Blockchain technology has been connected with cryptocurrencies and speculative trading for a very long time. One can only properly understand blockchain technology for what it is beyond cryptocurrency if they have a thorough understanding of it and a growing curiosity about it.

One of the many human activities that has been influenced by Web3 as a blockchain product is the 

A lot of concepts primarily available in TradFi have gained their place in DeFi and we have begun to see many more unfold. 

Conventional investors frequently invest in financial securities and asset-backed securities, and have the risk appetite for it. For these investors to embrace DeFi, the space will need to support their investment preferences.

The use of cryptocurrencies as digital assets today, has undoubtedly expanded from the days when investors would acquire them in the hopes that the value would rise before selling them to profit from market volatility to include asset classes that have stable forms but aren't exactly stablecoins.

An asset backed token or ABT for short, is a class of digital asset that is backed by an underlying physical asset. The price of the token and the value it garners are determined by the underlying asset or assets.

Physical assets used to back tokens include gold, equities, crude oil, diamonds, and other rare gems. 

Stablecoins are a form of asset backed tokens. They are generally backed by fiat currencies which keep their value pegged to that of the fiat currencies backing them. However, inflation and centralized control are very much a threat to this class of digital assets.

It's not uncommon to have assets like gold, oil, and even real estate back some conventional financial security. 

When a person owns this security, they are directly invested in the underlying asset. The value of the held security is directly impacted by changes in the price value of the underlying asset. Asset-backed tokens function in the same way as this.

Asset-backed tokens, which are also created using blockchain technology, are similar to regular cryptocurrencies except that they are backed by a genuine physical asset or piece of property that is unaffected by the volatility of cryptocurrencies.

Conventional investors consider investing in securities that are backed by fundamental assets, such as gold and oil, to be less risky and more lucrative than accepting a stake in the volatility of cryptocurrencies. These risk-averse investors are less inclined to gamble with cryptocurrencies.

By giving these investors an asset class they are familiar with, asset-backed tokens serve as the bridge that allows them to see the potential in the cryptocurrency and blockchain world.

If anything, asset-backed tokens will encourage more people to use cryptocurrency and leverage blockchain.

Since asset-backed tokens are widely regarded as securities, security laws are likely to have an impact on them.

Although asset-backed tokens have been around since web2, as the world adopts more transparency and digital representation in web3, more assets will be tokenized. 

The availability of liquidity is one aspect of asset-backed tokens that should be noted. The majority of the underlying assets supporting the most widely known asset-backed tokens are largely illiquid, making it difficult to convert them into currency. On the other hand, these assets can be exchanged for fiat and liquidity is made available by tokenizing them. Real estate, for example, is not a liquid asset because selling your property likely won't net you cash right away. You would actually need to put up the property for sale, fill out court paperwork, potentially negotiate, and sign documents before you could get your hands on money. Whereas, a token backed by real estate can be quickly converted into cash because there is typically liquidity to trade the token.

In a similar line, asset-backed tokens support automation because they are blockchain-based. This naturally gets rid of the manual processes you would have to go through to access the actual underlying assets. Purchasing a token backed by actual gold is all it takes to own gold. There are typically no paperwork or middlemen involved at all. In reality, you now possess gold, but you don't hold onto its physical form; instead, you possess a digital form of gold that is completely liquid.

Asset-backed tokens could be thought of as a digital means to invest in real estate. Tokens backed by physical assets can serve similar purposes as the physical assets without having to go through the hassles of paperwork, which would have come with owning some tangible assets. This use case is well illustrated by owning an NFT that represents owning a real-world drawing or piece of property.

Asset-backed tokens are another tool that startups can use to finance their ventures and raise money. Asset-backed tokens, which are akin to stocks, can serve as both a representation of a company's assets and a means for it to generate funding. Naturally, holders of these tokens will have an interest in the company's assets and, depending on the token's composition, may be eligible for capital gains.

