The fractionalization of NFTs will lead to better social tokens

-No realization of value - there is no way for early token holders to realize the value of the increase in value of the community.

The key distinction is that through fractionalization, it opens up the potential to get more contributors to contribute to the success of creative works represented as an NFT.

Perpetual royalties of NFTs was first created by the SuperRare team has since been instantiated by protocols like Zora which introduce the ability to set a royalty and sell-on-share price of an NFT.

-Free rider problem - anyone can join the community if they own enough tokens, but are not incentivized to contribute to the community.

-No on-chain cash flows - community does not gain from new members entering the community, they gain in new people buying a token to access.

In summary, while tokenized access was the first type of social primitive that showed the potential of tokens, it alone lacks the ability to create meaningful sustainable social token communities. Here are the problems it suffers:

NFT creators in the future will have two paths: independent or collective. As an independent, creators can realize the full upside of their NFT creations, and earn their built-in royalties. But the collective model is an entirely new way to build distribution. By fractionalizing the royalties of an NFT, creators gain more distribution. These fracti... See more