalize it um i guess maybe my question is this is like a it's not just a new primitive for d5 it's a new primitive for ownership in general if that makes sense and like i'm wondering what it's like because i've never owned a collectible with a group of strangers right if i had magic the gathering cards like they were mined like they weren't mine plus my friends we didn't like pull things together they were just mine what is it like to own a collectible with a group of friends or a group of even a group of strangers that you have

to share is some of the magic lost when you do that of like owning a specific thing you know i think sometimes probably and it depends kind of what your goals are what your end game is but i think there's also something really awesome about it because like one of the things that's been very evident in crypto and ethereum and primarily and nfts especially is like community is so important with all this stuff and there's something to be said for having a random group of people all who came together in a decentralized protocol online who now all have a vested interest in this thing and maybe they want to display it in crypto voxels and they say in order for you to see it

you have to own one percent of the of the nft fractions or if you want to like have your name on the plaque to own it and you can create these like really really cool communities and stuff and that's something i'm really excited to like continue to build we haven't had a ton of time to really start getting into that yet so we've been trying to build much more of an mvp but i think that you know with the right with the right technology and the right tools in place it can actually be like very empowering to the group people who are all owning this thing together but there definitely is always a time and place where people want to say like look at this badass thing that i own myself and it just kind of is two different scenarios andy we were talking earlier about uh

the blasphemous nature of putting a crypto punk as your avatar if you don't actually own it but when it comes down to the world of fractionalizing it like where do you think that line is uh and i know this is kind of only going to be determined by social consensus but i want to get your opinion so like say say somebody fractionalizes a an alien crypto punk that they own and they only fractionalize 49 of it so they still own 51 percent are they still allowed to have that alien punk as their avatar that's a really good question it's a really funny you would be shocked maybe not i hear that question all the time but the funniest part is i get people who ask me they're like am i allowed to use this i am not the twitter police i don't

really care what you make your profile picture uh but so those people were talking about this on twitter spaces on monday and it seems like a lot of people were basically saying yeah if if you own a percentage of this thing even a small amount like you own it but do what you want with it uh i'm sure some people will give give someone a hard time or be like oh you don't actually own the full thing um but i think in general if you can signal that you are in some way like attached to this thing people will probably get over it and and be okay with it but it'll be very interesting to see how that all plays

out i i don't really know it'd be awesome to be able to have some type of representation of your your ownership like in the profile picture and what that looks like and it's something we're pretty actively thinking about is how do you maybe issue a special nft to someone who owns 10 of an of an nft or something like that maybe you could use that instead as you're talking andy it's it's just crazy how all of this is like it's all socially enforced isn't it it's all layer zero in forest right like you know are you allowed to have a crypto punk in your twitter avatar if you only own one percent um well it's not really up to you i mean there's there's nothing legally you're not to get thrown in jail if you do that right there's no there's no ethereum twitter twitter house

right but like you know there there could be some social stigma attached to doing that like you could be a larper you could be a poser you could like not be achieving the signal that you're trying to receive with with crypto punks it's so fascinating but i i do wonder just to follow up on david's question if this could potentially cause actually an unintended side effect which is like a dilution of the value of some of these things so if it comes to pass that social consensus says hey if you own over 10 of a crypto punk you're allowed to use it as your avatar or you're allowed to like you know flash it around in social media um does that dilute the value of owning an entire

crypto punk and could that decrease the value of crypto punks over time what are your thoughts on that thought exercise uh yeah it's an interesting question i would say no uh primarily because even if you if social consensus was 10 of crypto punk means used as your profile picture that's still at most 100 000 people in the entire world who could use the crypto funk as their profile picture um and now if you're making the barrier to entry even lower for getting to that point you probably actually have more people who'd be interested i think if you told people that you could own a crypto punk for five thousand dollars right now and there were 100 million of them you probably would have a lot of a lot of demand to to do

that um i think i think in general like society is always going to appreciate owning single things especially like the uber wealthy like realistically someone who can afford to buy an alien crypto punk is probably not very interested in owning a fraction of like a zombie crypto punk that's not it doesn't really do anything for them outside of maybe you know they want to be a part of a particular community that springs up around one or something and so people like to emulate really wealthy people in in life in a lot of ways um