Retail investors will have the chance to invest in a company if it makes an attempt to tokenize its assets. Due to the asset class these investments belong to, it is typically more difficult for the common investor to invest directly with large corporations or tangible assets like oil and gold. As a result, only high net worth individuals have the option to invest in these asset classes, which is unjust to the average person. Asset-backed tokens eliminate the unfair advantage high net worth individuals have in TradFi and give everyone the chance to gain fractional ownership of a business or other underlying assets.

Considering that blockchain technology is decentralized, everyone on the planet has direct access to it. The same holds true for items created using blockchain technology. This implies that by tokenizing its assets, a corporation has the chance to attract more investors. In a typical environment, having more investors would increase revenue.

Additionally, since asset-backed tokens are linked to the value of the underlying assets, you can exchange them with other people at market value. People are open to accepting these tokens as a form of payment for goods or services because of their liquid nature. Additionally, this makes it simple to transfer token ownership.

Asset-backed tokens will pique your attention if you've ever considered having physical assets in digital form.

The idea of asset-backed tokens will also be extensively explored in the metaverse, since we will all be the owners of several digital properties. The concept of asset-backed tokens will be used for the purchase, sale, and even fractional investments in these properties. By issuing fractionalized NFTs, NFTs already use similar procedures.

It's better to familiarize with asset backed tokens as they are unquestionably a part of the web3. 

Asset backed tokens offer a variety of opportunities not available with conventional finance and investing, but they also have their own set of potential pitfalls that you should constantly be aware of. Tokens with an asset backing are typically kept in digital wallets. To ensure the security of the tokenized asset, it is crucial that the wallet's owner is not compromised since the wallet's security is entirely dependent on them.

iWrite

Asset-Backed Tokens - making room for risk-averse investors in web3

The adoption rate for the Ethereum blockchain is extremely impressive. Additionally, the blockchain represents a key frontier in DeFi with 

, which is 59% of the TVL in DeFi. Though Ethereum is looking to change its method of securing its network, learning about the unique features of the Ethereum blockchain is still never out of style.

Let’s take a glance at what keeps the Ethereum ecosystem functional. 

Ethereum virtual machine (EVM) is the Layer that helps 

 & other products built on the Ethereum chain to be possible.

EVM is used to build smart contracts on Ethereum. To build smart contracts on the EVM, the programming language required is Solidity. 

Just like the Android OS is the basis for building Android phones, the EVM is the basis for building Eth compatible decentralized applications.

EVM is such a great component of Ethereum that it is primarily in charge of the majority of the interoperability now available in blockchain. Cross-chain interoperability is made possible with EVM, considering that a number of interoperable chains are EVM-compatible.

It's important to note that EVM use goes beyond just the Ethereum chain. 

One of the specific features of Ethereum that has contributed to its enormous popularity is the smart contract. This idea was readily accepted since it is possible to build contracts that can automate on-chain operations in a decentralized version. Many DeFi functionalities can be automated with the use of smart contracts.

Smart contracts are required for dApps to perform properly. Smart contracts enable lending, borrowing, and swapping on the blockchain. Once written, it cannot be modified, and the majority of its program is transparent.

Ethereum blockchain is what acts as the storage of the Ethereum chain. Transactions processed via the EVM are completed on the Eth blockchain and are stored on individual blocks that make up the Ethereum blockchain. It's also possible to track activities on Ethereum via the blockchain.

The blockchain is a distributed ledger that keeps all on chain data within the Ethereum ecosystem. 

The Ethereum chain is kept in storage on the Ethereum blockchain. 

Take the blockchain as a record book for a shop. The record book has details of all the transactions that happen in and out of the shop. Some detailed record books will even have enough information to process the profit and loss of the shop. This is exactly the purpose of the Ethereum blockchain. Only this time, it's transparent, immutable and decentralized. 

The Ethereum network constitutes individual nodes and computers that make up the Ethereum ecosystem. The Ethereum network represents the nodes that makes sure the security of the network is up to par via a consensus mechanism. 

. Miners are those that validate transactions and maintain the security of the Ethereum blockchain in the PoW. Miners need to solve complex math problems to have the opportunity to add transactions into a block then add it to the blockchain. This is a way to keep out bad actors and maintain the integrity of the Ethereum ecosystem. 

