What kind of tokens can be created on the Akemona platform?

The Akemona platform can create fungible tokens (generally, known as coins) and non-fungible tokens (NFTs).

What’s the difference between fungible tokens and non-fungible tokens (NFTs)?

As the name suggests fungible tokens are exchangeable against each other. There is no difference between any two fungible tokens. Most of the people understand the concept of fungible tokens. A one-dollar bill is replaceable with another one-dollar bill, since money is fungible.

NFTs as the name implies are non-fungible. You cannot replace a Picasso with another Picasso or a Monet with another Monet. Unlike fungible tokens, each NFT is unique.

When you are working with Akemona, we will review your business case and help you decide what kind of token will fit the needs of your business.

Can I create NFTs to fractionalize my real-estate assets?

Yes, you can. But that does not mean that you should. Tokens must be created to fit the purpose for which they are created. Each NFT is unique. This standard is defined in the software that creates the NFT. For example, if an issuer fractionalized their real-estate assets of $10,000 into a collection of 10,000 NFTs and distributed the NFTs among four investors, each one will have 2,500 unique NFTs in their wallet. If one of these investors wanted to transfer 500 NFTs to another party, they will have to transfer each unique NFT one by one in 500 transactions, which would make the entire transaction extremely cumbersome. To solve this problem, the issuer may decide to issue 4 NFTs of $2,500 each and distribute them among the 4 investors. Now we have another problem. If any investor wanted to sell or transfer $500 worth of tokenized assets to another party, they cannot do it.

This discussion points towards one of the rules of tokenization. If a fractional asset is indistinguishable from the other fractions of the same asset, there is no need to create a unique NFT for each fraction. In such a scenario, fungible tokens will serve the purpose much better than NFTs. NFTs are not the right fit for fractionalization of an asset. On the other hand, if you wanted to mint an NFT to represent access rights or ownership of a unique collectible then that is the right use of an NFT.

What is a fractionalized NFT?

Fractionalized NFTs are a combination of NFTs and ERC-20 fungible tokens. Fractionalized NFTs allow ownership of an NFT by several people. Fungible tokens represent items such as money, stocks, bonds. On the other hand, non-fungible tokens (NFTs) represent rare and collectible items, such as a work of art. NFTs are indivisible, therefore an NFT cannot be owned by more than one person. If multiple people were interested in having a fractional ownership of the NFT, a smart contract can be deployed. This smart contract creates ERC-20 fungible tokens, which link to the NFT. The ERC-20 fungible tokens are distributed as fractional NFT ownership tokens to the interested parties.

At Akemona, we have expertise in analyzing business cases to identify fit-for-purpose for creating right type of tokens.