and so i do think that there is always going to be demand to own to own individual ones uh regardless of whether or not you can vote for actions i i i think i'll i think i buy that andy i think that that that could very well be the case now i'm gonna i'm gonna flip this and give maybe the the bull case for nfts with something like fractional it's out there which is like you are providing this this protocol is providing nfts um something in the finance world they would call a liquidity premium right so like nfts are not super liquid in like uh erc20s are much more liquid um but nfts you kind of have to sell all or nothing essentially but you are

taking a an illiquid asset and essentially creating a protocol to unlock the liquidity of underlying all of these assets and i wonder if that's actually could contribute to nfts as a whole being more valuable because hey i'm not locked into owning my you know 50 million dollar beeple piece forever if i buy it right like i can always like sell 90 of it and still keep 10 at any point in time so i'm on i i get some additional value from that purchase because uh i'm not locked in because there is this liquidity liquidity premium uh that now

fractional has kind of added to all nfts so i do think this could be a boon for the space and this protocol could actually increase the value of all of the nfts that are in existence particularly the more expensive nfts what's your take on that yeah i tend to agree it was actually that was kind of how i started thinking about doing fractional in the first place funny enough so i was very early in nba top shot and i was like one of the largest spenders on the platform for a long time i was basically just yield farming during d5 summer and by basketball moments um and as i was buying more expensive stuff i was having you know there was a ton of people like the the

floor level moments on the site were just like flying like crazy but it was you know harder to sell something that was fifty thousand dollars or a hundred thousand dollars um and so i was like okay i want to buy this thing and i think it's actually worth a million dollars or will be but who is the market of people who want to do that but there's a lot of demand for these cheaper things and i think in general if you have something like crypto punks is the easy example but i i think the crypto punks aren't going anywhere uh it's very easy to make the case of why someone wants to own a floor crypto punk uh i think it's very easy to make the case of why you would want to own an alien crypto punk right now assuming you could afford it but

there's kind of this thought of like okay if i'm going to spend 10 million dollars on an alien crypto bunk and i think that it's like 100x undervalued and this thing is going to be worth a billion dollars one day who is the billionaire who wants to buy right a one billion dollar alien crypto punk yeah that's like the hard conversation to have but i bet there are you know 100 thousand people who want to buy a piece of a billion dollar alien crypto punk just to say that this is so cool i own the rarest of the rarest nfts and i i think it unlocks something there that's really really powerful and and it helps people feel more confident making really high-end purchases where they don't want to be the greater fool but it's not even like

necessarily a greater fool it's just like a there's no one richer than me to buy this thing from andy i see this project falling in line with two very big themes that we've seen in d5 over there well d5 really over the last three years but really we've identified it lately it's capital efficiency right all defy apps are evolutions on capital efficiency and what fractional seems to me is capital efficiency for nfts like that was what ryan's question was and that was what we were talking about right now it's like how can we make nfts which are inherently a financial asset right like anything that's a token on ethereum is inherently part of defy by the very nature of it being a token and now we are getting into the world of capital

efficiency for nfts uh so my question to you is like is this just the start like what do you think and especially as someone who is paying attention to the quote-unquote nft bear market which actually wasn't a bear market apparently uh what do you see the trend coming from all these applications that are being built in the quote-unquote nft bear market yeah i mean i think that kind of what we're doing right now with nfts is really really just just like the most low-hanging fruit available and so like it's the the correlation or just like moving from real-world collectibles to digital collectibles it just makes so much sense it's very easy it's the easiest pitch in the book uh it gets more complicated when you say

what if you have like all of the non-fungible assets in the world are now non-fungible assets on the blockchain and all these different types of things and so i'm really really excited about what it looks like when you know we're fractionalizing charged particles or we're fractionalizing unit swap v3 liquidity positions although those don't like totally make sense i've had a long conversation with some of the guys yeah from unisoft about it and we came to the conclusion maybe it's not the best thing uh but just in general the idea i'm very excited about as defy finds itself in places where there are these non-fungible assets that represent different positions and different things that are happening in protocols that's going to be like a massive