The components that make up the Ethereum ecosystem is what makes it function the way it does. All of these components are able to interact together to make sure that Ethereum blockchain continues to remain effective. 

While Ethereum currently lacks in scalability, the Eth 2.0 merge is set to change the course of things. 

This is an explainer to help you understand the components of the Ethereum ecosystem.  I hope it's useful! 

Components of the Ethereum ecosytem - a quick explainer

Ask any crypto enthusiast what DeFi is, and notice how confidently they will mention DeFi's peer-to-peer feature and other aspects of its decentralization, as well as why it is superior to traditional finance.

In reality, the optimism of 'DeFi believers' is well served. There was no system prior to now that facilitated traditional finance through digital processes without the need for a centralized body or third party.

DeFi was an early proponent of 'your life is in your hands' type of finance. Individuals could have complete control over their finances with DeFi.

As cool as the concept of DeFi is, its first stage simply cannot support widespread adoption due to its shortcomings. Though DeFi could provide users with access to lending protocols, liquidity on DEXes, and swap tokens with AMMs, it is still only a partial success.

To create a more robust environment that is fully DeFi functional as expected, adjustments must be made to correct the shortcomings of the first stage of DeFi (DeFi 1.0). 

 is the result of the anticipated changes with the current state of DeFi.

DeFi 2.0 is simply an upgrade to what we currently know as DeFi. Similarly, web3 is an improvement over web2.

DeFi 2.0 refers to the next stage of use cases that will be supported by DeFi protocols and products.

Though we're starting to see some DeFi 2.0 functionality, we're still not at the full extent of what it has to offer. DeFi 2.0 is still in the 'test stage,' as it has yet to achieve everything that is expected of it.

There is still room for growth and development in the context of DeFi as a whole.

DeFi is a part of web3 and will play an active role in its development. The metaverse, P2Es, and NFTs all have aspects of their makings that are relevant to DeFi.

We didn't all wake up on Independence day to find DeFi flying around everywhere. What we now call DeFi evolved over time.

Though it is now a buzzword, particularly in relation to blockchain and cryptocurrencies, DeFi rose from the need for a decentralized financial network that is not influenced by a third party.

The creation and use of Bitcoin was the first glimpse of what DeFi could be. Despite being successful in its own right; at the very least, it is the forerunner of other cryptocurrencies available today, it did not complete all DeFi functionalities.

The founders of Ethereum then went back to the drawing board and created Ethereum to finish what Bitcoin started. Ethereum was created to support smart contracts, which are the foundation of DeFi operations. Of course, Ethereum was a success, and it is widely regarded as the catalyst that gave birth to DeFi.

The summer of 2020 marks the beginning of widespread DeFi adoption. More DEXs, AMMs, lending protocols, and DeFi tokens were introduced, each with a piece of the pie that DeFi was enjoying at the time.

With more people participating in DeFi, it became obvious that Ethereum couldn't handle fast transactions at a reasonable fee. Other layer 1s such as Solana, BSC, and Avalanche were introduced to address Ethereum's scalability issue.

Aside from Ethereum's scalability, the first stage of DeFi had other issues that needed to be resolved. As a result, came DeFi 2.0.

Who says the initial stage of DeFi didn't give you access to liquidity pools? Yes, it did, but the liquidity pools were restricted to a single chain or protocol.

Many early-stage DeFi products operate in silos, similar to how their underlying blockchain is developed. However, more interoperable blockchains and solutions are being introduced.

Liquidity pools in DeFi 2.0 are configured to communicate with one another, and protocol users can access similar liquidity pools from other chains.

This will address the issue of a lack of liquidity in specific chains or protocols, which may delay a person's true DeFi experience.

Many of the operations on protocols in the first stage DeFi, while allowing for peer-to-peer decentralized communication by interacting with a smart contract, leave the protocol with the majority of decision making.

DeFi 2.0 will be more user-inclusive, allowing users to make decisions that will influence how the platform is used.

