Fractional Rebrands, Raises $20M to Expand Collective NFT Ownership

Many of us will never own one CryptoPunk or a Bored Ape Yacht Club avatar, or one of many other uber-expensive “blue chips” NFTs– but it may still be possible to own a small part of such assets, through “fractionalisation”. And the top platform for fractional NFTs hopes to make that prospect a little more accessible and appealing.

NFT platform Fraction announced today that it has changed its name to Tessera, along with raising a $20 million Series A round. The round was led by Paradigm, much like the startup’s seed round last year, with participation from Uniswap Labs Ventures, Focus Labs, eGirl Capital, Yunt Capital and more than 50 individual angel investors.

Andy Chorlian, co-founder and CEO of Tessera, admitted Decrypt that the platform’s original name was “obviously very on the nose.” It had advantages at first, he said, as the name conveys the concept of fractionalizing an NFT—that is, effectively selling tokenized shares in an NFT so that hundreds or even thousands of people can own a share of something together.

However, the name never really stuck in the minds of NFT owners – Chorlian said people would call it Fractionalize or Fractal.art (the domain name), or even Fractalthe name of another, Solana-based gaming NFT platform. But rebranding is about more than just carving out a unique brand. It is also about expanding the path wider to collective ownership.

“What we really want to do is find unique and interesting ways to empower people online — and especially on the blockchain — to own things together,” he explained.

Fractional’s current platform has already been used for a number of high-profile projects. For example, the internet-famous original Doge meme image – the inspiration for Dogecoin– was purchased by an NFT collecting community (or DAO) called PleasrDAO for $4 million.

A DAO is an Internet community united by common goals, with membership represented via tokens. PleasrDAO then fractionalized the NFT into nearly 17 billion DOG tokens and sold them to the public. Currently, the total market capitalization of these tokens is around $10.8 million, per data from CoinGeckoeven though the price of tokens is down 97% from the peak.

Other notable projects that have used Fractional include UkraineDAO, which raised $6.75 million worth of ETH for Ukraine’s aids earlier this year, while Free Ross DAO raised funds for the legal defense of jailed Silk Road founder Ross Ulbricht. Remarkable NFT project Azuki has also used the platform for a community ownership initiative.

Explaining NFTs – that is, blockchain tokens that represent ownership in a commodity – can be difficult enough on its own. Adding fractionalization to the mix complicates things significantly. Under Fractional’s current structure, users who buy into a project get a retainer Ethereum ERC-20 tokens that represent a share of ownership.

With the upcoming launch of a V2 protocol, the newly renamed Tessera will instead provide users with an NFT that represents a stake in the more valuable NFT they bought into. Chorlian believes that will better represent the collective ownership proposition, creating an improved sense of partial ownership for users.

“One of the big things for us is to really meet our collector base and users where they are, and now all of those fractions will be NFTs themselves,” he said. “It will be a much more normal experience that they expect.”

Tessera is also rethinking how they communicate what they see as the benefits of joint ownership for NFTs. Chorlian pointed to the opportunity for artists and creators to build larger communities around their work through fractionation, and it’s a way for non-ETH-rich users to enter a tokenized community with others who have similar interests.

Tessera plans to begin rolling out its v2 platform with a trial run focused on Noun, an Ethereum NFT project, before launching the broader protocol around October. The platform plans to start small and gradually expand to include more NFT collections and projects, he said. Tessera will also explore the potential layer-2 scaling solutions to cut down on transaction fees as well.