massive place to fractionalize things and you know maybe you have an nft that represents vesting tokens that vest over the next two and a half years and you can fractionalize that and kind of sell at a discount because you want to get out of your position earlier or you have like all these different weird things that could be happening or insurance positions or there's a lot of different fun stuff that can happen there guys we are going to be back with andy in just a minute we've got so much more to cover including some questions that are coming in want to find out what exposure to fractional nft gives you versus something like nftx talk about how andy launched this talk about some of the wilder use cases you can imagine in the future but before we

do we want to thank the sponsors that made this episode possible living a bankless life requires taking control of your own private keys not your keys not your crypto that's why so many in the bankless nation already have their ledger hardware wallets which makes proper private key management a breeze but the ledger ecosystem is more than just a secure hardware wallet ledger is the combination of the ledger hardware wallet and the ledger live app and if you're used to seeing all of your crypto services and favorite d apps all in one place ledger is where you want to be not only does ledger let you buy crypto assets straight from the app but it also hooks into decentralized exchange aggregators like paraswap which makes sure that you are getting the best prices on your trades without your assets ever leaving your control defy

never stops growing and the ledger live app grows alongside with it so click the link in the show notes to see all the defy apps that ledger live has and stay tuned as more and more apps come online and if you don't have a ledger hardware wallet what are you even waiting for go to ledger.com grab your ledger download ledger live and get all of your dapps all in one place bankless is proud to be supported by uniswap uniswap is a new paradigm in asset exchange infrastructure instead of a cumbersome order book system where trades are matched with other humans uniswap is an autonomous piece of software on ethereum which is what ryan and i call a money robot no human counterparties or centralized intermediaries just autonomous code on

ethereum input the token you want to sell and receive the token you want to buy something brand new in the uni-swap ecosystem is the uniswap grants program is now accepting applications for grants we have been saying this for a while and will say it again dows have money and they are in need of labor if you think that you have something to contribute to the uni-swap dow apply for a grant to uni-swap just look at the size of the uni-swap treasury it's almost 3 billion this mountain of capital is looking for labor do you have something of value to contribute to the uniswap dao no matter how big or small your idea is you can apply for a uni grant at unigrants.org and help steer unit swap in the

direction that you think it should go that's exactly what we did to get uniswop to be a sponsor for bankless and you can do the same for your project thank you uniswap for sponsoring bankless all right guys we are back with andy we're talking all about fractional nfts and the new protocol called fractional which allows you to turn your nfds into fractions really exciting protocol um i i've been pumped well andy's been talking about this it's really unlocking some new use cases you know i want to ask about kind of the nft speculators like after certain you know fashion nfts are the purest form of speculation like i respect that you know remember that the icos of 2017 you thought you were actually buying like something valuable

like some sort of money maybe some utility token whatever that was like nfts are just flat out like it's worth whatever the market says it's worth you know and like i i appreciate that and respect that so people want to speculate on these nfts and i think there are a lot of folks that um don't have the time maybe that that we have in crypto and maybe that you've spent on this andy being a nft maximalist and like figuring out the next hot nft project before it happens like getting into nba top shots when it was just like a new thing for example and they want exposure to this asset class there is a platform called nftx that i think you mentioned earlier which we've talked about before on bankless and i

think what this allows you to do basically is get exposure to sort of crypto punks as a class or um you know mask nfts as a class an entire asset class and allows you to sort of speculate on that it seems to me fractional is doing something different where it's giving you exposure not to like an entire class of assets like all the crypto punks or all of the mask nfts it's giving you exposure to a specific piece like a specific nft in itself fractional exposure to that i think that's the way of looking at it but how would you kind of compare and contrast nftx versus fractional and the use cases for somebody who just wants to speculate

in this space and bet on the next big nft yeah i actually think i think you did a really good job kind of explaining it um but yeah and nftx typically is going to track with with the floor price of any given collection so it tracks pretty closely to the floor of crypto punks with like their punk's uh vault and that is like great for what it is it works really nicely i'm a big fan of nftx i've used it before and it like unlocks some very cool things you can do but as you were saying like i think it struggles it has struggled to find a way to handle significantly more expensive things like

they're the zombie punk vault that they're like uh index that they have it doesn't see very much volume but i'm surprised by that because it like i think people would like to have exposure to zombie punks given given the choice to um and i think it just kind of comes with the nature of how valuable the assets inside of them are that it just gets really hard you can't totally scale it unless you had just an insane amount of liquidity coming into it um it's very hard to get one full punk zombie share from nftx to have a redeem one and so yeah i think that's where fractional kind of can step in and play a really nice role where it would never make sense to put an alien crypto punk in in nftx in its current form but it works