As of this writing, a number of DeFi protocols have their own native token, and the full implementation of DeFi 2.0 will mean that more protocols will have their own governance token, native to the protocol, which will be used to run the protocol as a decentralized autonomous organization (DAO).

A DAO's goal is to eliminate any remaining form of centralization in DeFi products, to put project management in the hands of the community, and to eliminate anything that impedes proper DeFi experience. 

Liquidity mining is associated with the method by which liquidity in the current stage of DeFi is generated.

Liquidity mining requires that a protocol reward a liquidity provider with LP tokens for providing their tokens as liquidity for an LP pair. The disadvantage of this method of liquidity mining is that liquidity providers are vulnerable to experiencing impermanent loss as a result of the depreciation in the price of the pair used to provide liquidity.

To address this, DeFi 2.0 will implement insurance to protect liquidity providers. While this does not guarantee that providing liquidity is risk-free, it does reduce the risk exposure associated with liquidity provision. Perhaps in the future, there will be a development to generate liquidity without the risk of temporary losses.

Protocols such as Olympus DAO have already begun to support a single pair liquidity provision as a DeFi 2.0 initiative, typically exposing the amount of risk a liquidity provider would have otherwise been exposed to.

The concept of open source in DeFi 2.0 is related to operating as a DAO where the community can make project decisions. While there are some similarities, open source is a concept that is aimed at developers and those who are familiar with the technical aspects of a project.

We’re starting to see DeFi projects that embrace open source developments. The goal is to ensure that the community has access to the project's code and can easily find and fix bugs that bad actors may have used to infiltrate a project's ecosystem.

Since there are more eyes looking into protecting a project other than the project’s dev team, it's less likely to be tampered with. This also contributes to the transparency that DeFi 2.0 is expected to provide.

There have been numerous hacks and breaches in the DeFi space, and one way to actively address this is to create a system in which policing is done by every user of a protocol.

A number of blockchains supporting DeFi rose from the need to address Ethereum's scalability issue and replace the PoW consensus mechanism with other, more appropriate consensus mechanisms.

Ethereum Layer 2 solutions such as Polygon, a sidechain, and Arbitrum and Optimism, roll-ups, all contribute to Ethereum's scalability and are expected to sustain DeFi within the ecosystem. Solutions like these were not available at the first stage of DeFi, and users were forced to either pay exorbitant gas fees or wait longer before completing a transaction. 

The anticipated Ethereum merge, which would see Ethereum transition to a PoS consensus mechanism, could also usher in the much-anticipated DeFi season, which is a big part of what DeFi 2.0 is currently associated with.

Other layer 1s competing with Ethereum include BSC, Tron, Avalanche, and Solana. The goal of all of them is to increase DeFi’s adoption.

Lending and borrowing in the current state of DeFi are very similar to lending and borrowing in the conventional system.

Borrowers must provide crypto assets worth far more than the loans they are assuming as collateral. This type of system discourages borrowers because they may not have access to as many options as DeFi does.

DeFi 2.0, as an improvement over the current state of affairs, is poised to embrace a system that allows the use of LP tokens as collateral. 

LP tokens are yield-rewarding tokens. By using LP tokens as collateral, a borrower may offer collateral that is not too expensive. The loan made to a borrower will be repaid over time by the income generated from the LP token. The borrower gets his LP tokens back after the debt is paid off.

This means that DeFi 2.0 will support a system that gives borrowers more flexibility and enables them to take out loans and offer collateral without as much concern.

A PoS consensus mechanism is used by the majority of DeFi projects, meaning validators must stake their tokens to protect the network while also collecting rewards.

Staking your tokens to validate a blockchain entails giving up access to the token for the duration of the staking period, even though the compensation is typically good.

Liquid staking solutions are already made available to people who want to receive staking rewards and still take part in other DeFi activities as a step toward a full DeFi experience.

Users can now engage in liquid staking thanks to protocols like Marinade and Lido, which weren't available during the first stage of DeFi.

Although DeFi is more frequently connected with finance, the idea will still be pertinent to web3 and its products.

A financial aspect of a fully functional web3 is unquestionably necessary, and the first stage of DeFi might not be able to provide it.

According to the idea of web3, many parts of its making are set to reward creators. DeFi tokens will be used as part of some of the web3 incentives.

Web3-related concepts that DeFi also influences include tokenization of NFTs, move-to-earn, play-to-earn, and rewards for using web3 socials.

New DeFi activities that are suitable with the impending web3 need will be bred and supported by DeFi 2.0.

DeFi 2.0 is a stage of DeFi that can be regarded as 'smart DeFi.'

Many of the ideas that DeFi 2.0 will discuss are already present in its current form. However, DeFi 2.0 will be an enhancement of these well-known ideas and offer a better environment to enjoy DeFi.

Despite the fact that DeFi 2.0 is beginning to take shape, it is still in the process of becoming fully operational.

DeFi 2.0 - a move towards full decentralization

Those who made the most money from holding Bitcoin probably had to HODL for years before they could profit. The highest profit ever made per Bitcoin held was when it reached its all-time high (ATH) of $68,000. While this is undoubtedly a good profit, cryptocurrencies are not only subject to holdings. Your crypto holdings can do a lot more if you look in the right places.

DeFi is short for Decentralized Finance. It is one of the advantages that the crypto space offers to its investors. Its distinguishing feature is the ability to initiate and complete financial transactions without relying on a central body.

DeFi is what makes it possible for you to buy a crypto token directly from a decentralized exchange without going through a centralized platform like Binance.  If cryptocurrency is ever to fully replace the conventional financial system, it must be capable of providing all of the services that conventional banking provides. It is, in fact, the reason DeFi was created.

Thanks to Ethereum, the token was created to be more than just a decentralized payment option and means of exchange, like Bitcoin was. At launch, Ethereum enabled DeFi functionalities, and users quickly began to benefit from it. Following Ethereum's popularity, more DeFi projects began to emerge, eventually flooding the crypto space with a variety of DeFi products, services, and perks.

The 2021 DeFi season saw a lot of DeFi products, both cryptocurrency and protocols. At the time of this writing, 

. A number of buzzwords that are now more common in crypto communities emerged as a result of DeFi. DeFi has its place in a variety of blockchain functionalities.

While there is nothing wrong with aiming for capital gains with your cryptocurrency holdings, it never hurts to learn about techniques to enhance your profits. Let’s dive into ways through which you can make more from your crypto holdings. 

 allow you to swap your tokens for other crypto assets or stablecoins in an instant at market pricing, because there is enough liquidity to let these swaps go through. This liquidity, however, does not just end up in a liquidity pool by magic. Liquidity providers provide liquidity pools.

By depositing your tokens into a liquidity pool, you can become a liquidity provider. The exchange or protocol to which you deposit your tokens as liquidity will then reward you for each transaction completed through the liquidity pool. Some exchanges allow you to earn their native tokens as well as a percentage of transaction fees from other traders using the liquidity pool, while others only let you benefit from transaction fees paid by traders.

Typically, being a liquidity provider requires you to deposit two tokens into a pool. For example, you will need to deposit both ETH and USDC into an ETH/USDC pool. This will make it possible for those that want to swap ETH to USDC and vice versa to access liquidity. Recent improvements enable the provision of a single token as liquidity while earning liquidity rewards. You can earn passively for providing liquidity in pools with good APR.

What happens when you place money in a bank's fixed deposit account? The bank gives you interest that will be paid at the end of the tenure, while using your money to make more money throughout that time.

Similarly, you can become a lender on DeFi lending protocols. The good news is that you stand to earn more interest than with conventional banks. While banks often provide less than 10% APY at best, earning more than 10% APY is not unpopular with DeFi.

DeFi lending protocols are made to serve both borrowers and lenders, and one way you can actively earn from these protocols is to participate as a lender.

You can lock up your crypto holdings or stablecoins in a lending protocol, which provides liquidity to borrowers while earning interest.

The lending protocol makes sure that your funds are protected by overcollateralizing borrowers, ensuring that you are still in good standing even in the worst-case scenario.