very nicely in fractional where if some people might just want to have exposure to the best of the best and kind of uh really focus on like super high-end nfts or really really rare one-of-ones or stuff like that and that's kind of the major difference but as i said you did a good job explaining it is there a case where something like nftx could actually tap into the power of fractional and kind of improve exactly what your concerns are with like not really being able to offer exposure to all of the full spectrum of punks but now that you can fractionalize more punks and more varieties of punks could nftx kind of solve some of the cons that you just talked about yeah i actually had a an interesting conversation with alex from nftx about

this and i think there could be some really interesting solutions uh for primarily something like a zombie punks where say we basically would make uh a special way to signal that this is a fractionalized uh like zombie crypto punk and then you could deposit those fractions into nftx or nftx could just do that on the back end when you deposit zombie cryptobots and so then you could basically nftx would act as an index of all the different fractionalized zombie crypto punks and you could withdraw a piece of that which would just be you know some percentage of one of the particular zombie crypto punks as opposed to

uh having to withdraw an entire one and it would almost act as like a like a set protocol style wrapping system around fractional which would help unlock some some really interesting liquidity and more like just taking price action on the on the asset class so andy i'm curious how fractional would handle situations where you have an nft that has some like utility um in say a game like let's say i have a god's unchained card for example it's a very rare card very expensive card but like um that needs to be used in in the gameplay of god's unchained inside of my deck right um how would that work or is fractional

really not set up to do that it you know maybe it's the case that fractional is just kind of set up to give you sort of upside exposure into the value of that but when it comes to utility you have to kind of reform the thing together in order to get utility in a gaming platform like gods unchained or axes can you talk about that yeah so for our current version basically one of the things we wanted to make sure that we could do was allow a lot of security for the for the users who are buying these nft fractions to not have to worry that there's going to be a governance vote that rug pulls them and moves the nft out or something like that and so you

can't interact or like use any of these starts to get significantly more burdensome for the for all these nft fraction holders to have to be watching for governance votes and all the things that go along with that but what i'm what we've been actively thinking about and i think this will probably be some part of some later versions is a very specific fractionalization for different assets that have utility where say maybe for an axe we partner with yield guild and the one thing that your axi can do when it's fractionalized is like be given to yield guild to be lent out to a scholar and so it has very very specific function calls that would allow for very specific and like safeguarded actions so that way you don't have to worry that you know

you're going to wake up and someone 50 of the token holders voted to just transfer to a random wallet or something like that so right now we will not support it but in the long term i think we can make ways for people to feel safe but also be able to support these cool and interesting utilities andy a question i have is uh regarding the metaverse and everyone kind of has their own definition for the metaverse and so i actually kind of want to ask you to define the metaverse from from your own words and then how does fractional impact tokens in the metaverse the metaverse is very very tied with nfts and and digital assets so question to you what's what is the metaverse in your words and how does fractional as a platform fit into that

yeah you know i think i don't think anyone really totally knows what the metaverse is yet yeah i think that's kind of that's part of the beauty of it uh but to me it's really just any online world where people are doing things together and interacting and like the metaverse is just going to continue to grow in how expansive and interesting it is but it like kind of already exists it just is basically the internet um but what i'm excited about with fractional in particular and just like uh nft fractionalization in the metaverse is it actually is just like can be way more powerful than what fractionalization unlocks in the real world because it's all programmatic and so for example like

uh there's an app called or just like a web app called picasso i think where you can fractionally own a real home with your friends and it's all through legal documents and you like set up time it's basically like a time share honestly uh what's significantly cooler in my opinion is you could fractionally own land in crypto boxes with your friends and it is programmatic that who gets access to this land and when they get access to it and you can like you don't have to require you don't need some middleman to set this all up for you it all just can be done on chain or say you have fractional ownership of a piece of artwork and you're able to like only allow certain people to view it or