Imagine lending your $ETH to a lending platform when it was around $200. You would have benefited not only from its price appreciation, but also from the income connected with being a lender. This is not to imply you wouldn't be concerned at moments where there was a large price drop. Overall, that would have been a good long-term use of your $ETH.

 is a lending and borrowing protocol that you can look into and see how it works.

The upcoming Ethereum merge will move the coin from a PoW consensus mechanism to a PoS consensus mechanism. The goal is to assist Ethereum in resolving its scalability issues and help its users in completing transactions more quickly, so that Ethereum can fit in with use in everyday life.

If Ethereum uses a PoS consensus, there will be no need for miners to solve complex math problems in order to protect the blockchain as with PoW; instead, validators will secure the blockchain by staking their $ETH. Everyone who contributes to the security of a blockchain, whether PoW or PoS, is rewarded.

Validators will need to stake at least 32 ETH per node to secure the Ethereum chain in PoS. Even at the present market price, 32 ETH is a lot for many people to own. The advantage of DeFi is that you do not need to own 32 ETH to stake and get staking incentives.

There are protocols and exchanges that allow you to stake a small amount of ETH with their platform and earn a percentage of the benefits for your fraction of the node they manage. Most of these exchanges will lock away your $ETH for the duration of the staking period. 

, on the other hand, have begun to offer 

 alternatives, allowing users to stake their $ETH and receive a staked $ETH. Users can then use their staked $ETH with other DeFi functionalities. You can earn staking rewards while also using your token to participate in other opportunities provided by DeFi.

Many additional PoS networks enable users to stake their tokens and gain rewards. You can either stake through protocols and gain staking incentives, or you can become a direct validator by owning the necessary amount of tokens.

The strategies for earning from your crypto assets mentioned in this essay are the simple for anyone interested in taking advantage of DeFi to use.

It is, however, important to understand the risk connected with these DeFi passive income options. Each has its own set of risks and rewards.

3 ways to earn with your crypto holdings

If you had information that the real estate industry will be big in 6 months from now and after doing your own research, you’re convinced that a growth will happen, the most natural thing to do will be to act on the information; invest in real estate. 

You’ve looked through all you’ve got, and you realize you can spare up to $4,000 for a real estate investment. Sadly, in our hypothetical 

, to own a unit of investment in the real estate industry costs $100,000. Yeah, you’ve got a strong conviction that real estate will do well soon, but how do your raise $100,000?

Even a 10x of your $4,000 still wouldn’t be anywhere near paying for a unit.

You’ll most likely give up on this opportunity, it just don’t seem like there’s a way around it. 

Your curiosity for a way out of your hurdle led you to a community of like-minded individuals interested in investing their little sums in real estate. This community has proposed that members pool their money and acquire a real estate unit. The profit and loss is to be shared among pool’s participants. Members began pouring money into the pool, and within a few days, the community could buy a unit of real estate investment. 

A $20,000 contribution from a single member to invest into a unit of real estate means the member is willing to share 20% risk of the unit’s risk and reward. In the same way, your $4,000 investment will give you a 4% portion of the unit. Now, if everything goes fine, you’re poised to benefit from the growth of the real estate industry, thanks to the community that put a pool together. 

So it means it wouldn’t even matter if a person has $500, they’d still be able to own a part of real estate, provided they find a community like yours.

What you’ve done with owning a bit of a real estate unit worth $100,000 with a $4,000 investment can in fact be replicated with NFTs. 

You’ve heard about NFTs like every other time right? I could even believe you, if you claim to have minted a Bored Ape in your dream; I’d still think you’re weird though. 

This piece will discuss a break-away from the regular NFT. Hang in there buddy, and let’s go for a ride!

You can find an NFT everywhere! Does it do the job? Oh, I guess not. 

NFT is short for Non Fungible Token. It’s marks the representation of a digital asset on the blockchain. NFT is a digital asset class that is not liquid.

An NFT could be a digitally stored music, arts, designs, game characters, social media content, or even a digital representation of a physical property.  