you're able to like vote to display in a museum in a metaverse or something it like it unlocks a lot of really interesting use cases where having fractional ownership can mean so much more than just uh like just what it would be in the real world where you say yeah i own a fraction of this instead it can unlock a lot of really exciting things for people based on not even just utility and so much as like a zed run horse or something but utility and displaying it and showing it off to your friends or or using property in a metaverse or something like that it's interesting these terms like um like property and the metaverse that you used you know i was reading some stuff from mark

zuckerberg last week and he talked about facebook as being a metaverse company right that's how he sees facebook in the future which is sort sort of interesting to me but also like also kind of dystopian to me uh if you know facebook ends up owning all of the property on the metaverse right which is why i i hope english listeners are are i kind of get you know getting this vibe from we were talking about uh property we're talking about ownership right um blockchain platform public blockchain platforms like ethereum are the only things that we have on the internet that allow you to own digital things they're like property rights system systems for the internet and they're public and they're neutral so that mark

zuckerberg and google and like apple or any of the big techs don't end up owning all of our digital property online that's how that's why this stuff is so important i just wanted to fit that in there somehow andy i'm wondering if you have any uh any reflections on that like the importance of owning our own property on the metaverse why is that important to you yeah well you know i think what's cool about it too with the metaverse is it's unlimited and so it's not like uh what is it like blackstone is apparently buying all the property in the us like it's not to say it's not the same thing they can't just buy up all the property then we'll just we'll we'll make more right doesn't matter yeah and so i think that's what's really cool

about it and that's something where you know again like nfcs in general and fracture learnership other than just like creating all these interesting primitives for people to have more control over what they own and how they own it and what they do with it is just like really really important and very exciting to be building andy can you dream up your wildest use case for fractional like if somebody really wanted to like leverage fractional to it to the nth degree like what what's something crazy that they could really do with it man i you know i've seen some really really interesting stuff around like some stuff that's it's not that crazy but i think it'd be awesome like a me marketplace where you have like every time

like the origin of every meme is a fractionalized nft and you're able to create these marketplaces of what makes it what what memes are popular what memes are being used and all these different types of things i think in general like the idea of marketplaces around different fractionalized things that are like the source of truth of this is that thing and now people are able to trade trade it up or down based on its value to whatever they decide the value is is really fun as kind of like a slightly more realistic thing um outside of that i'm really into the ideas of like fractionally owning property like real life property and everything that comes along with that and like you know it's it's a very long ways away but like real

world assets and everything that comes along with that and i'm very excited to kind of see makers start to onboard more real world collateral and all that kind of stuff uh i think that's gonna be really huge in the in the nft space and infractional and i don't know what it's going to totally entail and there's going to be like an incredible amount of leg work that needs to happen before it really is anything tangible but i'm very excited for that whole space to continue to grow one of my favorite subreddits i don't know if you're familiar with it but it's called our meme economy and this this was a popular subreddit before before ethereum really before nfts uh and it's a subreddit joking about how different meme formats are propagating

across the internet and so like and it has nothing to do with crypto right so there's no actual money involved it's not like wall street bets it's just kind of a joke and some popular some some new meme format will come out and they will identify this like oh this meme format is hot like bye bye bye and then and then the meme format will like propagate throughout the internet and then you'll start to see like walmart start to use that meme format as like advertisements on reddit or twitter and then they're like walmart's not using the meme format cell time to sell time to sell and so like this energy is on reddit and like there's some sort of energy to like figure out how to monetize and make like prediction markets on memes and so maybe maybe that is actually what uh fractional uh enables in the long

term yeah it's like one of those weird things where i have no idea how it would actually work or why someone want to use it but i've had multiple people say hey i kind of want to use fractional to do this like well if multiple smart people all think this is like an interesting idea i'm sure something's going to come out of it at some point but it'd be a fun one andy what's uh on the roadmap for a fractional oh man um a lot of things so kind of we have a lot of stuff ui ux based um around just like making it really i feel like fractional can be a gate a great gateway to buying nfts and getting involved in the crypto space in general uh and also a great way to teach people

about d5 and stuff i've had teaching a lot of people how to provide liquidity on uniswap and all these different things who are coming from the nfd space maybe haven't done that and so there's just a ton of leg work to be done there to keep making that better and better and also make it feel really exciting to collect things you know what is how do you get excited to own one percent of a of a crypto punk for some people it's easy for some people maybe that like seeing the erc20 token in their in their account balance isn't that exciting because they own a million different erc20 tokens so that's one thing uh alongside that you know we're trying to stay up to date with layer two scaling and everything that comes along with that and fortunately we really only have to go where the most valuable nfts are

right now we don't have to make any hard decisions of of what's next but we're keeping very actively we're very actively watching optimism and arbitrary and zk roll ups and polygon and everything to go along with that to make sure that we're able to support whatever wherever those really valuable nfts basically and give people a good experience and then lastly uh kind of like i was talking about having these specific fractionalized nfts that are able to use their utility and really uh and really unlock some cool stuff and uh some fun composability between different applications and stuff like that so kind of a lot of things but andy this is really exciting and you know thanks for telling us all about the fractional um

it's a really cool project glad glad you built it um in in closing i think we have just a couple of questions because we don't often have a an nft maximalist on the bank list podcast so we we want to make sure we use uh that uh that expertise here and i'm super curious as to like you've dabbled these markets for a while how do you personally go about finding the next hot nft project like what attributes do you look for for the magic because to the to the to the amateur this all feels very like oh my god it's it's meme economy you're just kind of like shot in the dark i don't know if this is going to be successful or hot or not i don't know why crypto punks are worth like what they are um how do you find the

next hot thing in nfts yeah to be honest i'm not that good at it but one of the nice things around it is like you don't really have to so where nfts i've noticed as someone who's been in d5 for a long time and kind of doing all the d5 stuff as well nfts have this layer of emotion attached to them that a you know a valueless governance token can't really have you can get emotionally attached to one just because you've participated and been active but there's something about collecting art and something about you know just buying something and having it be yours and it's one of one and it's yours and that's special that is very hard to replicate in normal markets and

so you don't always you don't need something to be the next big thing for it to do well you need like a few really rabid like rabid fans who are like this thing is amazing i want as much of it as i can get so an example is there was a an art blocks drop recently called the eternal pump which is also an amazing name and there was this one guy who's this anonymous nft whale who just showed up recently named vincent van doe and he has bought like almost a million dollars worth of this nft over the last like week and like in order for you to do well buying that you didn't need the entire market to go oh this is the best nft ever i want to buy it you need one whale to say these are really cool i want to

own a bunch of them and so it's a totally different market dynamic from like trading d5 tokens or trading ethereum or bitcoin and so i think it's just finding stuff that you think is legitimately good where if that doesn't happen that sucks but you have artwork that you like and then also trying to try to identify like what makes why did vincent vandal want to buy a million dollars at this nft and it's really cool it's a very cool generative piece but i don't really know what made it so special to him that he wanted to do that and trying to find whether it's a community that's really excited about it and even if the price is down maybe there's still a lot of people who are building interesting things or just talking about it a lot and that was you know like our blocks a

lot of the art block stuff is like that and it's been so crazy and the same thing happened with crypto punks where they were just really really fans who loved crypto punks and eventually that like kind of spreads it seems like what you're saying is like stay in the community and just buy what you like yeah i think that's really don't overthink it yeah and it's very much so a space where even more so than than defy where one one hit is worth like so many misses for example like board apes if you minted a bunch of board apes because you thought they looked cool you could have minted every other profile picture project that has come out since then and you definitely are still doing all right for yourself andy uh last time we talked you talked about how you think like uh

you believe in the what i've heard of the crypto punk fat protocol thesis as in like ultimately all value flows back to crypto punks now unfortunately i'm asking you this question before i get my hands on my crypto punk not after but i'm gonna ask it to you all the same why do you think that's true yeah so it's a hard question and i i think that crypto punks are like this really really special project that so one there's never been any more of them and so that makes it very easy like the you know the bitcoin fixed supply meme fits right in with crypto funds except it's better it's a better it's it's a better meme than bitcoin's fixed

supply um because you know you don't have to actually secure crypto funds there's other stuff for that you have to get in that conversation and then alongside that uh they look cool so a lot of people say they don't i think they look cool but i don't really think that matters very much people buy very ugly clothing that cost thousands of dollars because other people say it's cool and so that doesn't really matter and then basically it has created the narrative that it is the first nft project some people will argue it isn't there's some other stuff called like ethereum that was really old right i don't really know it doesn't matter anymore the narrative is it's the first nft project and it's like it's kind of crossed this chasm into like it's really really cool to own a crypto