NFTs gained popularity in 2021 (though a technology that has been present since 2014) and since then, the concept continues to evolve. Today, NFTs can do more than be a speculative asset to gain use as access to events, get VIP experiences, make decision within a DAO, get in on a metaverse experience and even confirm access to a real-world property.

As a non-fungible asset, no two NFTs can ever have the same digital properties on the blockchain. While it’s possible that the content of different NFTs may be similar, there are never different NFTs with the same digital property.  

Simply put, NFT = JPEG, or say a simple ‘right click’ + ‘save’ is enough to own the exact Bored Ape thingy that Justin Bieber bought for $1.29 million, and have it sit conveniently in your gallery. 

While it’s cool to get anything super easy just like that, I’m not convinced that you have Justine Bieber’s Bored Ape NFTs in your gallery. JB has it in his wallet and that’s why he is the owner. The NFT information is saved on the blockchain and not only can we verify that JB owns it, we can also see if it moves between wallet, and most note-worthy, we can discover that JB didn’t actually transfer the ownership to you. Errr….I mean not yet.

JPEG is not equals to NFT, and ‘right click’ + ‘save' is not equals to minting. NFTs are on the blockchain, JPEGs are not. 

One similarity, however, is that both NFTs and JPEGs can attract value. 

Maybe you even like the CryptoPunks NFT community better, but no matter how much you think about it, you’ve come to a view that the most performing NFTs are for the affluent. Plus, you’re probably not even a fan of Ethereum’s high gas fee. It now makes sense to see why 

 by trading volume (all the juice lives on it), which has surpassed a $20 billion trading volume. Though OpenSea interoperates with networks like Polygon, Solana and Klatyn, outside of Ethereum, it’s still a favorite to Eth-based NFTs.

It’s not in my place to judge how you think about it, but the floor price for NFTs like BAYC and CryptoPunks makes them a no-go area for the average person, making them more of a sacred community rather than being entirely decentralized. 

To meet the needs of the growing NFT community, it’s only a matter of time for solutions that serve the wider market to be rolled out. 

If NFTs represent a digital asset class that 

You won’t be wrong to say Fungible-NFT. However, the more likely used term within the NFT community is Fractionalized NFT, also F-NFT. 

, don’t you think? Literature really do leave its mark on everything ehh. 

A fractionalized NFT is basically an NFT that’s divided into fractions. The fractions of an NFT represent a part of the original NFT. 

This way, much more than one person can own a single NFT, which is quite different from the norms with NFTs; which is that an NFT should typically be non-fungible, meaning it cannot be reproduced or shared into other similar part. 

Fractionalized NFTs work similar to the real estate example in the introduction of this piece. Having different people put money together to buy a unit in real estate investment, which would have been otherwise limited to ownership of a single person means more people can now participate.

, fractional NFTs solve illiquidity found in the NFT market . 

The idea of F-NFTs is to provide a market environment where trading NFTs become completely instant rather than hoping that an NFT gets picked for a listed price at some point.

With cryptocurrencies, you’re much more certain of what you’ll exchange your token for at the point of trading. With NFTs, you never can really tell. 

 as at the time of this writing. Total F-NFT market cap did peak to over $212 million in 2021. 

NFTs are typically developed as ERC-721 tokens, which supports 

To make NFTs into F-NFTs, the original ERC-721 NFT is locked into a smart contract written to execute this type of program. 

To be made into fractions of tokens that is easily tradable, the smart contract creates F-NFTs as ERC-20 tokens, like regular tokens built on the ETH chain. These tokens will then have the same value, and can be exchanged for each other as they do not carry different unique identity in their ERC-20 form.

Since fractional NFTs are made into ERC-20 tokens to become liquid, it’s not so out of place to anticipate their involvement with DeFi. F-NFTs are already gaining use with liquidity and identity on lending protocols. 

Buying ERC-20 tokens as F-NFTs, means you’re buying a part of an original NFT, making the ownership of an NFT flexible than ever. If Justin Bieber decides to lock up his BAYC NFT into a vault and issue 20% as Fractional NFTs, I tell you my friend, you’ll own a part of Justin Bieber’s BAYC NFT.