phone yeah and i don't for me at this point for that to change i think ethereum has to like fail as a project and i'm also you know basically betting my entire life that's not going to happen and so at that point like what else needs to happen for them and i get a lot of inbound people saying hey i'm trying to trade this nft for a crypto punk i'm trying to trade my five board apes for this crypto punk i'm trying to trade this and this for a crypto punk uh i don't get many very many people who say hey i have a crypto punk i'd love to get some of your insert other nft here that just like doesn't happen that's not a not a conversation and there's i think the reason for that is because it's kind of the end game it's it's like the

ultimate nft to own and i will say that if you had asked me five months ago would there be other profile picture projects that people cared about a ton i probably would have said not for a very long time if ever i have changed my opinion on that a little bit just because it's very clear that 10 000 crypto punks isn't enough and so there's more than 10 000 people who want to have a profile picture and that's where board apes have been really really interesting and cool cats and all the other millions of ones which ones end up like winning out of that who knows but i think we're gonna kind of my my latest theory on all this is we're gonna have these like seasons of punks and so or seasons of profile picture projects and so punx is the first one so they're like the ultimate

grail profile picture nft and then this new wave of nfts they have board apes and cool cats and wicked craniums and all this other stuff and those will all you know some will be worth something some won't and then you'll have a new wave of of stuff that comes in a couple of years whenever there's like the next nft wave of things and that they'll have their own projects and that's kind of how yeah exactly but at the end of the day there could only ever be one first nft project and one first profile picture project and so like no matter what narrative happens no matter what changes like that narrative is like set in stone it can't go anywhere i think that was a fantastic answer and so my my last uh question to you andy is

uh and we kind of started the show with this as well is there's been this uh you know meme going around in the last couple months is that nfts are going through a bear market um but people who have been paying attention to the nft industry don't agree with that statement so maybe you could give us update our mental models as to what's been going on in the nft industry for the past two to three years why did why do people think that it was a bear market and what's actually true yeah so you know i think basically what happened was there was an insane amount of hype around like the christie's auction for crypto punks and crypto punks like went really really crazy before then they got to like a 23 ethereum floor or something which is higher than they are now even only by

one the floor is at 22 right now i know it's crazy it's it's insane but so i think like ask me how i know oh i know it was kind of like this this event that was a little bit outside of the normal hype cycle of of nfts where like it was very much so a uh an event that was affirming to people's like theses and their beliefs but it was so exciting that it kind of like ramped things up too quickly and so then after that naturally there was going to be this little bit of a lull but very soon after that board ape started to really pick up and that was where we started to see these other profile pictures pop up while punks were kind of not moving and so i think there was a subset of people who basically

said like no one really seems to care about people as much as they used to and crypto punks are going down so it's an nft bear market but at that same time like all these other nft projects were exploding and art blocks was really starting to pick up steam and now like i mean our blocks is doing a couple million dollars of trading volume a day board apes are doing a couple million dollars punks are doing millions of dollars i mean actually just doing like 20 million dollars a day in trading it's it's crazy uh i think that you have to just like kind of remap that as i was saying before there's so many new pockets of communities that are building up around all these different projects and uh and so just you can't just look at

what's the crypto punk's volume what's the crypto punx floor and who's buying stuff on nifty gateway i think a lot of those people have moved and now they own ford apes and they're aping into stuff on openc drops and art blocks and it's just kind of evolving it's not really slowing down fantastic fascinating andy yeah thanks thanks for that insight too and for updating our mental models on that it feels like the nft's as a collectible asset class are still continuing to go up but there are these waves of collectibles that become popular and then kind of change in and out right so baseball cards to beanie babies to something else right would be the the old world analogy now of course we are in the nft world and you are fractionalizing them thank you so much andy for spending some time with us

today on bank list with this ask me anything yeah thank you for having me guys of course none of this has been financial advice crypto is risky d5 is risky nfts are risky you could lose what you put in but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot hey we hope you enjoyed the video if you did head over to bankless hq right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence we recommend joining our daily newsletter podcast and community as a bankless premium subscriber to get the most out of your bankless experience you'll get access to our market analysis our alpha

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