BAYC issued F-NFTs should not be mistaken for the project’s official token which is the ApeCoin.  Buying Apecoin does not represent a fractional ownership of the BAYC.

With Fractional NFTs, a bunch of people can come together and own an NFT -providing them the opportunity to own the most decorated NFTs with small funds.

Some F-NFTs give holders access to DAOs of a project. 

Fractional NFTs is a way for an NFT project to attract investors that would have otherwise avoid investing into NFT. It can increase NFT adoption and utility. 

Fractional NFTs can be a pool of an NFT collection, or  different NFT collections or a pool of a rare NFTs from a collection. 

F-NFTs are not always particularly tied to the price of the underlying NFT collection. 

F-NFTs can be utilized to hedge against market risk for the most part. Although cryptocurrencies and NFT do not operate in the same way, they do share significant similarities. The risk linked with both concepts is one of these similarities. To hedge against this risk in the event of a market downturn, crypto traders can simply exchange their crypto for stablecoins, which have a fiat equivalent and are not volatile. Due to NFTs illiquid nature, this type of hedge would not be achievable with regular NFT trading. Fractional NFTs will, however, make hedging against market risk possible in the event that a bear market is anticipated. 

Fractional NFTs can take different form, and depending on the protocol supporting the F-NFTs, the possibilities differ.

Let’s look at the well accepted F-NFTs protocol. These protocols allow you to find F-NFTs in the market and also give you the opportunity to create yours.

 is, without a doubt, the one-stop shop for F-NFTs. Just as the enormous statement on the front page of the website states, "buy, sell, and mint fractions of NFTs," it’s exactly what you'll be doing on fractional.

Fractional allows you to fractionalize ERC-721 compliant NFTs. The protocol is adaptable, allowing you to build a collection, calculate token supply, select a token symbol, and set the price for NFT bids, assisting you in the creation of your own ERC-20 F-NFT token.

Fractional also allows you to combine multiple NFT collections and issue them as one.

your deposited NFTs and make them tradable at any time. The protocol has its own automated market maker exchange where you can trade your tokens for other crypto assets at a go. You can also receive farming rewards by providing liquidity on the protocol.

Unicly also accepts both ERC-721 and ERC-1155 NFTs. These NFTs can be converted into liquid tokens known as uTokens.

Say you lock up BAYC on the protocol, you’ll be provided with uBAYC, which represents your portion of BAYC in the vault. 

Anyone who holds the protocol's governance token, UNIC, is eligible to participate in its DAO. 

If anything, I hope this article has opened your eyes to that an expensive floor price is not enough to stop you from owning the NFT you most fancy.

The content of this piece should, however, not be mistaken for a financial advice. You should be responsible for DYOR and make decisions you’re comfortable with. 

More importantly, you know JB got nothing on you now and you can very well own a portion of his 

The easiest way to own Justin Bieber’s BAYC NFT

Thanks to DeFi, you may now enjoy financial services in the crypto space  that were previously only available through the conventional banking system. Not only does DeFi allow you to participate in conventional financial services, but it also offers better returns and more flexibility than conventional financial institutions.

DeFi provides access to lending, borrowing, staking, farming, liquidity provision, and other related services. It enables crypto investors to maximize returns on their crypto assets in methods other than capital gains.

In this piece, I'll discuss how cryptocurrency-based loans work and why these loans are used in DeFi. You'll identify what type of crypto loan is suitable for you if you're considering taking one.

A crypto loan provides you the opportunity to borrow cryptocurrency assets.

Oh! You may be thinking that since cryptocurrency is really volatile, why would anyone in their right mind seek crypto-based loans?

ICYMI, accessing a crypto loan is super easy as there's no need for any paper work, there are no constraints as found in conventional lending systems and most importantly you can take a loan in 

, which is a cryptocurrency pegged to a fiat value. This means that $1 in fiat will always be equal to $1 in stablecoin, and stablecoins are not affected by crypto market volatility.

There are two major forms crypto loans could take in DeFi. Crypto loans are either collateralized or uncollateralized.

Crypto loans involving DeFi are also called DeFi lending.